“Our goal is to make sure the fight against poverty is based on scientific evidence,” Esther Duflo said shortly after becoming the second woman (and also the youngest economist, at 46) to be awarded the Nobel Prize for Economics.
Duflo, along with her husband, Abhijit Banerjee, and Michael Kremer, received this year’s top economics award “for their experimental approach to alleviating global poverty”.
The Nobel Committee could not have chosen a more noble cause. About 650 million people lived in extreme poverty in 2018 – well down from nearly 1.9 billion in 1990, but still far too many.
The committee highlighted the potential of the randomised control trials (RCT) pioneered in the award-winning work for figuring out policies that can best reduce severe hardship.
Too often, bad policy gets hidden behind feel-good messages, with little regard for efficacy. Against that darkening tide, this Nobel prize sends a powerful message: Good intentions are not enough, and even experts often do not know which policy will do the most good.
That message matters outside of the developing world, too.
Policy trials were an important part of America’s welfare reforms in the 1990s, with different states trying different ways of helping people from welfare to work.
There is important precedence in New Zealand as well.
The previous National government’s Investment approach was meant to harness small experiments to figure out what works, and what does not, in helping people shift from dependence to self-reliance over the long term.
The Coalition government’s shift from the Investment approach to the Wellbeing approach was not meant to abandon the experimental method. It rather sought to ensure that policies were evaluated on their ability to improve the wellbeing of the people the government was trying to help.
Unfortunately, neither National nor Labour has made nearly enough progress in harnessing the power of this approach.
We could be using policy trials in different parts of the country to find better ways of managing environmental problems, of achieving stronger regional development, or of unlocking housing affordability.
We could be making far greater use of policy trials in social service delivery to find out what works in improving the lives of the worst off.
To that end, this year’s Nobel prize is an important reminder. We cannot rely on the good intentions of our policymakers. Instead, policy needs to be tested rigorously.