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One such observation is that many
people are reluctant to adopt modern
technology. In a cleverly designed field
experiment, Duflo, Kremer et al. investi-
gated why smallholders — particularly
in subSaharan Africa — do not adopt
relatively simple innovations, such as
artificial fertiliser, although they would
provide great benefits. One explanation
is present bias — the present takes up
a great deal of people’s awareness, so
they tend to delay investment decisions.
When tomorrow comes, they once again
face the same decision, and again choose
to delay the investment. The result can be
a vicious circle in which individuals do Banerjee believes how many people have been affected by
not invest in the future even though it is these research results. One such estimate
in their long-term interest to do so. productivity differs comes from the global research network
Bounded rationality has important greatly, not only that two of the Laureates helped found
implications for policy design. If indi- (J-PAL); the programmes which have
viduals are present-biased, then tempo- between rich and poor been scaled up after evaluation by the
rary subsidies are better than permanent countries but also network’s researchers have reached
ones: an offer that only applies here and more than 400 million people. Howev-
now reduces incentives to delay invest- within poor countries. er, this clearly underestimates the total
ment. This is exactly what Duflo, Kremer Some individuals or research impact, because far from all
et al. discovered in their experiment: development economists are affiliated
temporary subsidies had a considerably companies use the with J-PAL. Work to combat poverty also
greater effect on the use of fertiliser than latest technology, while involves not investing money in inef-
permanent subsidies. fective measures. Governments and
Development economists have also others use outdated organisations have released significant
used field experiments to evaluate pro- resources for more effective measures
grammes that have already been imple- means of production for by closing many programmes that were
mented on a large scale. One example is similar products evaluated using reliable methods and
the massive introduction of microloans shown to be ineffective.
in various countries, which has been the The Laureates’ research has also had
source of great optimism. times possible to draw a straight line an indirect influence, by changing how
Banerjee, Duflo et al. performed an in- from research to policy. public bodies and private organisations
itial study on a microcredit programme Some of the studies we have already work. In order to make better decisions,
that focused on poor households in the mentioned have indeed had a direct im- increasing numbers of organisations that
Indian metropolis of Hyderabad. Their pact on policy. The studies of remedial fight global poverty have systematically
field experiments showed rather small tutoring eventually provided arguments begun to evaluate new measures, often
positive effects on investments in exist- for large-scale support programmes that using field experiments.
ing small businesses, but they found no have now reached more than five mil- This year’s Laureates have played a
effects on consumption or other devel- lion Indian children. The deworming decisive role in reshaping research in
opment indicators, neither at 18 nor at studies not only showed that deworm- development economics. Over just 20
36 months. Similar field experiments, in ing provides clear health benefits for years, the subject has become a flour-
countries such as Bosnia-Herzegovina, schoolchildren, but also that parents are ishing, primarily experimental, area
Ethiopia, Morocco, Mexico and Mongolia, very price-sensitive. In accordance with of mainstream economics. This new
have found similar results. these results, the WHO recommends experiment-based research has already
The Laureates’ work has had clear that medicine is distributed for free to helped in alleviating global poverty and
effects on policy, both directly and in- the over 800 million schoolchildren liv- has great potential to further improve
directly. Naturally, it is impossible to ing in areas where more than 20 per cent the lives of the most impoverished peo-
precisely measure how important their of them have a specific type of parasitic ple on the planet.
research has been in shaping policies in worm infection.
various countries. However, it is some- There are also rough estimates of letters@tehelka.com

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