Esther Duflo, Nobel Prize-winning economist - BBC HARDtalk

[Music] hello and welcome to heart talk I'm Shawn Lane we use random trials to test where the medicines make a difference why not use the same method to find effective treatments for poverty the experimental trials in Africa and India run by Professor Esther Duflo and two colleagues have won them the Nobel Prize for economics among their findings food aid isn't helping the poor and the poorest kids don't need more books they need more time a fashionable idea wins the Nobel Prize but is this really a story of failure of economists to predict the financial crisis and of economics to offer big solutions [Music] [Music] [Music] professor Esther Duflo welcome to hard talk in awarding the prize to you and your fellow economist a badge it's managing Michael creamer the Nobel Committee praised your experimental approach to alleviating global poverty how would you explain what you do so the idea is very simple so it first of all you take a big problem like oh how are we going to eradicate poverty and you break it into manageable pieces pieces that you know smaller questions but questions that admit rigorous answers and then once you have one of those questions you deploy something which is very much like a randomized control trial in medicine to test one approach against the other so to give you an example suppose that you want to know how to motivate parents to take their kids to be immunized you could set up a randomized control trials where in some villages on the millet rosen you work with member of the communities that are going to mobilize parents to get their kids immunized in other communities you send reminder text messages and yet another set of communities you provide small incentive say in the form of cell phone minutes fake to parents and then you can do these things together in combination because you've randomly chosen the villages there is nothing different about them so you can track the immunization rate into different type of villages and see where it's higher and in the place where it's higher is the intervention that is the most insane you don't see what works and what doesn't average it Banerjee who's your partner as well as your fellow Nobel Prize winner and said originally people thought there's a kind of Loony agenda people often told us it's not how you learn about anything because it's too small to local how did you overcome that skepticism little by little you can think of each of this individual project as one dot and then together the dots start forming a picture and initially maybe the skeptic said well you know it might not replicate what you find in India might not be valid in Kenya and what you find in Kenya I won't surely be valid in the UK and we said yes possibly but the only way to find out is to try and you know multiply the number of trials and try to understand what generalizes what doesn't and also when something works out why it works out or why it doesn't and progressively this has really become a movement we really take these prizes not as recognizing the work of all three of us but cognizing the world the work of hundreds of people researchers a network this is Jay pal the thing you founded back in 2003 I think it's got about four up to 400 researchers a table itself has four node researchers and together they have completed all other ongoing thousand projects so this is a large number of project and of course there are even people who are not enjoyable who are using the same approach so I think this has demonstrated the power of this technique of this tool much more than any of our any of our single project could add just after the award was announced you said it's not so much like hard science more like engineering or plumbing breaking the big problem to manual chunks and solving them through a combination of intuition trial and error and so on I suppose that it's an interesting analogy but I mean the argument might be made that the plumber can certainly remove a blockage but the plumber can't ensure you're getting your fair share of the water of the basic resource isn't that a danger of the approach that you're kind of seeing the minut but actually you're not solving the fundamental problems that lie behind it this could be reversed which is that you could have the very best engineering solution in place and the most modern water technique water system in your city but if the plumbing is not there nobody's really going to get the water so I don't think we are claiming that all economists need to do is running on damage control trials and worrying about the plumbing all we are claiming is that some economists need to do some plumbing some of the time and I think by us winning the Nobel Prize doesn't mean everybody else should stop thinking about the big hard questions and should stop thinking about engineering and hard science but that that is also something that has its place in the in the fight against and in our thinking about economic policy more generally I want to come back to that if I may but I just wanted to pick up on the right particular area that you've been working in now for a couple of decades which is trying to work with the poorest communities particularly in the air in Africa has enough attention do you think traditionally be paid by tourists to the poor I think development economics as early as 15-20 years ago used to be not really a fashionable subject and I think one important thing that my co-winners did Michael Cameron Abhijit Banerjee is to put it back on the map as something that many people could do there always has been development economists doing great work but it remained a little bit on the margin some sometimes something that very few people decided to do fortunately that's not the case anymore I think