What can we learn from the Nobel Prize Winners?

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It was a proud moment for India when Indian origin Abhijit Banerjee was awarded the Noble Prize in Economics for 2019. He shared it with Esther Duflo and Michael Kremer for their work in alleviating global poverty. “In just two decades, their new experiment-based approach has transformed development economics, which is now a flourishing field”, said the Royal Swedish Academy of Sciences while announcing the prize.

The Nobel Laurates are known for their contribution in popularising the use of Randomised Control Trials (RCT), to test the effectiveness of various policy interventions to address poverty. As per UNICEF definition, RCT is an experimental form of impact evaluation in which the population receiving the programme or policy intervention is chosen at random from the eligible population, and a control group is also chosen at random from the same eligible population.

RCTs were mainly used in clinical trials. However, the Nobel laurates started applying it in the field of economics in the 1990s. In a widely noted experiment, Mr. Banerjee and Ms. Duflo studied why the immunization rates are low in rural India, although vaccines are usually provided for free. They found that small incentives for parents coupled with reliable services at convenient mobile clinics increased the immunisation rates in rural India. An incentive such as a bag of lentils for each visit and a set of plates for the last visit increased the immunisation rates six-fold in relation to the comparison group. In another study, they found that more textbooks and free meals only had a limited impact in improving the learning outcomes. On the other hand, targeted help to weaker students helped in improving the education outcomes significantly.

The above examples provide an important guideline for the government while framing various schemes. In India, there are numerous social sector schemes that are implemented by both the central and state governments. With huge amount of funds being spent on these schemes, there is a need to ensure that they yield the best outcomes. The attainment of Sustainable Development Goals (SDG) by 2030 also calls the need for prudent exercise by the government to attain the SDG targets within the stipulated time. The experiment-based study will help in capturing the ground realities, which needs to be reflected in the framework of various policies/schemes. RCT also has its share of critics, but it can be used as an important tool for poverty alleviation.

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