The 2019 Nobel Prize in economics was awarded Monday to three economists: Prof Abhijit Vinayak Banerjee, his wife Prof Esther Duflo and Prof Michael Kremer, for their decades-long research on how to move people out of poverty.
While Banerjee and Duflo are professors at the Massachusetts Institute of Technology (MIT), Kremer is with Harvard University and the three have often worked together.
The award this year created a few records.
Duflo, 46, is the youngest person ever and only the second woman to receive the economics prize.
This would be the first time in history that a husband-wife couple have been awarded the Nobel Prize in Economics – although five other couples have won the Nobel prize in other categories earlier. Banerjee was born in India and educated in the same college that has produced another Nobel prize winner in Economics: Dr Amartya Sen.
Why did the trio win the Nobel prize?
According to the Royal Swedish Academy of Sciences, the work of Banerjee and his colleagues had shown how poverty could be addressed by breaking it down into smaller and more precise questions in areas such as education and healthcare, making problems easier to solve.
It said the results of their studies and field experiments had ranged from helping millions of Indian schoolchildren with remedial tutoring to encouraging governments around the world to increase funding for preventative medicine.
As Duflo explained in her phone call during the award announcement: “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’.”
Where did Banerjee grow up?
Born in 1961, Banerjee was educated at the South Point High School in eastern Indian city of Kolkata, before progressing to Presidency College in the city – the same college where fellow Nobel laureate Dr Amartya Sen earned his BA in Economics.
After completing his bachelor’s degree in economics in 1981, Banerjee studied at the Jawaharlal Nehru University in New Delhi – from where he obtained his Master’s degree in Economics in 1983.
He completed his doctoral studies in Harvard in 1988 and briefly taught there along with Princeton University, before moving to MIT where he is currently the Ford Foundation International Professor of Economics.
Who were his major influences?
Banerjee credits his parents — Deepak and Nirmala Banerjee — as the biggest influences on his intellectual growth. While his mother was a professor of economics at the Centre for Studies in Social Sciences in Kolkata, his father was the head of the Department of Economics at Presidency College.
In receiving the prestigious Malcolm Adiseshiah Award in 2001, Banerjee acknowledged that it was under his parents’ intellectual stimulus that he became “a social scientist by instinct long before I had any formal interest in social science and even longer before I realized that I was meant to be one”.
Among the teachers who persuaded him to study economics were Prof Tapas Majumdar and Prof Anjan Mukherjee, while at Harvard he mentions Prof Eric Maskin as his strongest influence.
Despite his formidable credentials in economics, Banerjee claims that he finds “reading history more fun”.
What is the Abdul Latif Jameel Poverty Action Lab all about?
Banerjee and Duflo are most well known for their work through the Abdul Latif Jameel Poverty Action Lab, known as J-Pal, which has pioneered the use of randomised controlled trials (RCT) to find out what works in development.
Banerjee founded J-Pal in 2003 along with Duflo and Sendhil Mullainathan and remains one of the directors of the lab.
As Duflo put it in a Ted lecture, much of development policy has until now been on a par with medieval medicine — doing things based on habit, an intuition or a misplaced belief — and she once likened development interventions as rather like using leeches.
By using RCT, the economists maintain, they can take the “guesswork out of policy making”.
What are the other awards won by Banerjee?
The list is nearly endless, but here’s a summary: Banerjee is a past president of the Bureau for the Research in the Economic Analysis of Development, a Research Associate of the NBER, a CEPR research fellow, International Research Fellow of the Kiel Institute, a fellow of the American Academy of Arts and Sciences and the Econometric Society, and has been a Guggenheim Fellow and an Alfred P. Sloan Fellow and a winner of the Infosys prize.
He is the author of a large number of articles and four books, including Poor Economics, which won the Goldman Sachs Business Book of the Year.
He is the editor of three more books and has directed two documentary films. He has also served on the UN Secretary-General’s High-level Panel of Eminent Persons on the Post-2015 Development Agenda.
What about his personal life?
Banerjee was married to his childhood friend from Kolkata, Dr Arundhati Tuli Banerjee, a lecturer of literature at MIT. They had one son together before Abhijit and Arundhati divorced.
Banerjee lived with Duflo — his co-researcher and former doctoral advisee — for 18 months and had a child together in 2012. Banerjee was also a joint supervisor of Duflo’s doctoral thesis at MIT in 1999.
They formally married in 2015.
What has been Banerjee’s advice for the Indian economy?
Banerjee was consulted by India’s opposition Congress party, ahead of national elections in May this year about offering financial aid to the poor.
“At some broad level, we were sympathetic to the idea that India as a newly middle-income country should do something for its desperately poor,” Indian news channel NDTV quoted Banerjee as saying in March.