that movement around on the mesh control trial has more generally become a movement of many white people deciding to study development economics and the problem of the poor and that of course what else would you be interested in how once you start thinking about the problem of a poor mother in a village in India and what you could do to make it better it's a little bit difficult to get focused on something else give us some examples of what you might call unexpected findings from your experiments where you've kind of given new insights so to give you one example I studied many years ago the the whole of woman in in politics and in particular of women mayor's so there are very few women in politics in India and in fact everywhere in the world pretty much in the absence of quota people don't take to elect women and India in 1993 made the bold move of decided that one third of the villages have to elect a woman as the mayor and it was a ton of pushback on this policy saying or the women are not ready they are not capable they are not leaders they don't have experience they don't have charisma the husband is going to understand so on and so forth and I didn't have a strong view on which way it was going to go but I thought has to be investigated and the way that India did it they kind of had a massive randomized control trial without knowing it because they randomly selected every election which place is needed to elect a woman so what me and my Indian courts are get but I did is we collected data we just collected data because the experiment had been run on what women do and what men do and we learned many important and expect unexpected things and the first one is that women are extremely effective leaders and they are doing very different things so they are not at all fun from their husband even this woman who seems shy and retiring and won't speak once they are in power they actually run the show and they are very powerful Elinor Ostrom was the first woman economics Nouriel ii do you think fewer women at the top of your profession has affected the kinds of things that are studied that are examined as it has it perhaps left some of these aspects particularly the life of the poor out of the equation most definitely and not just at the top of the profession but all over the profession unfortunately that not enough woman decide to study economics not enough undergraduate student peak economics as a field among them not enough stare in the ph.d program and then continue to become researchers and I think this is very damaging because it really has has an impact on what we study because women and men have slightly different centers of interest by the way it's not just women it's also minorities who are also underrepresented in fact even more and that deprives us as the field economics is a social science we should have different perspective you yourself criticized the way we attempt to tackle poverty through economic theories and simple problems beget simple solutions the field of anti-poverty policy is littered with the detritus of instant miracles that prove less than miraculous isn't your approach also guilty of that too because all these different little examples experiments that might have worked in one place everyone thinks well that's going to be a solution that discovers it doesn't apply elsewhere well that's that's not my question is and and so we are not claiming to have any silver bullets but we are looking if you win for the silver pellets you know many little things that might work we never won experiment is not going to tell you once you have done one experiment somewhere that you have to scale up that particular approach everywhere in the world without modification or without further research the way that it typically work is think of each of this project as one little dot one little data point that helps us understand one aspect of the problem before scaling your projects are replicated and you can see whether they tell essence carry out same thing for finding out that something is not effective actually let me put the criticisms that's been made of this approach and summer of last year 15 economists including three previous winners that the Nobel Prize for economics wrote that the real problem of the Aid Effectiveness craze as they call it is it narrows our focus to my two micro interventions it tends to ignore the broader macroeconomic political and institutional drivers of impoverishment and under development would you accept that that is a fair criticism the question is what are you going to do about those once you've said that there are big macro problem big institutional problem then what nothing so the question is you want to take for example take institution for sure the quality of institution generates as huge impact on the quality of life of people but once you've said that how do you improve institutions it's going to be - a set of steps for example you know that democracy is better than non democracy in expressing the will of the people once you've said that how do you actually organize a democracy how do people vote what do you need to put in front of people to make the right decision what are the right you know even as plumbing like as what I what are the right way to count people vote cetera but I can see why for a lot of particularly policy makers who have to wrestle with the pressures of competing demands for budgets your approach is very attractive because it basically doesn't challenge the fundamentals the way the system is organized and what these critics are saying is we're able to break big problems into manageable chunks as you put it try to solve them pragmatically but that may disguise a bigger more fundamental problem the system that we have devised for distributing wealth that creates this inequality