Presentation Speech by Professor Jakob Svensson, Member of the Royal Swedish Academy of Sciences, Member of the Committee for the Prize in Economic Sciences in Memory of Alfred Nobel, 10 december 2019.
Your Majesties, Your Royal Highnesses, Esteemed Nobel Laureates, Ladies and Gentlemen,
8−5=3. This is a simple exercise for most 9-year-olds, but fewer than half the fourth-grade students in Mozambique and Nigeria can solve it. In rural India, only half the children in grade five can read a short text intended for second-graders.
These are not exceptions. Worldwide, hundreds of millions of children leave school without basic skills. As adults, they cannot calculate the correct change from a transaction or read and understand instructions. Nor can they help their children with homework, let alone build a career.
Over the last two decades, living standards have noticeably improved almost everywhere on the planet. Despite these improvements, huge challenges remain. Why aren’t children learning how to read and count in school? Why are so many children dying of diseases that could be treated or prevented at a low cost? Why do smallholders not adopt simple technologies, such as artificial fertiliser, even though they can provide large returns?
It was to answer these questions, and similar ones, that this year’s Laureates began their pioneering research into the mechanisms behind poverty, and into effective measures to alleviate it. Their work laid the foundation for a new approach which, in just 20 years, has transformed research on global poverty.
The new approach is experimental so, just as in much medical and natural science research, causation is established through randomised control studies. However, these are not experiments in a laboratory, but studies of people in their everyday environments. The approach also has a clear connection to economic theory. Somewhat simplified, we can say that theory can provide guidance on important mechanisms behind poverty. Field experiments can investigate the quantitative importance of these mechanisms in practice.
The research based on the new experimental approach has provided us with a deeper understanding of the root causes of poverty. To return to the example of the learning crisis, we now know that the most important reasons why, in many countries, children learn so little in school are not large class sizes or the lack of tex books. Instead, the problems are what teachers do in the classroom, what they know and – surprisingly often – whether they show up at all.
I believe that searching for explanations for poverty and the means to eradicate it is, for economists, like trying to solve the mystery of cancer for medical researchers. This year’s Laureates have taken research on poverty further than anybody before and millions of people are now benefitting from effective measures that were developed and tested using the new experimental approach for which they laid the foundation.
Dear Professors Banerjee, Duflo and Kremer,
You have introduced a way of conducting research that helps us better understand the root causes of poverty, as well as to find effective ways of alleviating it. The experimental approach you pioneered has transformed research in development economics. The research that follows this approach has already influenced policy, and it keeps improving our ability to help those in most need. It is an honour and a privilege to convey to you, on behalf of the Royal Swedish Academy of Sciences, our warmest congratulations. May I now ask you to receive your Prizes from his Majesty the King.