The Latest Nobel Prize in Economics
By David Henderson
The Royal Swedish Academy of Sciences will award the 2019 Nobel Prize in Economic Sciences to Abhijit Banerjee and Esther Duflo of the Massachusetts Institute of Technology and Michael Kremer of Harvard “for their experimental approach to alleviating global poverty.” The award reveals a deepening fault line among economists about how best to fight poverty.
What’s striking about the award is that the Nobel committee gave it to the three economists specifically for addressing “smaller, more manageable questions”—such as how to improve educational outcomes and child health in poor countries—rather than for big ideas. Mr. Banerjee and Ms. Duflo (a married couple) explicitly reject thinking about big questions in their 2011 book, “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty.”
To be sure, breaking down big issues into smaller questions can sometimes allow quicker and more-direct solutions to unwieldy problems. Yet in the case of global poverty, economists actually do have pretty good ideas about how to fight the problem on a macro scale. Namely, immigration and economic growth, which are by far the most reliable ways to improve the quality of life among the world’s poor.
These are the opening 3 paragraphs of my article, “Nobel Laureates Aim Too Low on Global Poverty,” Wall Street Journal, October 15, 2019 (print edition.) Under my agreement with the Journal, I can run the whole piece 30 days from now and I will do so.
It’s not an ideal title. My point in the article is that the Nobel committee aimed too low, although I didn’t use that exact wording. If the Prize were awarded simply for good technical economics work, it would be well deserved. The problem is that the Nobel committee oversold the work, writing as if it’s small ideas that make the big difference in global poverty. It’s not.
If you want to see someone who’s even tougher than me on the importance of this line of work, see Lant Pritchett’s piece written in June, “Randomizing Development: Method or Madness.” I read his piece after writing my first draft but it affirmed my strategy.