The winners of the Nobel prize in economics and why they won it

Banerjee and Duflo are professors at the Massachusetts Institute of Technology, where the couple founded the Abdul Latif Jameel Poverty Action Lab, and Michael Kremer is an economist at Harvard University. The trio has made vast contributions to the study of health, labour, rural and development economics by pioneering an on-the-ground approach. One of the basic questions is why their contribution is different? Millions of papers have been published on poverty, so far. Thousands of economists work on it. But why these three peoples are distinguishable? 

The key points are, rather than looking at poverty solely from a secondary data and theoretical standpoint, they shifted the focus to smaller issues within the vastly complex and multifarious problem. After isolating key areas of interest, they observed issues such as the education of poor children, poor people's sanitary facilities, and healthcare in actual practice to determine the factors that contribute to the problems.

Their research focused on mainly education and healthcare, poverty, child health, vaccination, and other things. One key study, led by Professor Kremer, centered on the most effective way to increase performance at schools in the poorest communities. Through several field experiments in Western Kenya, the study found that a lack of resources wasn't the primary reason for under-performing schools and pupils, but rather a lack of teaching support and an overall lack of teachers' accountability.

Other studies have focused on how price impacts parents' decisions to give their children de-worming pills, how mobile clinics can increase rates of vaccination, and the impact of microcredit programs etc. The World Health Organisation is among the global bodies that have made recommendations based on Banerjee, Duflo and Kremer's findings.

Most people think that Amartya Sen and Abhijit-Duflo-Kremer's contributions are the same. But the fact is, though their working area is mainly the development sector, their approaches are different. Sen's contributions are focused on – welfare economics, social choice theory, and capabilities approach in that order. He relates the head-count ratio of poverty to the measure of the economics of inequality of people who live below the poverty line. Sen identified various causes that lead to different famines and demonstrated that the decline in aggregate food availability is not the primary cause.

In the famous essays, 'Poverty and Famines', 'Entitlement and Deprivation', several famines have been studied in the working of a general theoretical framework from a data-based research and original angle. He examined various meanings of poverty and drew attention to the incidence of absolute and relative deprivation. Sen carried out massive work on poverty, famine, and inequality in India. His major point has been that the gap simplicity approach will not do. The distribution of income and consumption among the persons underneath the poverty line is to be taken into account seriously.

On the other hand, Sen developed the concept of capabilities that have been cited and applied as a better index of wellbeing than just access to commodities or utilities. The word 'capability', as defined by Sen, is the ability to transform Rawlsian primary goods i.e. basics rights, liberties, etc. to the achievement of wellbeing. The capability of the human being is their ability of functioning in different capacities in a society and state such as to enable them to achieve the constitutions, organisations, employments, and components of well-being. Such functioning ability and power concretely implies access to adequate, unadulterated, and nutritious food, and necessary services.

In economic research, most of the measures are general and probably technical. Such as education, medical and health care facilities and a measure of security regarding the availability of the above. Sen has helped to induct several development indicators regarding the above in the human development index (HDI). Capability also includes an environment of freedom of choice and the ability to make use of various freedoms. Sen has included in the concept of entitlements items like nutritious food, employments, proper education, medical and health care, information, the security of food supply in times of famine, etc. According to Sen famine arises out of the failure of creating a system of democracy and entitlements. Another important contribution of Sen is the 'Choice of Technique', a research work where he argued that in a labour-oriented economy, the generation of employment cannot be increased at the initial stage by the adoption of labour-intensive techniques. He argued that capital-intensive techniques support and strengthen the economic foundation and institution of the country which helps in further expansion of the economy.

On the other hand, Banerjee, Esther and Michael Kremer passionately tried to uplift, encourage, and strengthen the poor. Their experiments have become a popular tool in advanced development economics research. So, what is the experimental research? In a few words, experimental research is a scientific and systematic process to the scientific method where the researchers manipulate variables. So, why the experimental method is different from previous traditional research?

According to Abhijit Banerjee, in rural India, many of the current government and non-government schemes have no purpose or long-term outcomes, and nobody knows what their functions are. He said that subsidies provided for seeds, fertiliser, power, water, etc are being misused. Banerjee said that these subsidies are not good for the economy, sustainable development, and economically inefficient. Alternatively, the subsidies should apply to the proper channel. They found these development gaps by applying their experimental approach. The popular experimental research in development economics, like earlier research in labour, health, poverty, and education, started from a concern about the reliable identification of program effects in the face of complex and multiple channels of causality.

In general, participants in a program differ from nonparticipants in many ways, and we have no information on how they would have fared had they not been participating. This makes it complex to separate the causal effect of the program from other factors. A vital problem is sample data selection, the fact that participants or those who got treatment may be systematically different from nonparticipants or those who are in control. Although the treatment effect for each person cannot be identified, experiments make it possible to vary one factor at a time and therefore provide internally valid estimates of the average treatment effect for a population of interest.

So, it is clear that these experiments have become a popular tool in development economics research, also has been the subject of discussions. Though there are some limitations and criticisms of this approach, it is one of the best research methods to measure and eliminate poverty.

Liton Chandra Voumik is a faculty member of the Department of Economics, Noakhali Science and Technology University