A few weeks back on 10th December at the Nobel ceremony held in Stockholm, Sweden - Nobel prizes were handed out to researchers and practitioners from the fields of Physics, Chemistry, Medicine, Literature and Economics Sciences. While these awards represent the zenith of intellectual achievement for respective recipients in their own fields, it was the Nobel Prize for Economic Sciences (colloquially referred to as Nobel Prize in Economics) that caught my attention the most. This not only being because I am a student of Economics but also because I belong to a part of the world whose predicament is bulk of the subject matter of the recipient’s body of work.

The Nobel Prize in Economics, interestingly, was not included in either the will of Alfred Nobel or the list of first awards that were handed out in 1901. Instead, the Prize for Economics was established in 1968 as a result of a donation by Sweden’s Central Bank to the Nobel Foundation. The award was first awarded in 1969.

The 2019 award was presented to Abhijit Banerjee, Esther Duflo, and Michael Kremer “for their experimental approach to alleviating global poverty in practice.” All three are development economists with the first two being professors at MIT and the latter being an economist based at Harvard University. The umbrella organisation that the three recipients work under and for which they have been awarded the Nobel Prize is called J-PAL, short for The Abdul Latif Jameel Poverty Action Lab. Instead of being a strict hierarchical organisation, J-PAL instead is a network of researchers and practitioners around the world who share the common goal of reducing poverty through informed scientific methods. This includes extensive use of surveys and data collection strategies to analyse and make fact-based policy decisions.

What sets J-PAL apart from other similar organisations is both the philosophy behind J-PAL’s work and the method employed by researchers to study poverty in areas of the world that are often misunderstood.

In the field of development economics, where romanticised depictions of the poor are the fad and grand narratives about proposed structural solutions dominate – J-PAL’s distinctive approach has instilled a breath of fresh air. J-PAL’s philosophy itself is based on core belief of their founders Abhijit Banerjee and Esther Duflo, who highlight the problematic ways in which most development economists view the poor – as romanticised caricatures removed from mainstream rationalities whose predicament can change either through rich’s philanthropic exercise or through structural policy changes that overhaul the corrupt systems of the developing world. Instead, the two economists stress the need to “abandon the habit of reducing the poor to cartoon characters and take the time to really understand their lives, in all their complexity and richness.”

This dire need to understand the lives of the poor through scientific evidence-based methods needs innovative experimental approaches that inform policy decision-making. One such experimental technique that has guided the lion’s share of the both J-PAL’s and the recent Nobel Laureates’ work at studying the poor of the world is what’s called a Randomised Control Trial (often shortened and known by the acronym RCT in academic circles). While the term Randomised Control Trial may seem alien to some in mainstream culture, the concept of RCT in-fact is not anything new – this is an experimental technique that has been around for quite some time. Despite applied economists and statisticians having embraced this experimental approach like their holy grail, it is actually the field of medical science and pharmaceutical drugs testing that have pioneered this approach.

To be honest, behind all the jargon, the concept of RCTs is not that difficult to grasp even from a layman’s perspective. To clarify, let’s take an example where a new medicine’s effectiveness is to be tested. To run a randomised control trial, from a given population two similar samples are randomly selected and labelled treatment & control groups respectively. The drug is then administered to patients in the treatment group whilst the patients in the control group are not given any such treatment. Any observed effect over time is then measured; and since the samples were randomly allocated in the first place, the observed effect can be attributed to being as the effect of the new medicine. Agreed that there are intricacies involved and other factors need to be controlled for through both experimental design and statistical techniques; having said that, the above example communicates the experimental philosophy of RCTs for mainstream consumption adequately.

What the Nobel Laureates’ work has done is to make these experiments the yardstick through which the lives and the preferences of the poor are studied and understood. For instance, in a study conducted in rural Rajasthan by J-PAL, packages of lentils were handed out to those families that brought their kids to vaccination camps. The purpose was to study how this added incentive would positively affect the immunisation rates in a part of the world where these rates have consistently remained low. Following the RCT methodology, the lentils were only given out in a randomly selected group of villages, whilst in other similar randomly selected villages in the vicinity no lentil packages were handed out. Both set of villages had vaccination camps setup in them. What was observed was really intriguing; in villages where the added incentive of lentils was handed out, immunisation rates increased more than two times as compared to those villages where lentil packages were not handed out. The increase in rates was so profound that despite the additional cost of lentils factored in – the average cost of immunisation per child actually decreased.

Mentioned above is just one example of how J-PAL’s work has revolutionised how development economists study the poor of the world. And such evidence-based studies are gradually challenging the many narratives about the poor that have often skewed mainstreaming understanding of problems that afflict them. The poor much like the rest of the world are rational decision-makers whose lives cannot be pushed to the periphery of economic understanding. Their lives are as interesting, if not glamorous, as are the lives of neon-tinted downtown Manhattan. In such stead, the recent Nobel Prize in Economics was a testament to the recipients’ achievements at “dramatically improving our ability to fight poverty in practice”, but also about the Royal Swedish Academy of Sciences acknowledging the importance of understanding the lives of the poorest and the downtrodden of this world.

Raja Rafiullah

The writer is Graduate Student at Cornell University in the US, he can be reached at rr698@cornell.edu