2019 Nobel Economics Prize Announced: These Three People Are Looking For The Answer To "Reduce Poverty".

In October 14th, the results of the Nobel prize in economics in 2019 were released. The Royal Swedish Academy of Sciences announced that the 2019 Nobel prize in economics will be awarded to Massachusetts Institute of Technology professor Banerjee (Abhijit Banerjee), Diflo (Esther Duflo) and Harvard University professor Kramer (Michael Kremer) in recognition of their research contributions in alleviating global poverty.

The Nobel prize in economics is widely regarded as the highest prize in economics in recognition of outstanding researchers in economics. Unlike the other Nobel prizes awarded since 1901, the Nobel prize in economics was established by the Swedish central bank in 1968. It is the only award not created by the Alfred Nobel. Since 1969, the Nobel prize in economics has been awarded 51 times, and 84 people have won the prize.

Creating an experiment based poverty reduction method

How to effectively reduce poverty is one of the biggest problems facing economics since its birth. Today, over 700 million people in the world still live on very low incomes. Every year, children under 5 million and 5 years of age die from diseases that can be prevented or treated at low cost. Half of the children in the world leave school without basic literacy and computing power.

What is the best way to alleviate global poverty? The three Nobel laureates put forward a new way to break down the grand problem of poverty reduction into smaller, easier and more accurate questions at the individual or group level, and then find answers through field experiments.

For example, it has long been recognized that the average productivity gap between poor and rich countries is huge. But Banerjee and Diflo noted that there was also a big difference in productivity among poor countries. Some individuals or companies used the latest technology while others produced similar products or services in obsolete mode of production. Therefore, the average productivity of poor countries is low, mainly due to the backwardness of individuals and companies. Does this reflect inadequate credit, inappropriate policy design, or difficult to make fully rational investment decisions? This year, the research method designed by the Nobel Prize winner is to deal with such problems.

Education is an important part of their research. Which interventions can raise educational outcomes at the lowest cost? In low-income countries, textbooks are scarce. Children often go to school hungry. If students can get more textbooks, will their grades improve? Is it more effective to provide free school meals?

To answer these questions, three Nobel laureates conducted a number of field experiments in Kenya and India, and selected some schools to randomization and provide different resources. The control experiment found that the provision of more textbooks and free school meals only had a small impact, while the help of disadvantaged students significantly improved educational outcomes. Field experiments also conducted a survey of teacher motivation and lack of responsibility, and found that one of the ways to improve teachers' enthusiasm is to sign short-term contracts with them, perform well and extend the contract.

Their experiments and studies in the field of education in low-income countries show that in general, the value of providing additional resources is limited, and educational reform that makes teaching adapt to students' needs is of great value. Improving school management and demanding irresponsible teachers are also effective measures. Since then, they have conducted many new field experiments in other countries, focusing on health, access to credit and the adoption of new technologies.

The work of the winners has a direct or indirect effect on policy. For example, the study of tutorial counselling ultimately provides evidence for large-scale support programmes, which currently benefit about five million children in India. The winners' research also changed the way in which public institutions and private organizations work. In order to make better decisions, more and more organizations dedicated to global poverty alleviation began to regularly use field experiments to systematically assess new measures.

There are two obvious characteristics of the experiments designed by the winners this year. One is that the participants make practical decisions in their daily environment, which means that the new policy measures can be applied on the spot, and the other is that the experiment not only tests the effectiveness of some intervention, but also explores the reasons. Their experiments are compared to clinical trials of drugs to identify and prove which investments are worth and which investment has the greatest impact on the lives of the poorest.

Diflo, speaking at the announcement of the Nobel prize in economics, said by telephone that the focus of the three men's work was to understand the deep and interrelated root causes of poverty. It was pointed out that policymakers would generally describe poor people, who were totally hopeless, lazy or entrepreneurial, but did not understand why. "Our approach is to solve problems one by one and to test them as scientifically as possible."

In order to study the motivations, limitations and information that influence participants' decisions, they also applied "contract theory" and "behavioral economics". The researchers of these two theories won the Nobel prize in economics in 2016 and 2017 respectively.

In just 20 years, three Nobel laureates based on experiments have changed the development economics, and field experiments have become the standard method for developing economists to investigate the effectiveness of poverty reduction measures.

The birth of second female winners

For half a century, the Nobel prize in economics has been awarded to a woman named Elinor Ostrom. Ostrom won the 2009 Nobel prize in economics for his analysis of economic governance, especially public economic governance.

Diflo, a French American, is the second female scholar who won the Nobel prize in economics. He is also the youngest winner in history. He is 46 years old. Diflo enjoys a high reputation in the academic circles of the United States and France. Since she won the famous John Bates Clark prize in 2010, she has widely guessed that she will win the Nobel prize in economics. Diflo expressed the hope that this award would motivate other female economists to continue their work and receive the respect that men deserve.

Li Rengui, a researcher at the Institute of economics of the Chinese Academy of Social Sciences, told reporters on twenty-first Century economic report that the 50th anniversary Nobel economic prize was awarded this year, which means that there may be some adjustments in the award rules. For example, the lower age limit of the winners was broken. Before that, an economist generally needed twenty or thirty or more years from the theoretical contribution to the Nobel prize, and this year has been shortened for a short time, which is a great encouragement for young and middle-aged scholars. Ostrom was awarded the prize of 40th anniversary at the Nobel prize in economics, and 50th anniversary women economists were more likely to win the prize. Diflo's award was in line with expectations.

It is quite striking that Banerjee and Diflo won the Nobel prize in economics this year as husband and wife. In 2003, two people jointly founded the Abdul Latif Jameel Poverty Action Laboratory (J-PAL), a global anti poverty research network dedicated to field experiments. They published dozens of research papers together, together with two books: Poverty Economics and the upcoming "good economics in difficult times".