Social media is abuzz with congratulations for today’s trio, from fellow academics.

Kaushik Basu, professor of economics at Cornell University, has hailed the creativity and impact of their work.

Wharton economics professor Katherine Milkman tweets that all three have helped reduce poverty.

Harvard assistant professor Peter Blair says Banerjee, Duflo and Kremer have all helped mentor academics in their field:

Global development expert Cindy Huang has an example of how Duflo’s work has shaped policy:

The AFP have written a profile of Esther Duflo. Here’s a flavour:

Esther Duflo, one of three people awarded the Nobel Economics Prize on Monday, is a high-profile academic feted in the United States and her home country France for her hands-on approach to studying how people can escape the poverty trap.

The 46-year-old professor, the youngest ever winner of the economics prize and only the second woman to gain the accolade, had been widely tipped since she picked up the prestigious John Bates Clark medal in 2010 which is 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 won the award with Indian-born Abhijit Banerjee of the US and Michael Kremer of the US, all hailed by the jury “for their experimental approach to alleviating global poverty”.

Duflo is married to Banerjee, who was her doctorate supervisor, and both are professors at the Massachusetts Institute of Technology (MIT).

The economist 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.

“Our vision of poverty is dominated by caricatures and cliches,” she told AFP in an interview in September 2017 while discussing the aim of her fieldwork and research as a professor at MIT in Boston.

“We need to understand the obstacles faced by the poorest and try to think about how we can help them move on,” she said.

Duflo is just as likely to be found out in the dusty and impoverished villages of northern India, where she has worked alongside local academics, as she is in the rarefied halls of US academia.

French economist Thomas Piketty, whose Capital in the Twenty-First Century examines the causes of inequality, has tweeted his congratulations:

Shobhini Mukerji of the South Asia branch of the Poverty Action Lab, in New Delhi (where Banerjee and Duflo conducted their work on poverty reduction) has welcomed the news.

Mukerji says (via AFP).

“This is huge for us.... India is where the seeds were sown for their research.”

The randomised control trials (RCTs) at the heart of Duflo, Banerjee and Kramer’s work aren’t without critics.

Splitting people randomly into groups is meant to allow researchers to change one variable (free healthcare, better funded schools, mosquito nets) and see the effect.

Dr Shialaja Fennell, Senior Lecturer at the Centre of Development Studies at Cambridge University, cautions that RTCs shouldn’t be treated as gospel:

“It is good that the contribution of development economics has been recognised. However, it is important to note that experimental methods such [randomised controlled trials] RCTs and natural experiments, tend to estimate abstract efficacy instead of actual efficacy.

The difference between these two types of efficacy arises due to a false assumption that a ‘gold standard’ of perfect identification is possible from the evidence obtained from the experiment. The evidence is then taken at face-value without due regard to the possibility of conceptual or ethical concerns.”

This blog post, on Brookings, points out that RTCs are better at measuring private goods (you either have it, or you don’t), than public ones (say, the benefits of lower pollution).

This blog post, on Oxfam, warns that creating truly randomised groups can be very hard - if, for example, people of a certain religion aren’t happy to take part. Also, once you’ve created your trial groups, it takes skill to properly implement the test - otherwise external factors can ruin the evidence.

Back in 2011, Madeleine Bunting wrote about the importance of Abhijit Banerjee and Esther Duflo’s work:

Duflo and Banerjee 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 to find out what works in development. In less than a decade, they have worked with local partners in a wide range of countries on nearly 240 trials. 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, a hunch or misplaced belief – and she once likened development interventions as rather like using leeches. She maintains that she can take the “guesswork out of policy making”.

Some don’t like the ethics of handing out bednets in one village and not the next, but 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”.

There is a huge amount that is positive here. How can anyone object to using rigorous evidence to make better policy? Furthermore, their research throws up all kinds of challenges to assumptions about how the poor behave and the choices they make. Ever wondered why there are so many half-built houses in developing countries? Answer: the poor save brick by brick. Slowly building a house can be their only way of saving because saving small amounts in banks is so expensive.

