Interview with Esther Duflo: On Experimental Methods and Inequality

Interview with Esther Duflo: On Experimental Methods and Inequality

Timothy Taylor 19/04/2021 4
Interview with Esther Duflo: On Experimental Methods and Inequality

Douglas Clement provides an "Esther Duflo interview: Deciding how to share" (For All: Federal Reserve Bank of Minneapolis, Spring 2021).  

On the existence of a tradeoff between growth and inequality:

I think the whole notion of a trade-off is likely a fallacy, for various reasons. First of all, there is no clear link either on theoretical grounds or empirically between higher inequality and more growth. There is no reason why inequality is necessary for growth. And there is no law of economics that says that growth increases inequality either. So I think there is no causality necessarily going in either direction; therefore, there is not necessarily a trade-off. Just as a matter of accounting, growth is equality-enhancing if most of the benefits of growth are going toward the poor. And growth is inequality-enhancing if most of the advantages are going toward the rich. Both are possible. I don’t think there is a systematic pattern either way. ... 

In fact, we don’t seem to have much of a handle on what causes growth anyway, although we might have interesting theoretical narratives on growth. If there is a consensus among macroeconomists, it’s on what should be avoided at all costs, like hyperinflation. But there is not a set of recipes that guarantees growth, and it’s not that these recipes therefore lead to a trade-off. So, I think there is actually no trade-off.

On how evidence from randomized control trials is like a pointillist painting

The idea of the pointillist painting is, imagine a painting by Seurat. It’s literally made of dots, and each of these dots on its own is perfectly nice, but it doesn’t generalize to anything. But if you step back and accumulate all these dots, you see the entire painting of, say, a family on the bank of the Seine having a picnic.

Suppose you’re trying to assemble a jigsaw puzzle of that Seurat painting. Just by looking at the rest of the painting, you sort of know what goes next. You have a prediction about where a given piece fits. You might find that your piece doesn’t fit. It might be wrong. It’s not what you expected. But the frame, the painting, gives you good guidance for what you might expect.

That’s how progress happens. The caricature is that you try one small experiment in one place, and then you can take the result to the entire world. That’s not it. The way it actually works is: Do your small experiment; get some findings that are interesting. They might contradict or confirm the theory that you started from, but they give you fodder for the next experiment, and so on and so forth, until you have an understanding of what might be the entire shape or contour of that problem.

On using the superstar power of economists to save lives

My husband, Abhijit Banerjee, also a Nobel Prize laureate, was asked to be the chairman of the coronavirus response team in West Bengal. ... We knew from previous work ... that stars and celebrities are very influential in conveying these messages, so we were looking for stars to pass along very basic social distancing advice to households in India at a time when it was completely confusing. It finally dawned on us that the best star we had was right on our team! Abhijit Banerjee has been a bit of a household name in West Bengal—where he’s from—since he won the Nobel Prize. ...

Abhijit recorded messages that were sent in two rounds to subscribers with Airtel, a bigger subscriber network. One message was about asking people to be kind to coronavirus patients and not to shun them out of the village, and the other was about how travel during Durga Puja, where people normally come in droves to town and make pilgrimages to makeshift temples. So, potentially, a scene of millions of people crowded together, coming from everywhere and going back. It could have been a coronavirus disaster.

Abhijit worked with others in putting together something that was feasible. You cannot say, “Cancel the holiday.” That’s not really an option. So something that was feasible, but would improve things. And we sent one more round of messages urging people to stay home if they’re older, and if they do go out, visit just one location, and wear a mask.

And quickly after that, Durga Puja happened, and we saw that the attendance was down a significant amount from previous years. So it was much, much, much lower attendance. And we can now see whether there was an uptick of coronavirus and we don’t see that.

So, of course, it was not just his messages. There was also the chief minister went on television to relay the message. But this entire effort to convince people with clear messages about what to do seems to have been very effective. I’m convinced that that saved thousands and thousands of lives ultimately. You don’t get to do that every day.

For an earlier post on the award of the 2019 Nobel Prize in economics to Duflo, Banerjee, and Michael Kremer, see "A Nobel for the Experimental Approach to Global Poverty for Banerjee, Duflo, and Kremer" (October 22, 2019). 

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  • Will Saunders

    To reduce inequality, people should only borrow as much as they can afford to pay back.

  • Phil Barnett

    It's time to review taxation. High income earners have more money leftover for investment and growth while the low income earners are left with little or nothing to invest.

  • Keith Peterson

    By upholding values such as altruism, compassion, unity and solidarity, cooperation can be created.

  • Isaac D

    Great read

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Timothy Taylor

Global Economy Expert

Timothy Taylor is an American economist. He is managing editor of the Journal of Economic Perspectives, a quarterly academic journal produced at Macalester College and published by the American Economic Association. Taylor received his Bachelor of Arts degree from Haverford College and a master's degree in economics from Stanford University. At Stanford, he was winner of the award for excellent teaching in a large class (more than 30 students) given by the Associated Students of Stanford University. At Minnesota, he was named a Distinguished Lecturer by the Department of Economics and voted Teacher of the Year by the master's degree students at the Hubert H. Humphrey Institute of Public Affairs. Taylor has been a guest speaker for groups of teachers of high school economics, visiting diplomats from eastern Europe, talk-radio shows, and community groups. From 1989 to 1997, Professor Taylor wrote an economics opinion column for the San Jose Mercury-News. He has published multiple lectures on economics through The Teaching Company. With Rudolph Penner and Isabel Sawhill, he is co-author of Updating America's Social Contract (2000), whose first chapter provided an early radical centrist perspective, "An Agenda for the Radical Middle". Taylor is also the author of The Instant Economist: Everything You Need to Know About How the Economy Works, published by the Penguin Group in 2012. The fourth edition of Taylor's Principles of Economics textbook was published by Textbook Media in 2017.

   

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