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Esther Duflo: It pays to care about the poor

Richa Mishra Payel Majumdar Upreti | Updated on November 01, 2019 Published on October 31, 2019

Winning ways Esther Duflo believes that the entry of more women in economics will lead to policies that seek to change the world - Rajeev Bhatt   -  The Hindu

Noble Laureate Esther Duflo on why there are better things to fight for than just the growth rate, the fallout of male bias in economics, and what she liked about the Indian TV show Sacred Games

She has been described as a rockstar economist — two words that seldom go together. But even though the arc lights have not focused on her in India, as they have on her husband and co-winner Abhijit Banerjee since the announcement from Sweden, it’s clear that Esther Duflo rocks. She is the youngest and only the second woman recipient of the Nobel for economics since its inception in 1969.

Fame courted her early in her career — when the media coined the epithet — but she was still taken by surprise when the 2019 Nobel Prize was awarded jointly to her, Banerjee and Michael Kremer for their experiments that helped reduce global poverty. “This is special because none of us is anywhere near the end of our careers, so we weren’t expecting this at all. This is not the end of the conversation from us,” the 47-year-old French-American economist says.

The three worked with randomised controlled trial groups in India and other countries (similar to medical trials) and were successfully able to lift people out of poverty, the Nobel Foundation said in a statement. “As a direct result of one of their studies, more than five million Indian children have benefited from effective programmes of remedial tutoring in schools. Another example is the heavy subsidies for preventive healthcare that have been introduced in many countries,” it said.

It’s early morning in Boston — she and Banerjee both teach at the Massachusetts Institute of Technology — when we catch her over Skype. They are currently working with the state governments of Tamil Nadu, West Bengal, Haryana and Punjab, among others in India, on pre-primary education. “Rukmini Banerji, the CEO of Pratham [an NGO that works in the field of education], says that people suddenly become very interested in early childhood once they have children,” Duflo says with a laugh. She and Abhijit Banerjee have two children, aged 5 and 7.

Duflo, together with Pratham and a friend, Harvard-based psychologist Moira R Dillon, has developed a curriculum that seeks to get a child prepared for the first grade in school. This can also counter early school dropouts.

“We have developed a curriculum for 4-5-year-olds that involves games and taps a child’s intrinsic cognitive abilities. It doesn’t rely on the knowledge of symbols or name of shapes or any formal knowledge that everyone has usually. You can train these abilities that kids already have and then leverage this to teach them numbers and other formal rules of education. You can do all that before they enter first grade. The school curriculum in India is too demanding, and we are trying to change that, but no harm in getting the kids ready for what’s coming,” she says.

Duflo, Banerjee and Kramer (who teaches at Harvard) have been working with different institutions in the country to tackle poverty over the past two decades. One of their earliest programmes was with Seva Mandir, a non-profit organisation that works towards community development and education, among other efforts.

“When Banerjee and Kramer first met me at Seva Mandir, I never imagined it would turn into so many years of deep and meaningful work,” says Neelima Khetan, a social advisor who worked with the economists at the NGO based in Udaipur, Rajasthan. Seva Mandir was then trying to battle teacher absenteeism, and the organisation was able to successfully make a difference with the economists’ help.

The experiments involved installing cameras in the classroom, and encouraging teachers with positive incentives. The team also worked with the Haryana government on improving immunisation rates in the state. A kilo of lentils given to the parents of each vaccinated child led to an increase in the number of vaccinations.

“ We found in the process that the measures needed to be taken were very cheap, using resources already at their disposal, to turn the programme into a success. It will now be scaled up in the state,” Duflo says.

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In her latest book Good Economics for Hard Times (written with Banerjee and published late last month by Juggernaut), she writes that every state does not have to follow the same policies, for people everywhere are different. Take migration, she says. People do not always migrate to places that are more economically developed for a better life or improved wages.

“The places people seem most desperate to leave — countries such as Iraq, Syria, Guatemala and even Yemen — are far from being the poorest in the world. Per capita income in Iraq, after adjusting for differences in cost of living (what economists call Purchasing Power Parity or PPP) is about 20 times that in Liberia, and at least 10 times as high as in Mozambique or Sierra Leone,” she writes.

And yet, racist alarmism, a proven tactic to win votes across the world, has people believing that migrants, especially those from a different ethnic or religious group, are taking over countries. Duflo is worried about the rise in polarisation, which comes along with worries over the slowdown.

“I do hope that you as a country decide that there are many more things to fight for than the growth rate. The growth rate is one indicator of well-being, not the be-all and end-all,” she says.

Giving the example of Japan and China, she stresses the need to refocus on social indicators and not growth alone. “We need to acknowledge that growth is a bit behind us, and beyond our control. When growth started failing in Japan they panicked because their national pride was attached to growth. As a result they did all sorts of silly things, and transformed what would be a slowdown into a huge crisis,” she says.

On the other hand, China was talking about a new normal as early as 2014, and looking at a 7 per cent instead of a 14 per cent growth rate. “All the newspapers were relaying the message. The targets are more reasonable, and policymakers could concentrate on other things like pollution. So if we accept the fact that growth is currently what it is, our standard of success changes,” she says. What matters, she adds, is how the disadvantaged members of society are doing.

She stresses that this is sound economics. “After the 2008 economic crisis, you can now differentiate between countries that decided to spend on public expenditure to improve the situation and those that didn’t. If there is one thing that we do know, it is that we can shift from a bad situation to a terrible situation if there is a demand collapse. A demand collapse is more likely to happen if social expenditures are slashed. Even if you don’t care about the poor, it is important if you want to manage the macroeconomic situation.”

Unfortunately, all across the world, policymakers rush to cut social spending in times of depression, she rues. “Preserving social expenditure and even infrastructure expenditure is important,” she points out. “It’s just good economic sense. But it’s very hard to convince people of that because they tend to think of the economy like the family budget: If things don’t go well, you should save. But economies are not families.”

A low economic rate also does not necessarily translate into poor health. “Countries in Africa have been able to improve the lives of the most unfortunate in indicators such as infant and maternal mortality and primary education. All of these are huge successes of the last 30 years. ”

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Duflo feels that there in an inherent male bias in economics, perhaps because most economists — especially senior academics and researchers — are men. “People need to realise that economics is not interest and profit. Perhaps if more women came into the field, we would have policies that genuinely look at changing the world, and not just making a few people richer,” she says.

Duflo and Banerjee travel extensively for projects, but when not working, they spend time together. “We are very close as a family, and a lot of time just goes in being with our children whenever we are not travelling.” She likes to run to keep her head clear, while Banerjee has taken up cooking as a passion (he is known for his French cuisine, she says) and they enjoy world cinema. Duflo particularly liked the latest season of Sacred Games, a Nawazuddin Siddiqui-Saif Ali Khan series on Netflix “The one with the nuclear bomb challenge was very memorable,” she says. The season ends with a suspense-filled turn, with an earth-shaking question unanswered. Not quite what you thought would appeal to someone who has been seeking answers — from the ground — to her many questions.

Published on October 31, 2019
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