There is some fascinating stuff here: take for example a chapter on how the poor make decisions about healthcare. Duflo and Banerjee point out that there are some very cheap health interventions which often the poor are reluctant to sacrifice the time or the money to get, for example oral rehydration salt and sugar for a sick baby. It’s not that they don’t care, because the research shows that they worry a lot about their family’s health, nor is that they don’t spend money on it – they do and more than one might expect. So the puzzling conclusion is that the poor spend money on expensive cures rather than cheap prevention: in Indian surveys, they prefer to go to private doctors who over-medicated (most often injections, drips and antibiotics); their healthcare was often unnecessary and even dangerous.

But their approach is also controversial, because it blames poverty on three I’s -- Ignorance, ideology and inertia. Some might argue that deep-seated problems in power structures, both political and domestic, matter too....

Back in 2012, Esther Duflo had ‘Lunch with the Financial Times’ - a popular interview format which often elicits more insights than a standard face-to-face.

The FT’s John Gapper wrote:

Duflo, raised in Paris, is one of three children whose mother, Violaine, instilled in them a sense of social justice. “Part of me always wanted to do something useful for the world. It came from my mother. She is a paediatrician and she was active in a small NGO for the child victims of war. She used to travel to countries that had been through war and she would come back and show us slides to make us aware.”

She studied history with economics at the Ecole Normale Supérieure in Paris, an elite institution that turns out French academics and politicians, and the turning point came in her fourth year, spent in Russia.

During her meal of French onion soup, Eggs Benedict and a decaf cappuccino, Duflo discussed her research on women in the developing world:

Despite cultural barriers, several studies have indicated that putting women in charge of decision-making, for example on village councils in India, makes it more likely that children will be well-fed and better educated. So would poverty be eradicated if it were a woman’s world?

Typically, Duflo has a hard-headed view – it might help but it wouldn’t be enough by itself. “It is codified that women in Africa are in charge of getting food on the table so you get better outcomes for children when resources are transferred to women. But you cannot rely on women’s empowerment to make us all rich and healthy.

During the interview, Duflo -- then pregnant-- also explained she was taking US citizenship.... even though the food was better in France! As she put it:

My child is going to be American.....

And he [Banerjee] doesn’t speak French, so I don’t think he would like to go to France.”

Professor Costas Milas of Liverpool University tells me that all three winners are very highly regarded in their field:

Based on data from 56,942 authors, RePEc (Research Papers in Economics; a central index of economics research available here) places all 3 Nobel Prize Winners in the top 1‰ in terms of the popularity of their research work.

More specifically, in terms of Research Work by Number of Citations, Weighted by Recursive Impact Factors and Discounted by Citation Age, Esther Duflo is ranked 3^rd worldwide. Abhijit Banerjee is ranked 163rd worldwide and Michael Kremer is ranked 260^th worldwide.

Professor Avner Offer of Oxford University has welcomed today’s awards, saying:

“An excellent prize this time.

[It] is long overdue recognition for an important field and some of its very best practitioners. This field also constitutes a rejection of standard economic theory, which it invokes very little and often not at all.”

Offer has also co-written a history of the Nobel Memorial Prize in Economic Sciences, which explains how the Swedish central bank created the award to promote market-friendly economics -- helping fuel the rise of market liberalism.

Nat Dyer of PEP, a new economics organisation, has flagged up that this year’s award is notable for several other reasons, as well as the second female winner.

He says:

• Only second time poverty cited: the citation for this year’s winners (“for their experimental approach to alleviating global poverty”) is only the second time in the history of the economics prize that ‘poverty’ has been cited. The only other time was in 2015 with Angus Deaton [according to PEP analysis online here].
  
  
• Only third BAME male to win: Abhijit Banerjee becomes only the third male who is not white to win the top prize in economics - the other two being - Arthur Lewis in 1979 and Amartya Sen in 1998.

PEP (which stands for Promoting Economic Pluralism) also launched a ‘Not the Nobel’ prize this year. It was won by influential UCL Professor Mariana Mazzucato for her work ‘reimagining the role of the state and value in economics’.

You can really get to grips with Kremer, Duflo and Banerjee’s work by reading this 41-page scientific explainer.

It explains how the trio used empirical research to really dig into the causes of poverty, and to show in practices which policies actually work.

