Small Thinker turned Nobel Laureate Abhijit Banerjee
The Royal Swedish Academy of Sciences recently released the names of 2019 Nobel laureates for their exceptional work in the fields of Science, Literature, and Promotion of Peace. Abhijit Banerjee is the latest addition to the list of Indian Nobel Laureates, sharing the list with names like Kailash Satyarthi, Amartya Sen, Mother Teresa, and Rabindranath Tagore. The Nobel Prize committee declared the Sveriges Riksbank Prize in Economic Sciences, in the Memory of Alfred Nobel 2019 to Abhijit Banerjee, Esther Duflo and Michael Kremer (jointly shared) for their experimental approach to alleviating global poverty.
"Research conducted by this year's Laureates has considerably improved our ability to fight global poverty. In just two decades, their new experiment-based approach has transformed development economics, which is now a flourishing field of research. Their research is helping us fight poverty." As stated by The Royal Swedish Academy.
Abhijit Vinayak Banerjee was born in Mumbai, India, on the 21st of February, 1961, to Nirmala and Deepak Banerjee. Both his parents belonged to an Economic sciences background and served as Professors of Economics in different educational institutions in Kolkata. Abhijit finished his school education in South Point High School and later moved to his father's alma mater, Presidency College, Kolkata, where he completed his BSc degree in Economics in 1981. He then completed his MA degree at the Jawaharlal Nehru University, Delhi, and went on to obtain a Ph.D. in Economics at Harvard University in 1988.
Along with his co-workers, Abhijit tried to measure the effectiveness of Public Welfare Programmes, by using the method of Randomized Controlled Trials. Married to his co-researcher Esther Duflo, the duo figured out ways to improve the effectiveness of public welfare programs. Abhijit and his wife Esther Duflo are the 6th married couple in the world to win a Nobel Prize.
Banerjee is a strong advocate of the Universal Basic Income scheme, and the Congress Party was dependent on him while forming the NYAY program. The NYAY scheme was supposed to give Rs 72000 to each family among the poorest 20% of the population. The basic idea was to help the poor, financed by taxing the rich.
The lessons of the Benerjee-Duflo-Kremer research suggests that all policy actions should be based on evidence, and must be changed if there is no proof of their impact after a reasonable period. Keeping outdated policies in-action will lead to loss of money and resources, hence regular updates of welfare policies are needed. These ideas will help alleviate poverty and suffering in the short term and will make health and education much more efficient, but they have to be used in coordination with other up-to-date policies to be sustainable.
Schemes like Demonetization were severely opposed by Banerjee, as they reduced economic growth, and the people who suffered most were the poor. No amount of welfare and charity can make up for the losses suffered by them. According to Banerjee, larger government spendings on schemes like building roads and sewers, creating Aadhaar-like solutions, create feedback loops, which in turn helps the poor. Eventually, this kind of good governance policy, leads to better economic conditions of the poor, given how little thought goes into making welfare policies for the underprivileged. Banerjee-Duflo's defining work on alleviating poverty and suffering is aptly named "Poor Economics."