He was also part of a group of 108 Indian and foreign economists and social scientists who raised concerns over “political interference” in statistical data presented by the Indian government, and was critical of the 2016 demonetisation program that took almost 90% of India’s cash out of circulation.
How do Banerjee’s theories work in real life?
Banerjee and his colleagues found through RCT that even small differences in prices can lead to dramatically different health outcomes, particularly in preventive care.
Kremer, for instance, discovered that 75 per cent of poor parents would give their children deworming pills for parasitic infections when the medication was free, compared with 18 per cent when the medicine cost less than $1, according to the Royal Swedish Academy of Sciences.
After these findings, the committee said, the World Health Organization recommended that medicine be distributed for free to more than 800 million schoolchildren in areas where more than 20 per cent have a certain kind of parasitic worm infection.
Similarly, in some villages of India, people didn’t like the ethics of handing out bednets while the next one actively preferred it Duflo and Banerjee’s argument is that we need to know what works and why, rather than the scattergun assumptions we have relied on up to now.
Should the bednets be free or sold for a small fee?
They talk of development as an “accumulation of small steps, each well thought out, carefully tested and judiciously implemented”.
Who is Esther Duflo?
The 46-year-old Duflo, born in Paris, is the youngest person ever and only the second woman to receive the Nobel in Economics. The first was Elinor Ostrom in 2009, and Duflo noted that the profession is not always a welcoming one for women.
She is a high-profile academic feted in the US and her home country France for her hands-on approach to studying how people can escape the poverty trap.
She was widely tipped for the Nobel since she picked up the prestigious John Bates Clark medal in 2010 — often a first step to the Nobel award.
But her age, gender and speciality - development economics - make her stand out among past recipients of the prize, who have traditionally been older, male and often American.
She made her name conducting research on poor communities in India and Africa, seeking to weigh the impact of policies such as incentivising teachers to show up for work or measures to empower women.
Her tests, which have been likened to clinical trials for drugs, seek to identify and demonstrate which investments are worth making and have the biggest impact on the lives of the most deprived.
So how does Banerjee and his colleagues plan to use their Nobel prize money?
Asked by a reporter in Stockholm what she would do with the 9 million Swedish crown ($915,300) Nobel economics prize, Duflo said she as a child read about how the first woman to win a Nobel Prize, Marie Curie, used her money to buy a gram of the element radium.
“I guess we’ll talk between the three of us and figure out what is our gram of radium,” Duflo said.
What is the Nobel Prize in Economics?
The official name for the Nobel Prize in Economics is quite complicated — it’s called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel!
It’s the only Nobel not originally included in Alfred Nobel’s 1895 last will and testament and was established in 1968 to celebrate the Swedish central bank’s 300th anniversary.
While it’s an award for outstanding contributions mainly to the field of economics, but it could also be awarded in other fields of social sciences, such as political science, psychology, and sociology — if they impact economic issues.
The prize is administered and referred to along with the Nobel Prizes by the Nobel Foundation, and Laureates receive the award at the same ceremony.
Who are the previous winners of the Nobel Prize in Economics?
Since it was first awarded in 1969, Americans have dominated the prize, and only two women have won. Here is a list of the winners of the past 25 years:
2019: Abhijit Banerjee (US), Esther Duflo (France-US), Michael Kremer (US)
2018: William Nordhaus (US) and Paul Romer (US)
2017: Richard Thaler (US)
2016: Oliver Hart (Britain-US) and Bengt Holmstrom (Finland)
2015: Angus Deaton (Britain-US)
2014: Jean Tirole (France)
2013: Eugene Fama, Lars Peter Hansen and Robert Shiller (US)
2012: Alvin Roth and Lloyd Shapley (US)
2011: Thomas Sargent and Christopher Sims (US)
2010: Peter Diamond and Dale Mortensen (US) and Christopher Pissarides (Cyprus-Britain)
2009: Elinor Ostrom and Oliver Williamson (US)
2008: Paul Krugman (US)
2007: Leonid Hurwicz, Eric Maskin and Roger Myerson (US)
2006: Edmund Phelps (US)
2005: Thomas Schelling (US), Robert J. Aumann (US-Israel)
2004: Finn Kydland (Norway), Edward Prescott (US)
2003: Robert Engle (US), Clive Granger (Britain)
2002: Daniel Kahneman (Israel-US) and Vernon Smith (US)
2001: George Akerlof (US), A. Michael Spence (US), Joseph Stiglitz (US)
2000: James Heckman (US), Daniel McFadden (US)
1999: Robert Mundell (Canada)
1998: Amartya Sen (India)
1997: Robert Merton (US), Myron Scholes (US)
1996: James Mirrlees (Britain), William Vickrey (US)
1995: Robert Lucas Jr (US)
- With inputs from Reuters & AP