The explainer says:

While theory can pinpoint certain incentives, it does not tell us how powerful these are in practice. To give just a few examples, theory cannot tell us whether temporarily employing additional contract teachers with a possibility of re-employment is a more cost-effective way to raise the quality of education than reducing class sizes. Neither can it tell us whether microfinance programs effectively boost entrepreneurship among the poor. Nor does it reveal the extent to which subsidized health-care products will raise poor people’s investment in their own health.

Knowing the right quantitative answers to such specific questions is vital for enhancing human capital, increasing income, and improving health among the poor. Answering these questions requires an empirical approach that allows researchers to draw firm conclusions about causal effects.

Abhijit Banerjee and Esther Duflo (who, incidentally, are partners) took Kremer’s work in Kenya, and proved that simply forcing children to spend more time in school didn’t actually help tackle poverty.

The Nobel committee explains:

Banerjee, Duflo and their co-authors concluded that students appeared to learn nothing from additional days at school. Neither did spending on textbooks seem to boost learning, even though the schools in Kenya lacked many essential inputs. Moreover, in the Indian context Banerjee and Duflo intended to study, many children appeared to learn little: in results from field tests in the city of Vadodara fewer than one in five third-grade students could correctly answer first-grade curriculum math test questions.

In response to such findings, Banerjee, Duflo and co-authors argued that efforts to get more children into school must be complemented by reforms to improve school quality.

The Royal Swedish Academy have produced a ‘popular science backgrounder’ to explain Banerjee, Duflo and Kremer’s work on fighting poverty.

For example, it proved that healthcare initiatives were much more effective when medicine was provided for free:

A field experiment by Kremer and co-author investigated how the demand for deworming pills for parasitic infections was affected by price. They found that 75 per cent of parents gave their children these pills when the medicine was free, compared to 18 per cent when they cost less than a US dollar, which is still heavily subsidised. Subsequently, many similar experiments have found the same thing: poor people are extremely price-sensitive regarding investments in preventive healthcare.

Low service quality is another explanation why poor families invest so little in preventive measures. One example is that staff at the health centres that are responsible for vaccinations are often absent from work. Banerjee, Duflo et al. investigated whether mobile vaccination clinics – where the care staff were always on site – could fix this problem. Vaccination rates tripled in the villages that were randomly selected to have access to these clinics, at 18% compared to 6%.

The Royal Swedish Academy awards committee say they’re optimistic that more female economists will be recognised in the future.

They point out that Esther Duflo won the John Bates Clark Medal for economists under 40 (often called the mini-Nobel) in 2010 -- that’s a good clue to where future winners may come from.

That’s good news for this year’s winner Emi Nakamura (she’s Professor of Economics at University of California, Berkeley), and Amy Finkelstein of MIT (she won in 2012).

The committee also dismisses any notion that Duflo won because she’s a women - it’s because her research is so good (as is Banerjee’s and Kremer’s, of course!).

Q: What will you do with the prize money (the trio will share 9 million Swedish krona, or around £720,000)?

Duflo says that when she was eight or nine, she read that Marie Curie had spent her first Nobel Prize money on equipment for further research into radiation.

She hopes to do the equivalent for poverty research.

Q: What do you think about the risks from Brexit and trade wars?

We live in turbulent times, hard times, Esther Duflo replies, telling us:

Many people in rich companies are worried about their position in the world. They think they have lost their dignity and don’t have the place in the world they deserve.

That is probably at the root of much of the turmoil we are seeing.

She suggests that using the techniques she, Banerjee and Kremer have used in the developing world could help explain problems in the developed world.

Esther Duflo is also the youngest person to win the Nobel economics prize.

Banerjee, Duflo and Kremer have won the Nobel Prize in economics for their experiment-based approach to tackling poverty -- in the fast-growing area of development economics .

The key to their research is to take the daunting issue of global poverty, and break it down into smaller questions -- which can be more credibly answered.

For example, to find ways to imprive children health you would examine various experimental approaches, such as education methods, health systems, agricultural approaches, and access to credit.

Esther Duflo’s success means we have a second female winner of the Nobel prize in economics, 50 years after it was first awarded.

The first was Elinor Ostrom in 2009.

Not long now!

