The economic crisis is bad news for economists, or at least for those in the west whose orthodox recipes offered an uncritical gloss on the deceptive boom years and failed to anticipate the devastating financial meltdown that has followed. No wonder then that in this time of retrenchment and rethinking, there is also a search for fresh perspectives and voices that can propose economic solutions for the world after the crash.
It is a big responsibility to place on anyone's shoulders, let alone that of a diminutive 36-year-old woman easily mistaken for a student. But in the crucial area of finding answers to the enduring problems of poverty and development in the global south, a young left-leaning French economist named Esther Duflo is leading one of the interesting and creative currents of new economic thinking.
Esther Duflo teaches at MIT and runs a project called the Poverty Action Lab (J-PAL, whose first letter comes from the name of her Saudi sponsor, Abdul Latif Jameel). She has become so famous in France that she was invited to chair a year-long project on "knowledge against poverty" at the - almost exclusively male - cradle of Parisian intellectualism and academia, the Collège de France; her inaugural lecture on 8 January 2009 on the theme of "experiments, science and the fight against poverty" was held in front of an enthusiastic crowd which overflowed from the largest lecture-hall.
A pioneer's project
Esther Duflo could not be further from the traditional image of French (usually Parisian, usually male) intellectuals - beloved abroad but recycled too at home - whose concern with "great ideas" tends to frame their encounter with the actual world of living, working, suffering individuals. She is also no friend of those big international bodies charged with responsibility for dispensing or regulating aid to the less-developed countries, and whose bureaucracy consumes a significant share of dwindling aid funds (see John Lichfield, "Step aside, Sartre: this is the new face of French intellectualism", Independent, 13 January 2009).
She has focused on the importance of economic-development programmes which work best at grassroots level rather than in the gleam of the planner's eye or seminar-room's sheen. She is both academic and populariser, and writes a mind-blowing column in centre-left daily Libération (founded by Jean-Paul Sartre). The persuasiveness of her ideas is reflected in the growing attention she has received, from her peers in selected other projects such as the Bureau for Research and Economic Analysis of Development and from respected media outlets (see "International bright young things", Economist, 30 December 2008).
This governing idea of this rigorous protestant woman, since childhood deeply committed to helping the poor, is of "randomised evaluations of social programmes": the most effective (and cost-effective) way, she argues, for the downtrodden to find a route out of poverty. The implication is that external agencies can assist less by doing "more" than by doing "better". Esther Duflo acknowledges the influence here of the Bangladeshi pioneer of microcredit, Muhammed Yunus, whom she describes as "the living evidence that economic innovation is possible" (see Farida Khan, "Muhammad Yunus: an economics for peace", 25 October 2006).
Duflo believes that economists should not wait for perfect conditions to fall from the sky before starting to evaluate projects; they should rather create these conditions themselves via an experimental method which (as she says) "gives you the chance to be surprised". Economists are not pure scientists but rather like plumbers: their job is to fix things. Thus they "have to remain modest, to observe the behaviour of social players and deduct from that the laws of economy". It is a vision that preceded the deep phase of the current global crisis, and is given added point by it (see Esther Duflo, "21 Solutions to Save the World: Fund What Works" [Foreign Policy, May-June 2007]).
It is deceptively simple too. For it requires getting rid of the traditional (ideological or professional) blinkers which have long inhibited development strategies. It also requires a quality that economists are only now, with the discrediting of so many ideas by the great recession, beginning to see the point of: modesty. Her emphasis on experimental trial and error, cross-checking and different approaches echoes a remark by Franklin D Roosevelt which she likes to quote: "The country demands bold, persistent, experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But, above all, try something."
Her work with J-PAL in India and Africa offers many examples of her original methods. Her grassroots testing, for example, enabled her to discover a way to reduce child truancy by 25%: give vermifuge to pupils (at a tiny cost per head and per year) to free children of worms. But school attendance itself does not necessarily mean learning anything from teachers who may lack dedication to and respect for their pupils, using a curriculum designed for the elite. Here, the "Read India" programme, implemented with a local NGO called Pratham, showed that one additional young tutor per school could increased literacy and numeracy much more - and at a much lower cost - than buying computers. (Yet isn't it much more gratifying for a donor to have his picture taken next to a computer than to a jar of worm-powder?)
Some of J-PAL's programmes - on the use of fertilisers in Kenya, or the distribution of sprayed mosquito-nets in Uganda, Madagascar and Kenya - have led Duflo to question the ideas of far more high-profile analysts. Her research on mosquito-nets confirmed that the policy (supported by the World Health Organisation) of offering them for free was most effective against malaria, as opposed to the aid-critic William Easterly's advocacy of selling them at a low price.
J-PAL's project on fertilisers builds on Malawi's policy of handing "starter- kits" to farmers to confound both the positivist views of orthodox economics and to dependency-creating subsidies. Duflo's MIT and J-PAL colleague Abhijit Banerjee believes that experience and good technical knowledge can enrich economists' understanding. The offer of free delivery to farmers in Kenya who placed an early order for fertilisers - and thus allowed knowledge of their effect to be spread quickly around the community - is a classic case-study of innovation based on precise observation and adapting to local circumstance.
Duflo describes this as an example of "a programme which, for a very low cost, can change the everyday life of poor farmers by systematically improving the productivity of their fields". Her ambitions in such projects are conveyed by informed by the point in her Collège de France lecture that ground-level experimentation "compels scientists and field-workers to accept being contradicted and surprised. My feeling is that this is their true strength, and an opportunity to advance science while fighting poverty".
A burning question
These evaluations are a "crucial step" towards prosperity for the many; fighting poverty in the most efficiently possible way is a "necessary" foundation. She warns that John Maynard Keynes's famous comment "in the long run, we are all dead" takes on "a more real and sinister sense in the poorest countries". The explosion of inequalities has had devastating consequences in many parts of the globe; to conjure vast sums in bailouts or in aid is not going to help when the system itself is dying.
There is a need rather to focus on local experiments - cross-tested in different environments - to help understand how to reduce poverty, and to make the reduction permanent. For Duflo, "macroeconomic models will be based on microeconomic principles: the macro model is built from micro blocks like a Meccano". This is a component of an ambitious project to redefine economics as "a real human science - rigorous, impartial and serious, generous, ambitious and committed - but also human in its fragility and modesty". It is a refreshing and bold vision - pursued too in her founding editorship of a new publication, American Economic Journal: Applied Economics - from a young scholar-practitioner unafraid to challenge "the self-proclaimed experts of the anti-poverty fight".
Esther Duflo and her colleagues have begun to provide answers to a burning question that is even more relevant amid the desperate economic conditions of 2009: where will the 21st-century solutions to the world's economic problems come from?
This article is published by Patrice de Beer, and openDemocracy.net under a Creative Commons licence.