Combating Poverty
Source: By PP Sangal: The Financial Express
This year’s Nobel prize in economics for experiments in poverty alleviation brings a new hope to the poor in regions like India, China, Africa, Latin America and South-East Asia, where about 2 billion people still reside in extreme poverty. Further, the award would boost attainment of 17 UN Sustainable Development Goals, which came into force on January 1, 2016. It is note-worthy that Abhijit Banerjee was on the panel of experts finalising the Sustainable Development Goals. The very first goal entails ‘ending poverty in all its forms everywhere’ and other 16 goals jointly contribute towards this objective.
Now, before exploring the utility of the research of three Nobel laureates for poverty alleviation in India’s context, let’s briefly discuss the history of poverty mitigation efforts in various poor countries. For example, India launched its massive ‘Community Development Programme’ on October 2, 1952 for development of rural areas and the poor. Since then, these programmes have continuously been transformed to accomodate requirements of the poor. Other poor nations around the world have also made efforts from the Indian experience. But the benefits to the poor are not commensurate with the huge spending.
The three Nobel prize winners—Abhijit Banerjee, Esther Duflo, and Michael Kremer—in their approach, have determined through experiments as to what works and what does not in terms of implementation of schemes focused on income, health and educational standards. They have pioneered new ways to fight poverty by concentrating on smaller, more manageable issues. Their research shows that smaller and more precise questions are often best answered through carefully designed experiments.
The husband and wife duo—Banerjee and Duflo borrowed the methodology from the pharmaceutical industry. For instance, they studied two infant immunisation campaigns in some villages of Udaipur (Rajasthan). It brought out that a slightly tweaked campaign, which offered 1kg of ‘daal’ for every mother who brought their children for immunisation, improved turn-out. Similarly, Kremer, in 1990s, used fields experiments to test interventions to improve school results in western Kenya. He helped develop programmes to incentivise distribution of vaccines.
They have done some experimental studies which have impacted policies at the international level as well. Their research led World Health Organisation to recommend that medicines should be distributed for free to over 800 million school children living in areas where 20% of them have a specific type of parasitic worm infection. The studies also paved the way for heavy subsidies for preventive healthcare that have been introduced in many countries.
In specific reference to India, Banerjee and Duflo introduced large scale support programmes on remedial tutoring; these have now reached 5 million children. In Mumbai and Vadodra, they conducted a study to evaluate learning outcomes. The results indicated that teaching is not attuned to the needs of students. Learning outcomes improved in schools that were provided with teaching assistants to support students with special needs.
Earlier, Nobel prize winners Amartya Sen (1998) and Angus Deaton (2015), who also focused on poverty, have questioned RCT methodology. Sen adopts an institutional approach, as does Deaton. They believe it is possible to devise effective welfare schemes such as ‘Kudumbashree’ in Kerala, without resorting to RCT, if socio-political democratic institutions are responsive to the needs of people.
Banerjee,Duflo and Kremer are also credited for creation of Abdul Jameel Poverty Action Laboratory (J-PAL) in MIT. Over 500 RCTs in 10 countries including India where evaluation of pollution control in Gujrat, MGNREGA and numerous welfare schemes in Tamil Nadu, Andhra Pradesh and Kerala have been completed. J-PAL has designed innovative randomised evaluations to identify effective approaches to poverty reduction and associated global challenges. It has also worked with decision makers in the governments, NGOs and private sector to help them apply results from randomised evaluation.
J-PAL’s on-going evaluations in India include improving immunisation rates in Haryana, strengthening early learning in pre-school centres in Tamil Nadu, saving ground water through better irrigation practices in Punjab and testing the impact of ‘ Direct Benefit Transfer (DBT) across Indian states with NITI Aayog.
In view of the above, though no one can deny the value of the research done by three Nobel laureates for poverty mitigation, but, at the same time, one need not lose sight of corruption and funds leakages in implementation of poverty schemes, across geographies including India, which is a great challenge and adversely impacts the programmes. However, according to Banerjee, implementation of MGNREGA scheme has shown how leakages can be plugged quite effectively through DBT. NSS data shows that while in 2007-08, the poor received only 50% of the expenditure, now; it is 80 to 90%. So, improvements can’t be ruled out.
India should work on the research of 2019 Nobel laureates to combat poverty in various forms as enunciated in Sustainable Development Goals. We also need to set up a J-PAL like think- tank in India with the support and guidance of Banerjee and Duflo, who have a lot of experience of working in India.
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