The Royal Swedish Academy of Sciences has filled up, ready for the final Nobel prize of 2019 to be awarded.

We’ve added a live feed to the top of the blog - you might need to refresh the page to see it.

Winning a Nobel prize changes someone’s life, and not always in a good way.

Seeing your life’s work recognised must be a great feeling, and the money can’t hurt either! But there are downsides -- including constant attention, and the danger that your every utterance suddenly carries rather more weight.

As we wrote last week:

Those who win a Nobel are often propelled from a quiet life running a laboratory or writing books to minor celebrity overnight. Invitations to give talks, attend parties and pronounce opinions on a wide variety of topics come flooding in. Some are thrilled to have a platform from which to raise political issues and gain access to politicians, business leaders and the media. For others, this comes as a downside. The Anglo-Dutch laureate Sir Andre Geim joked that “journalists’ questions” were one of the negatives.

Another physics laureate, Brian Schmidt told New Scientist magazine: “One of the pitfalls of being a Nobel winner is that our voices are too loud when it comes to providing personal opinion – and in this respect, I need to be far more careful than I used to be about what I say and what I write.”

But at least you get your pick of bright students? No according to one chemistry Nobel winner, Martin Chalfie, who reported struggling to recruit students since winning the prize.

Excitement is building, with just 30 minutes until the economics Nobel is awarded.

Bloomberg’s Noah Smith has come up with an impressive list of potential winners.

1) The New Keynesians: Economists who have examined causes of recessions, and explained how policymakers need to act when the business cycle deteriorates. There’s plenty of possible options, including: Michael Woodford, Stanley Fischer, Greg Mankiw, Nobuhiro Kiyotaki, Olivier Blanchard, Guillermo Calvo, Janet Yellen and David Romer.

2) Claudia Goldin, for her work on equality.

Smith explains:

Goldin identifies increasing education as a key driver of the fall in U.S. inequality in the early 20th century, and blames a slowdown in educational attainment for the reversal of that happy trend.

3) David Card of the University of California-Berkeley. His landmark studies of low-skilled immigration and minimum wages proved that neither were particularly damaging to local workers. They also changed the way economists used data.

4) Paul Milgrom, for his theoretical work on game theory, contract theory, financial modelling, and more!

Smith writes:

The economics Nobel tends to favor the work of pure theorists who work on the deepest problems. And few thinkers dig deeper than Stanford University’s Paul Milgrom.

He was a major figure in the creation of auction theory -- probably the most empirically successful and practically useful economic theory of all time, which is now used to power everything from Google ads to federal spectrum auctions.

5) Daron Acemoglu of MIT, for his work on political economy, and why some nations succeed while others fail.

His most important thesis is that social institutions are crucial for development and don’t change much over time -- places that develop institutions based on exploiting labor and extracting resources tend to do badly over the centuries, while those that create more inclusive systems flourish. More recently, Acemoglu has tackled the question of whether automation will make humans obsolete.

Back in 2016, the FiveThirtyEight website calculated that:

The typical winner of the Nobel in economics is a 67-year-old man, born in the United States, who is working at the University of Chicago when he wins.”

Little has changed subsequently, with five men in their 60s or 70s winning in the last three years (including Richard Thaler of Chicago).

Here are some facts on the Economics Sciences prize, from Nobelprize.org:

Number of Prizes in Economic Sciences

• 50 Prizes in Economic Sciences have been awarded every year since 1969.
• 25 Prizes in Economic Sciences have been given to one Laureate only.
• 19 Prizes in Economic Sciences have been shared by two Laureates.
• 6 Prizes in Economic Sciences have been shared between three Laureates.

Number of Laureates in Economic Sciences

• 81 individuals have been awarded 1969-2018. Here’s the full list

Youngest Laureate in Economic Sciences

• Kenneth J. Arrow was just 51 years old when he was awarded in 1972.

Oldest Laureate in Economic Sciences

• Leonid Hurwicz, who was 90 years old when he was awarded in 2007, which also makes him the oldest person to win any Nobel prize

Female Laureates in Economic Sciences

• Elinor Ostrom became the first female Laureate in 2019, and is still the only one

Here’s 2017’s winner, Richard Thaler, with some inspiring words for those who found academia a struggle <raises hand>: