It is important for to make many small changes, mainly in many various areas, to improve the lives of the poor.
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Indian-born Abhijit Banerjee recently won the Nobel Prize for his contribution in Economics. Amartya Sen, a fellow Bengali like Banerjee, won the Nobel Prize in Economics in 1998. Although both Banerjee and Sen live outside India, their studies focus on India, so they visit India frequently. Banerjee and his wife Esther Duflo are both professors at MIT (Massachusetts Institute of Technology). A third Nobel laureate, Professor Michael Kramer, teaches at Harvard University.
The Royal Swedish Academy mentions the trio were awarded this year's Nobel Prize for their research, which proved that "our ability to fight poverty has greatly improved". Currently, the subject of 'Development Economics' has attracted the attention of the Nobel Prize Committee. One thing is clear from this that there are various branches of economics, but improving the condition of human beings and freeing them from the shackles of poverty and alleviate their life style is still an important issue today.
Although poverty levels have declined globally, the number of people living in poverty (according to a World Bank report) was 1.4 billion by 2005. Out of the total poor people in the world, 26 crore 7 lakh people are in India. That is why Banerjee and Duflo invested much of their time in conducting grassroots experiments in India to find out the real causes of poverty.
The economics of development have been based on theory and macro-level economics for decades. From Rostov's "take off" theory to Hershman's "balanced and unbalanced growth" theory, development is the process of major change in underdeveloped economies. Abhijeet Banerjee and Esther Duflo, however, have chosen a new way to deal with poverty, which is to make the poor and their decisions an important part of the development process. To find out kind of policies might differentiate between poverty and its consequences, they first conducted an in-depth analysis and study to find out the causes of poverty and deprivation.
As mentioned above, 20 years ago development studies used to emphasize economic theories and raise questions from a macroeconomic perspective. These two Nobel laureates tackled these big developmental questions and studied them like scientists conducting medical trials. For example, they found that India has teaching methods that are inadequate for students' needs. He noticed that tutoring students with low grades led to positive improvements in the performance of those students. More than 5 million children have benefited from such teachings, because even if the poor have books, they lack the ability to learn from them. Also, they have encouraged state governments to make greater public investment in preventive health care.
Their book 'Poor Economics' is summed up in one sentence in the book's introduction: "We must take the time to understand the complexity and richness of the poor's lives, not just as a cartoon character." The book describes and analyses on how the decisions made by Indian people living on less than $2 a day.
This analysis actually makes a lot of sense. For example, it is natural for a poor family to spend their family budget for education on one child, hoping that the child will go to secondary school and then to college. It would be a waste of resources to divide the family's education budget among all the children instead of achieving it. But convincing the parents about the importance of education is important and it is having a big impact on the running of village schools. This is likely to change their educational choices. Recognizing his contribution, the Nobel Academy stated, "Their experimental research methods now completely dominate development economics."
It is important to pay attention to the decisions of the poor in order to understand and solve the challenges of poverty, as Duflo recently stated: But, we are not trying to understand the deep, root of the problem connected to each other. So in our research we try to unravel the problem one by one to understand the cause of a particular problem.
One criticism of Banerjee and Duflo's work is that they are unaware of how difficult it is to change a policy and implement it to the best of their knowledge. He believes that big changes do not always succeed, and that the way forward is not to "think big" but to think small. The way he advised Rahul Gandhi about the NYAY scheme, the poor should be given Rs 2,500 per month instead of Rs 6,000.
Improving the lives of the poor requires a number of small changes, mainly in many different areas, without the need for political battles or dramatic financing changes. These two Nobel laureates are basically and completely 'short-sighted thinkers'!
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