Abhijit V. Banerjee: Can microfinance solve poverty?
Abhijit Banerjee, co-founder and co-director of Abdul Latif Jameel Poverty Action Lab (J-PAL) and 2019 Nobel Laureate in economics, discusses J-PAL's mission in a wide-ranging conversation about poverty in the context of climate change, evaluating for impact and his philosophy on 'good economics.'
Abhijit says, “J-PAL was set up to help make better policies against poverty by encouraging the better use of high quality evidence. That sentence is a bit of a mouthful but it's really what we do,” he says. “We try to encourage people to generate the evidence, but we also then summarize it. When the evidence shows something that's worth scaling, we try to work with policymakers to make that happen.”
Abhijit Banerjee is the kind of economist who refuses to glorify his profession, even though he’s partially responsible for a massive shift in how economists approach and use data, has published several best-selling books, and has been awarded the highest honor in the field. For Banerjee, the work is always evolving, always improving, and always reaching more people. You won’t be catching him resting on his laurels anytime soon.
Banerjee, along with his co-Laureates Esther Duflo and Michael Kremer, are seen as the pioneers of experimental economics. Fueled by randomized controlled trials, an approach similar to clinical trials in medicine, smaller scale experiments are conducted to take specific action on an otherwise complex issue.
“We often look at millions of people rather than 68 or something,” says Banerjee. “So, it's just an order of magnitude in terms of size that raises many statistical issues and many implementation issues which we need to wrestle with. But in the end, the philosophy is very similar, which is that we want to make sure that we haven't selected the group of beneficiaries in a way different from the way the non-beneficiaries were selected. And therefore, we could legitimately claim that if we see a difference, it's the causal effect of the intervention.”