Abhijit Banerjee, Esther Duflo, and Michael Kremer
Citation: For their experimental approach to alleviating global poverty.
The key idea
Don't theorise about what reduces poverty — test it. Randomised Controlled Trials (RCTs) applied to development programmes: deworming, micro-credit, conditional cash transfers, teacher incentives.
The explanation
Kremer's 1990s deworming experiments in Kenya kicked off the credibility revolution in development economics. Banerjee and Duflo founded J-PAL (the Abdul Latif Jameel Poverty Action Lab) and produced hundreds of RCTs on poverty programmes. The methodology forced development economics to confront causal-identification standards.
Why Africa should care
Of the three laureates' RCT base, perhaps half is conducted in African countries. Deworming evidence from Kenya influences WHO policy. Microfinance RCTs in West Africa shaped global understanding of credit's modest impact. Conditional cash transfers, teacher contracts, agricultural extension — each has an Africa-grounded RCT body. J-PAL Africa and IPA Kenya are direct institutional descendants.
How to use it
Before scaling any social programme, ask if it has been tested in an RCT in a similar context. If not, fund a pilot before national rollout. Most 'common-sense' programmes underperform once tested.
Watch out for
RCT findings are conditional on the population, context, and time of the experiment. Generalising 'deworming raises wages' from one Kenyan setting to all African settings overreaches. Local replication matters.
Canonical works
- Abhijit V. Banerjee and Esther Duflo (2011) "Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty" PublicAffairs
- Edward Miguel and Michael Kremer (2004) "Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities" Econometrica
- "J-PAL: The Abdul Latif Jameel Poverty Action Lab"
More from Search, experiments, and climate · 2010-2019
- 2010Peter Diamond, Dale Mortensen, and Christopher Pissarides
Labour markets don't clear instantly. Workers and firms search; matches form slowly. Equilibrium involves simultaneous unemployment and vacancies. The Beveridge curve traces the relationship.
- 2011Thomas Sargent and Christopher Sims
Sargent: rational-expectations equilibrium estimation gives us a way to recover structural parameters from data. Sims: vector autoregressions and impulse-response functions reveal causal patterns in macroeconomic data without imposing strong theoretical priors.
- 2012Alvin Roth and Lloyd Shapley
Shapley: stable matching in two-sided markets (deferred-acceptance algorithm). Roth: take the theory to the field — kidney exchange, school choice, medical residency.
- 2013Eugene Fama, Lars Peter Hansen, and Robert Shiller
Fama: efficient markets — prices reflect all available information; predicting short-term returns is essentially impossible. Shiller: prices are too volatile to be explained by fundamentals alone; behavioural and bubble-prone. Hansen: GMM — the workhorse estimator for testing asset-pricing models.
- 2014Jean Tirole
Industrial organisation needs game theory + information economics. Optimal regulation of natural monopolies requires accounting for information asymmetries between regulator and firm. Two-sided platforms (credit cards, OS) have specific competitive dynamics.