Economics Explored

Randomised controlled trials & economic development

Episode Summary

The 2019 Nobel Prize in Economics was won by economists aiming to reduce poverty in developing economies by learning what works through randomised controlled trials. Economics Explained host Gene Tunny is joined this episode by Associate Professor Andreas Chai of Griffith University to discuss the contributions made by the 2019 Nobel prize winners to the field of economic development or, more specifically, poverty alleviation.

Episode Notes

This episode’s guest Associate Professor Andreas Chai is Discipline Head of Economics and Business Statistics in the Griffith University Business School. He has previously worked at the Australian Productivity Commission and the Australia Treasury. Andreas is well-placed to speak about economic development, as he has consulted to international organisations such as the United Nations Industrial Development Organisation on economic development issues.

Use these timestamps to jump right into Gene and Andreas’s conversation:

• 1:40 – is the Nobel Prize in Economics a real Nobel Prize? (NB at the current exchange rate, the 9 million Swedish Krona prize is work around 960,000 USD, which is shared equally among the winners)
• 5:40 – why did Esther Duflo, Abhijit Banerjee and Michael Kremer win the 2019 Nobel Prize?
• 9:00 – Limitations of traditional approach to economic development, with Andreas mentioning Jeffrey Sachs and Bono and critics such as William Easterly 
• 16:00 – Bill and Melinda Gates Foundation and Abdul Latif Jameel Poverty Action Lab
• 17:50 – what is a randomised controlled trial? How one helped find the cure for scurvy. 
• 22:40 – RCTs in poverty alleviation
• 31:25 – Dr Andrew Leigh MP as proponent of RCTs in policy analysis and development in Australia (e.g. see Andrew’s 2018 interview on RN Breakfast)
• 31:50 – ethical issues with RCTs?
• 33:20 – future Nobel Prize winners? Neuroeconomics as an emerging field
• 36:35 – Andreas’s own work on economic development issues; e.g. this UNIDO report on Household Consumption Patterns and the Sectoral Composition of Growing Economies