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The Message the Nobel Prize Sends to the 2020sThe poor are more prudent and rational
Lee Soo-hyun, Editor | 승인 2020.04.28 00:05

    On October 14th, 2019, the Nobel Prize in Economics was announced. Those honored were Abhijit Banerjee and Esther Duflo, professors at the Massachusetts Institute of Technology, and Michael Kremer, a professor at Harvard University. The Royal Swedish Academy of Sciences1) said their research broadened the prospect of economics with an experimental-based approach, improving the ability to get over poverty.

    The professors applied the idea of “appropriate technology” based on behavioral economics. They judged that using the human nature of seeking economic benefits could actually change the behavior of the poor. In addition, they introduced a randomly controlled trial for the first time in the field of economics to prove this hypothesis.

    The professors conducted soy experiments over 15 years in more than 40 countries. Only 20 percent of children were receiving essential vaccinations at the time in Rajasthan, India. Even though the government and aid agencies actively informed people of the effectiveness of the vaccination and gave it for free, the inoculation rate was low. Parents did not bring their children to health centers. In fact, there was a superstition in this area that if a child went out before the age of one, he would die under the eyes of the devil. Many experts said that no incentive would work, if the residents did not change their minds about the superstition. However, the professors had different ideas. They set up a research team on the ground to objectively find out why the poor were not taking advantage of the free vaccinations, as well as looking at how to get the children to come to health centers. The team randomly selected a village and divided it into three groups. The first group, the control group, did not have any changes, and the second group was encouraged to get their children vaccinated by nurses. In the third group, children were given two pounds of soybeans, if vaccinated, and a set of stainless steel trays, if they received all five essential vaccinations. Six months later, only 6 percent of the first group and 17 percent of the second group completed the inoculation, while 38 percent of the third group did so. They found that a little encouragement gave people a reason to act right away. The two pounds of beans compensated for immediate losses that parents would have suffered from, including time, and effort to receive the inoculation and take care of their children.

    Against people’s prejudice, the professors argued that the poor act much more prudently and rationally, because they have less than others. They found out why the poor suffer from malnutrition, do not send their children to school, and do not save despite long-standing efforts by the government and aid groups. Moreover, randomized controlled trials have found the most effective ways to help them, such as providing incentives, nutritional supplements, or school uniforms, and readjusting their deposit or insurance systems. As a result, more than 5 million children in India have been freed from poverty through the study, as the Nobel Committee on Selection said.

 

1) Non-governmental scientific organization which selects winners of the Nobel Prize in Physics, Chemistry, and Economics each year

Lee Soo-hyun, Editor  sylvie8@konkuk.ac.kr

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