because in the sense your work is about outcomes but it doesn't deal with why we get those outcomes so first of all I will take exception to that which is that in every study that every study that we do usually calls for follow-up studies that can help us get into the why so I think we get to a much deeper understanding of the why then big thought about you know in power good institutions are good once you've said that what you know once you've said that you have to get into what is a good institution when you pee you've been very candid about this to me back in 2010 the New Yorker quoted to Ted presentation you gave in California where he explained over several decades aim for Africa drizzle sharply but the GDP per capita not and then you told your audience we have no idea we're not any better than the medieval doctors and their leeches yes and the point is that in order to find out you have to get to the details you cannot say you cannot even answer the question of whether it is good or bad our market is good or bad or democracy is good or bad without being a bit more specific in in the question the attitude of saying oh well if you can only answer the small questions and it could make the world of the life of people a little bit better abated positive the system to me surprisingly for Nobel Prize we know in economics we do tend to not be you know extremists to me it's a bit like a Marxist attitude which is you have to make things as bad as you can to create revolution so in that sense I'm not like that I am a much more of a pragmatic person I'm not going to kind of collude with let's the system explored under its own pressure on you colluding with the system because if the system is bad and it's delivering bad outcomes if you say well that we will do these little local things that make things better for individuals that's great for the individuals you're helping but there's the point again of randomized trials is you're not there's no rational basis on who you choose to help you do it medical trials like the people who receive the placebo they're not getting the medical help people know their need maybe it's great there are many good systems where outcomes are very bad and I think when outcomes are very bad in good systems that fragile eise's those good systems and they are more likely to to collapse so a lot of the work I'm doing in India is in India which is generally a very well functioning you know the world biggest democracy and where there is a lot of progress to be made in the UK you know so many things are not working for the poor or for the middle class partly because they are just not very well organized so that creates anger that that and then draws the even reasonably good systems we have and puts you for example in the situation you have now in the UK so I think this idea that you cannot do anything meaningful without changing the system at least it's not it's not for me do you accept that in part the appeal of your approach with these kind of demonstrable outcomes has been a reflection of kind of sense that perhaps the bigger world of economists the grand world of macroeconomics has failed or at least failed to warn us to caution us to cause us to change behavior in a way that might have prevented things like the financial crisis of 10 years got me the Queen famously said why didn't anybody see this coming when she went to visit the London School of Economics and the economists couldn't tell her that has certainly not been a white movement for economics I think economists are not very good or even quite terrible at forecasting the economists when an article a few years ago showing that the IMF projection are no better than taking the current rate of course and keep it at that of predicting a constant rate of course so it carries a pattern that the problem is that usually they are expected to do that and because they are bad at it that really undermines the trust in economists so I think we need to also communicate to the public that that's not the only thing economics is about and it's also about trying to understand and behavior in a in a slightly more detailed way more empirical way more close to the gun where and give practical solutions to concrete problem that people can understand such as you know how do you get kids to learn in school or how do you most effectively help someone find a job after they've lost theirs you can't be accused of kind of giving up on your profession because your new book good economics for hard times in in a sense makes the case for why economics and economists are still needed but in it you and a budget Banerjee of right we seem to be back in the Dickensian world of hard times with the haves facing off against the increasingly alienated have-nots with no resolution in sight questions of economics and economic policy are central to the present crisis I mean I suppose the kind of the kind of key example of that really is is the it's the level of inequality that remains even in the richest countries I mean the four hundred richest households in 1950 in the United States paid seventy percent of their wealth their true income in tax in 2018 it was twenty three percent the poorest tenth of households 1950 they paid sixteen percent of their wealth into their incoming tax 2018 they paid twenty six percent these figures seem so striking and astonishing and yet they don't seem to provoke much real comment outside the world of economics I I think at the moment they do thanks to the worth of Emmanuel Saez and gabriel zucman that I think produced in everything I think they are in the public eye and that is very important and I think their work is going to contribute to rethinking of the tax systems and in particular tax on the rich that people have that you know the Western government have