SVERIGES RIKSBANK PRIZE
What’s in news?
The Royal Swedish Academy of Sciences has decided to award the 2019 Sveriges Riksbank Prize to Abhijit Banerjee, Esther Duflo, and Michael Kremer “for their experimental approach to alleviating global poverty”.
- The 3 will equally share the prize money of 9 million Swedish krona (about $916,798/Rs.6.53 crore).
- It is the second time a woman has bagged the prestigious award and it is a first for a husband-wife duo to win in this discipline — Mr. Banerjee is married to Ms. Duflo.
- The research conducted by this year’s Laureates has considerably improved ability to fight global poverty.
- In just two decades, their new experiment-based approach has transformed development economics, which is now a flourishing field of research.
- Banerjee, Duflo and Kremer, who have been working together since the mid-1990s.
- Both Mr Banerjee and Ms Duflo are professors at the Massachusetts Institute of Technology (MIT).
- The couple decided to begin work on the world’s poorest and how markets and institutions work for them.
- Rather than focussing on big picture questions, they divided the issue into smaller, more manageable and measurable questions.
- For example, within poor health, for instance, they look at nutrition, provisioning of medicines, and vaccination, etc.
- Within vaccinations, they try to ascertain “what works” and “why”.
- They then showed that these smaller questions could be best answered through carefully designed experiments among the people who are most affected. This thought process has resulted in what are called Randomised Control Trials (RCT)
- The team questioned assumptions like the poor eat as much as they can.
- Using an 18-country data set on the lives of the poor, the economists found that food represented 36-70% of the consumption of the extremely poor living in rural areas and 53-74% among their urban counterparts.
- Also that when they did spend on food, they spent in on “better-tasting, more expensive calories” than micronutrients.
- Nutrition is a conundrum in developing countries. The couple argue that things that make life less boring are a priority for the poor – a TV set, something special to eat, for example.
- In one location in the northern Indian state of Rajasthan, where almost no one had a TV, they found the extremely poor spent 14% of their budget on festivals.
- By contrast, in Nicaragua, where 56% of the poor households in villages had a radio and 21% owned a TV, very few households reported spending anything on festivals.
- Their work also suggested governments and international institutions need to completely rethink food policy.
- Providing more food grains- which most food security programmes do – would often not work and help little for the poor to eat better because the main problem was not calories, but other nutrients.
- Findings in india shows that the poor do not eat any more or any better when their income goes up; there are too many pressures and desires competing with food.
- On schooling strong evidence shows that employment of contract teachers is generally a cost-effective way to improve student learning.
- Governments across the world, including in India, spend big money on social schemes without the vaguest of ideas on whether their objectives have been met.
- The Field-Work Based Approach that these economists have perfected has revolutionized the field of development economics and made it more relevant in policymaking.
- The government would do well to borrow from the research of these laureates to understand the impact of its several schemes, and where necessary, tweak them to derive maximum benefit for the thousands of crores of rupees that it spends.
About the prize:
- Annual prizes for achievements in physics, chemistry, medicine, peace and literature were established in the will of Alfred Nobel, the Swedish inventor of dynamite who died in 1896. The prize in economic sciences was added by Sweden’s central bank in 1968.
- In 1968, Sveriges Riksbank (Sweden’s central bank) established the Prize in Economic Sciences in Memory of Alfred Nobel, founder of the Nobel Prize.
- The Prize is based on a donation received by the Nobel Foundation in 1968 from Sveriges Riksbank on the occasion of the Bank’s 300th anniversary.
- The first Prize in Economic Sciences was awarded to Ragnar Frisch and Jan Tinbergen in 1969.
- The Prize in Economic Sciences is awarded by the Royal Swedish Academy of Sciences, Stockholm, Sweden, according to the same principles as for the Nobel Prizes that have been awarded since 1901.
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