Reflections on the 2019 Nobel Prize in Economics
The award of the 2019 Nobel Prize in Economics to Abhijit Banerjee and Esther Duflo of MIT, and Michael Kremer of Harvard University, has led to a flurry of blogs and op-ed pieces. Some of these have rightly been congratulatory of the Nobel Committee’s decision to award the Prize to a set of scholars which includes both the youngest and only second-ever female recipient, and an economist from a developing country.
Others have, also correctly, pointed out the limitations of the method popularized by these three economists.
Development economics has its day in the sun
As a development economist, I see value in recognizing the contributions of our work to the larger economics discipline through the Nobel Prize for Economics this year.
I recall the many economics conferences I attended in the 1990s and early 2000s in the United States and Europe — such as those held by the American Economics Association and the Royal Economic Society — where development economics was confined to the periphery.
When one attends these conferences now, there would be no shortage of sessions on development economics, representing meaningful progress for the field within the economics discipline and inspiring young graduate students in the audience to write their doctoral theses on the subject.
Further, the contribution of this year’s Nobel Prize winners to development economics has been substantial. The field mostly relied on secondary data (with some important exceptions) until the randomized controlled trial (RCT) revolution helped to make the collection of primary data a key component of its practice.
At the same time, the use of RCTs is but one method in an array of approaches, particularly suited to answer some questions but not others. There is an increasing danger in economics that the methods we adopt condition the questions we choose to ask.
RCTs can be useful in answering important development policy questions such as: how effective is microfinance? What can boost educational outcomes in Eastern Africa? But it cannot answer some of the more challenging questions in development economics, such as why do we see a lack of structural transformation in sub-Saharan Africa?
UNU-WIDER’s new work programme asks such fundamental questions on the challenges faced by low-income countries, and the methods it embraces are diverse in their approaches.
This is the way it should be in development economics — while we celebrate the award of the Nobel Prize in Economics to one sub-discipline of development economics, we should also continue to support a plurality of methods and recognize the important contributions of researchers using diverse methods and approaches. A lot of other work in development economics deserves a place in the sun too.
The views expressed in this piece are those of the author(s), and do not necessarily reflect the views of the Institute or the United Nations University, nor the programme/project donors.