The Guardian view on the economics Nobel: worthy winners

Readers of this paper on 6 June 2011 may have spotted an editorial titled “In praise of... Esther Duflo and Abhijit Banerjee”. It was indeed a paean to the two Massachusetts Institute of Technology economists and their work to lift people out of poverty. “They make a subtle case for one big argument,” we wrote. “Aid really can help poor people, provided the money follows the evidence.” Scroll forward almost a decade to this week, and the judging committee behind the “Prize in Economic Sciences in Memory of Alfred Nobel” announced that the pair would win this year’s award, alongside their colleague Michael Kremer. To the lucky trio sharing a prize of 9 million Swedish kronor (currently £716,000, although sterling’s value in these Brexit-addled times can go down as well as down), we extend our congratulations. To the judges, we say: what took you so long?

A number of precedents are being broken or tested by this welcome decision. At 46, Prof Duflo is the youngest-ever winner of this prize. She is also only the second woman to win it. Handed out since 1969, it was never given to one of the major economists of the 20th century, Joan Robinson. Prof Banerjee is only the second Indian to win it, and one of very few winners to come from outside the west. Most of the world economy is not in the west, and many of the most interesting thinkers do not come from there, as is now reflected in the senior echelons of the World Bank, the International Monetary Fund and the Bank for International Settlements. Alas, the prize givers at the Sveriges Riksbank have yet to catch up. Instead, the prize has gone to some odd choices such Milton Friedman. In 1997, Myron Scholes and Robert Merton won the prize for their work on derivatives. The very next year, the hedge fund they ran according to their model lost $4bn in just six weeks and required a state-organised bailout.

Over a decade has passed since the world economy plunged into crisis, along with the prestige of the discipline of economics. Some of the brightest undergraduates have complained that the economics they are taught is too narrow in scope and too detached from the real world. That complaint cannot be levelled at this year’s Nobel winners. Prof Duflo did not even want to be an economist but started off as a historian. The randomised control trials central to their method owe much to medicine. Want to find the best way of galvanising parents to inoculate their children? Take a bunch of poor families in India, and offer half a small bag of lentils if they give their kids the jab. Prof Banerjee and Prof Duflo found that that little treat drove up vaccination rates from 5% to almost 40%. Too much has been claimed for the “randomista” method they use (by supporters, rather than the prize-winning trio) and it does not obviate the role of politics and power in tackling poverty and inequality. But let’s hope that the judges show even more imagination in the future. Thomas Piketty and Emmanuel Saez next year?