progressively given up on what we think needs to be done in complement to this approach is giving the the public much clearer idea of suppose you could raise more taxes on which what are you going to do with it and because with the increasing inequality and the stagnation and living condition for the vast majority of people in the Western world combined with this huge increase in inequality there has been a crisis of legitimacy of the government the economists on the expositor the least trusted about the old field of expertise only in the UK and you go pull 25% of people trusted them the people who are the only people who are less trusted than economists are politicians and when you're in a situation where you have to face with issues that are at heart policy and economic policy issues like inequality or climate change for example the idea that neither economists not policy makers I've been able to to keep a voice a trusted voice in that debate is very depressing and we heard this book to hold on to the hope that we could get back to it and get back to a reasonable discourse it's just so that a society we can start addressing these issues when your project to increase vaccination rates in India did improve them significantly from single things up to 40% but still not a majority you were very I should sound five and they say that about this you said some policies don't work and it isn't clear why they don't work in the way you expect it but you said you prefer your approach to the one that says the view that is a big conspiracy against the poor name your favorite enemy capitalism corruption whatever it means our approach you said is easier or Buffett who is a wealthy man who has no reason to worry about his own income says there is an enemy there is an enemy and it is really an enemy that is preying on the poor he says there's class warfare all right but it's my class of rich class that's making war and we're winning isn't it your obligation as an economist if you see the evidence of this to call that out I do think that the war metaphor is very powerful and when Buffett is not the only one to use it I think the populist movement have gained a lot of ground by putting themself as the leaders of the you know particular the downtrodden and as you know the downtrodden being the food solid here and I do think that it is it might be a good idea to to to take ownership again of that image and say you know if you've lost your job because you've been over placed by Robert or your job was outsourced somewhere or the factory that produced furniture has now been shut down because the functions made in China you are in a way of a turn of not a war that is food specifically against you but a veteran of the of an economic disruption world and we should not look at you with suspicion because you need welfare you should we should not look at you as as a sponge who is trying to take advantage of the system we should not look at you as a loser we should look at you as a hero and someone that we need to to meaningfully help so this is maybe what we adding to the taxation piece and the place where not only it's important to raise revenue and to curb inequality by raising taxes at the top but you need to show people what you're going to do with it that is going to help them directly and you need to really change both the rhetoric and the program's themselves to have a clear awareness that in the globalized world in which we live and in with the advent of artificial intelligence and mobilization of a lot of the workforce people are constantly faced with disruptions in their life and they are not and they are not as equipped to deal with this disruption as economists and policy maker like to think and therefore we need to be there to help them out and help them out and turn their lives around to something else at the end of the book you you issue a call to action and you conclude by saying it's for all of us to take responsibility economics is too important to be left to economists I hesitate to say this given that you pointed out that survey shows that only one group of people is less respected than economists in the UK and that's politicians but would you consider entering politics president macro is one among your biggest fans and you are somebody who is interested in solutions could you not be like one of those women mayors in the Indian village people buy what you could do if you took office so when I was about 20 I considered not entering politics like electoral politics but becoming a civil servants because I wanted to make a difference in the world and what stopped me at that time is the I didn't want to be in a situation where I had to make a lot of decision under pressure knowing well that this might not be the best decisions and I I found that idea uncomfortable I still do I think my I have the best job in the world which is the ability to think deeply about problems and take my time away from any electoral pressures which are very real and at the same time whenever there is a space for an opening on a conversation on policy and politics have people willing to listen to me so I think I'm gonna stay where I am professor Esther Duflo thank you for being with us on heart thank you so much [Music] [Applause] [Music] [Music]

Channel: BBC HARDtalk

Views: 54,864

Rating: 4.8618784 out of 5

Keywords: BBC Hardtalk, interview BBC, Esther Duflo, Nobel Prize, Economics, Shaun Ley

Id: J3ksTQjhzb4

Length: 24min 40sec (1480 seconds)

Published: Fri Nov 08 2019

Reddit Comments

[u/Warcrimes_Desu]

Don't have time to watch, but she had a good episode on some podcast about the importance of putting money into losing communities because people won't move. You can't just retrain people for better jobs and then give them aid and expect them to leave, she found.