Against The Nobelists
A longer version of this article can be found at the Hertie School WESP blog here.
In 2019, the Nobel Prize Committee awarded the Nobel Memorial Prize in Economic Sciences to Abhijit Banerjee and Esther Duflo for their insights into development economics and how evidence-based solutions can be applied at scale to help the world’s poor. In 2024, the Nobel Prize Committee awarded the Nobel Memorial Prize in Economic Sciences to Daron Acemoglu, James Robinson, and Simon Johnson for their contributions to the study of comparative development and how nations succeed and fail in a global context. In this essay, I argue that Banerjee and Duflo’s 2011 bestselling Poor Economics and Acemoglu and Robinson’s 2012 bestselling Why Nations Fail suffer from similar shortcomings and pitfalls. More controversially, I –– an international affairs master’s student with admittedly questionable economics marks –– will argue for an alternative conception of development that privileges the voices of the poor in policy-making decisions.
Poor Economics succeeds where many prior development economics books have failed. More precisely, it includes evidence-based, empirical solutions to poverty problems supported by data from randomized controlled trials (RCTs). The randomistas (as I, and others, have called them) are convinced that incremental changes and “thinking small” can lead to massive outcomes in the worldwide battle against poverty. Furthermore, the randomistas are convinced that conventional wisdom is often wrong and that, instead of looking for obvious answers, we must dig deeper to find feasible solutions. Indeed, in the second chapter of Poor Economics, the authors dispute the common notion that all the poor need is cheap grain. Instead, they argue, the poor are just like us in that they value taste as much as nutrition and that evidence-based interventions must be grounded in providing food that people actually want to eat.
In the same chapter, the authors discuss an RCT in Kenya where “children who were given deworming pills in school for two years went to school longer and earned, as young adults, 20 percent more than children in comparable schools who received deworming for just one year.” Fair enough, but what about the children who didn’t receive any deworming pills? We’ve known for a long time that deworming pills are effective counters to anemia and general malnutrition and yet the authors still felt compelled to administer an RCT on the known question. Indeed, one shudders to think of the number of innocent children who have been sacrificed at the altar of science. Furthermore, “informed consent” seldom figures into the authors’ experimental designs. How many Kenyans would have objected to being assigned to the controlgroup deprived of deworming pills if given a voice in the matter?
In chapter three, the authors discuss how small incentives and reliable service quality can greatly increase access to public health instruments. Beyond the issue of informed consent, however, they fail to acknowledge what might work in one place may not work in another because of social, cultural, or other factors. In statistics, this is referred to as external validity, or the degree to which empirical findings can be generalized to larger populations. While these meticulous experiments may have strong internal validity, they nevertheless fail with regard to external validity and overall generalizability. Simply put, what works in one village in Rajasthan may not work in an Albanian town. In ignoring the cultural and social factors differing from nation to nation, they ignore a fundamental reality of challenges facing development initiatives around the world.
Chapter four sees the authors investigate the foundational issue of education and how to get children into schools. They demonstrate that teachers are often absent and curricula are often mismatched to student ability, leading to poor outcomes by students in South Asia (where they spend the majority of their analysis) and around the world. Beyond the aforementioned issues of informed consent and external validity, what really jars the reader about this chapter is its insistence that "dumbing down” the curricula is the only way to help the poor. Indeed, in the chapter’s conclusion, they concede that their approach may not sit well with education experts who view their proposals as “suggesting a two-tier education system.” Principally, what the authors lack is the ambition to overhaul the Indian and other education systems as they instead opt for incremental changes that are unlikely to pay off in the long run. After all, how will mere percentage points more of schooling pay off on the job market? Finally, I found it especially jarring when the authors pointed out that some ostensibly lowly food vendors could have been professors of economics in prior lives. As one particularly astute economist has noted, it is clear where the authors’ sympathies lie.
In the final chapter of their first section on “private lives,” the authors turn to the politically fraught territory of fertility. After examining the lives of girls in Kenya, they conclude that, oftentimes, economic incentives outweigh personal discretions in sexual partnering. Simply put, if bearing a child to an older man will provide you financial security, it makes sense to have the child with that man. Now, the authors found that initiatives communicating the comparatively high rates of STDs and HIV carried by older men did not necessarily reduce premarital sex, but they facilitated more age-appropriate relationships. As a consequence, less girls got STDs and HIV. What this experiment and the others reveal, however, is, despite good intentions, a desire to socially engineer the poor. Moreover, it seemed as if the authors used the poor as guinea pigs in order to extrapolate their findings to more prosperous populations.
The second half of Poor Economics on “Institutions” fails to think big and consider true institutional renewal. Instead, it is again focused on small, incremental changes. Consider the chapter on the poor and insurance. Beyond speculating as to the degree to which poor people understand insurance, the authors fail to consider that insurance may not actually be what poor people need. In fact, assimilating the poor into the brutal realities of financial capitalism may erode existing social relations and reify them into market relations. So the next time a drought occurs, the poor may turn to insurance companies rather than their neighbors. And, as Americans know, insurance companies are notoriously unreliable. Whether its focus is on microeconomics in the first half or macroeconomics in the second half, the authors’ economic reasoning is, well, poor.
