Esther Duflo

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(From left) 2019 Nobel laureates in Economic Sciences Michael Kremer, Esther Duflo, and Abhijit Banerjee at a press conference at the Royal Swedish Academy of Sciences, Stockholm, December 7, 2019.

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Esther Duflois a French-American economist who, with Abhijit Banerjee and Michael Kremer, was awarded the 2019 Nobel Prize for Economics (the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel) for helping to develop an innovative experimental approach to alleviating global poverty. Duflo, Banerjee, and Kremer, often working with one another, focused on relatively small and specific problems that contributed to poverty and identified their best solutions through carefully designed field experiments, which they conducted in several low- and middle-income countries over the course of more than two decades. They also explored methods for generalizing the results of particular experiments to larger populations, different geographic regions, and different implementing authorities (e.g., nongovernmental organizations [NGOs] and local or national governments), among other variables. Their fieldwork led to successful public policy recommendations and transformed the field of development economics (see economic development), where their approach and methods became standard. Duflo was the youngest person, and only the second woman, to receive the Nobel Prize for Economics.

Duflo earned maitrise degrees (approximately equivalent to four-year bachelor’s degrees) in economics and history at the École Normale Supérieure (1994); a master’s degree in economics from DELTA, an association of French research centres in economics that later merged with other groups to form the Paris School of Economics (1995); and a doctoral degree in economics from the Massachusetts Institute of Technology (MIT; 1999). She spent almost all of her teaching career at MIT, where she was eventually (2005) appointed the Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics. In 2003 she and Banerjee (who had been a member of the economics faculty of MIT since 1993), along with Sendhil Mullainathan (an economist then at MIT), founded the Abdul Latif Jameel Poverty Action Lab (J-PAL), a research centre supporting scientifically informed policy making to reduce global poverty. Duflo and Banerjee were married in 2015.

Duflo, Banerjee, and Kremer applied their experimental approach in many areas, including education, health and medicine, access to credit, and the adoption of new technologies. Building on the results of field experiments conducted in the mid-1990s by Kremer and his colleagues, which had shown that poor learning (as measured by average test scores) among schoolchildren in western Kenya was not caused by scarcity of textbooks or even by hunger (many students went to school without breakfast), Duflo and Banerjee tested the hypothesis that test scores could be improved by implementing remedial tutoring and computer-assisted learning programs to address the needs of weaker students. Working with large student populations in two Indian cities over a two-year period, they found that such programs had substantial positive effects in the short and medium term, leading them to conclude that a major cause of poor learning in low-income countries was that teaching methods were not properly adapted to students’ needs. In later experimental research in Kenya, Duflo and Kremer determined that decreasing the size of classes taught by permanently employed teachers did not significantly improve learning but that putting teachers on short-term contracts, which were renewed only if the teacher achieved good results, did have beneficial effects. They also showed that tracking (dividing students into groups based on prior achievement) and incentives to combat teacher absenteeism, a significant problem in low-income countries, also positively affected learning. The latter finding was further supported in studies by Duflo and Banerjee in India.

In the area of health and medicine, Duflo and Banerjee tested the hypothesis that introducing mobile clinics would significantly boost child-vaccination rates (the percentage of children who were fully immunized) in India—where, as in other low-income countries, high rates of health-worker absenteeism and poor service quality at stationary health centres, among other factors, had long discouraged the use of preventive medicines by poor families. Duflo and Banerjee found that vaccination rates in villages that had been randomly selected to receive visits by mobile clinics were three times greater than rates in villages that had not been selected and that vaccination rates increased by more than six times if families were given a bag of lentils with each immunization.

Duflo and Banerjee also used field experiments in the Indian city of Hyderabad to test the effectiveness of microcredit loan programs in promoting economic growth and development. The somewhat unexpected results indicated that such programs did not significantly increase small-business investment or profitability and did not improve other indicators of economic growth and development, such as per-capita consumption, health, and children’s education. Later studies of several low- and middle-income countries by other researchers confirmed those results.

In a series of studies beginning in 2000, Duflo, Kremer, and the American economist Jonathan Robinson used field experiments to investigate the question of why smallholder farmers in sub-Saharan Africa often failed to adopt modern technologies, such as fertilizer, that were relatively simple to use and potentially greatly beneficial. Focusing on farmers in western Kenya, they demonstrated experimentally that the low adoption rates could not be attributed to difficulties that farmers encountered in applying the fertilizer correctly or to any lack of information among them. Duflo, Kremer, and Robinson instead proposed that some of the farmers were affected by present bias, a tendency to view the present or the short term as more important than the future or the long term, and specifically by hyperbolic discounting, a tendency to prefer smaller rewards that arrive sooner to larger rewards that arrive later. Accordingly, present-biased farmers would put off the decision to purchase fertilizer at a discount until just before a deadline, and even then some of them would choose not to buy, preferring a smaller amount of savings (in both money and effort) in the present to a larger amount of income in the future.

As a test of this hypothesis, Duflo, Kremer, and Robinson designed field experiments that showed that, on the whole, farmers purchased more fertilizer if it was offered to them at a small limited-time discount early in the growing season (when they had money) than if it was offered to them at a much larger discount (enough to offset their out-of-pocket costs) without a time limit later in the season. The researchers thus established the extremely valuable practical result that temporary fertilizer subsidies do more than permanent subsidies to increase the incomes of smallholder farmers.

Work by Duflo, Banerjee, and Kremer directly and indirectly influenced national and international policy making in beneficial ways. Banerjee and Duflo’s studies of remedial tutoring and computer-assisted learning in India, for example, led to large-scale programs that affected more than five million Indian schoolchildren. According to J-PAL, programs that were implemented following studies by researchers associated with the centre, including Kremer, have reached more than 400 million people. The laureates’ experimental approach also inspired both public and private organizations to systematically evaluate their anti-poverty programs, sometimes on the basis of their own fieldwork, and to drop those that proved to be ineffective.