Global poverty has been cut by more than half in the past couple of decades and one reason may be a new type of poverty-buster. A new branch of economics has radically changed views about poor people and what they are capable of. On Monday, three leaders in the field were honored with the 2019 Nobel Memorial Prize in Economic Sciences.
The three, Michael Kremer of Harvard University, and Esther Duflo and Abhijit Banerjee, both of Massachusetts Institute of Technology, have pioneered an experiment-based approach to ending poverty, doing real-world testing one microproject at a time rather than relying on the kind of big theories and statistical arguments found in traditional economics.
Here’s how Dr. Duflo explains the approach: “It starts from the idea that the poor are often reduced to caricatures and even the people that try to help them do not actually understand what are the deep roots of [their] problems.”
“What we try to do in our approach is to say, ‘Look, let’s try to unpack the problems one-by-one and address them as rigorously and scientifically as possible’,” she added.
The premise is that poor people are already smart decision-makers who, with well-tested incentives to learn and earn, can lift themselves up. “A little bit of hope can allow people to realize their potential,” Dr. Duflo says.
Hope, of course, is not a strategy, as generals like to say. These economists and their followers have tested dozens of modest interventions to find out which ones work. Often the problem is not a lack of resources but a tailoring of assistance that emphasizes motivation and inspiration through example. Poor people are asked to offer perceptions of themselves or to identify the poorest among them.
Starting from these self-conceptions, various solutions are tested through “randomized control trials.” In India, for example, Dr. Banerjee tested ways to help low-performing students and found certain types of remedial tutoring brought the most progress. This individualized approach is now used for more than 5 million Indian children. In another project, researchers found farmers were more likely to adopt temporary subsidies for fertilizers rather than permanent assistance. In their eyes, the temporary aid better honored their sensibilities.
The researchers keep looking for the ultimate basis of hope. They know it rests on more than wishful thinking, new aspirations, or the freedom to define one’s future. One scholarly study cites hope as a “spiritual trust in God or other transcendental force.” Whatever the source, this new field, now aptly honored with a Nobel, is changing expectations about what poor people are able to do. The research has shown a resilience equal to the people it studies.