Stellenbosch University (SU) last week hosted many distinguished guests and leading scientists from across the globe. One of the highlights was the Chancellor’s Lecture presented by two renowned Nobel Prize winners in economy, Prof Abhijit Banerjee and Prof Esther Duflo.
For more than 15 years, the American-based couple has worked with the poor in countries spanning five continents trying to understand the specific problems that come with poverty and to find proven solutions.
Hosted in the Adam Small Theatre on the Stellenbosch campus, the Chancellor’s Lecture was part of the Nobel in Africa symposium series, which showcases knowledge production and research potential on the continent.
SU’s Chancellor, Justice Edwin Cameron, expressed his pride in the University and its achievements and said although South Africans have much to celebrate after thirty years of democracy, there is also reason to reflect on lingering problems such as government corruption and poverty. “Our distinguished guests are international laureated, awarded and garlanded because their theories address remedies for poverty,” Cameron said in his welcoming address.
Prof Wim de Villiers, Vice-Chancellor and Rector, noted that the Stellenbosch Institute for Advanced Study (STIAS) is the first institute outside Scandinavia to host a Nobel symposium on behalf of the Nobel Foundation since the symposia were initiated in 1965. “It is truly an honour to have such distinguished minds grace our symposium, sharing their insights and experiences,” De Villiers said. He stressed the importance of intellectual investment in Africa, given the continent’s growing and young population. De Villiers also emphasized the University’s role in harnessing knowledge for the betterment of humanity, particularly for the advancement of Africa and its people.
Poor Economics revisited
The two speakers were introduced by Prof Ingrid Woolard, Dean of the Faculty of Economic and Management Sciences at SU. She highlighted the significant contributions Banerjee and Duflo have made to the field of poverty alleviation and development economics. Through their work at the Department of Economics at the Massachusetts Institute of Technology’s Abdul Latif Jameel Poverty Action Lab (J-PAL) they’ve introduced a new approach to obtaining reliable answers about the best way to fight poverty.
For the Chancellor’s Lecture Banerjee and Duflo revisited their groundbreaking book Poor Economics published in 2011 that argued much of the anti-poverty policy have failed over the years because of an inadequate understanding of poverty. “One of the book’s central themes is the importance of understanding the poor as rational decision-makers, constrained by personal circumstances,” Woolard explained.
“By unraveling the complexities of poverty dynamics, they advocate for context-specific interventions. Moreover, Poor Economics highlighted the efficacy of randomised control trials and evaluated the impact of social programmes and policy interventions. I think it says a great deal about Abhijit Banerjee and Esther Duflo that tonight they didn’t just choose to give an update on what they’ve learned since Poor Economics was published. Instead, they chose to talk about what they got right; what they got wrong and what they missed altogether. I think that speaks to true intellectual curiosity, rigour and humility.”
Banerjee was the first to take to the stage. He discussed progress in reducing poverty and improving health globally, while also addressing challenges such as the COVID-19 pandemic and the importance of climate change adaptation. “What we are taking on now is a world that is both richer, but also more frightened of especially climate change, where perhaps dire poverty is less of an issue, but health emergencies might become more of an issue,” he said.
Highlighting the significance of tailored education approaches, Banerjee said research has shown the biggest driver of change in education is teaching children at their individual level, rather than a one-size-fits-all approach. Evidence suggests that improving pedagogy and involving parents in their children’s education can lead to better learning outcomes.
Focusing on recent research in health interventions, Banerjee noted that many people in poor communities are suspicious of the health system. “That seems to be one of the great issues because it’s clear that unless people take preventive steps, it’s very hard for the health system to deliver results. We had suggested that this was an issue in explaining why people were not getting treatment. But I think what the later literature has done very effectively is to show that the reason is the lack of trust.”
One aspect they had missed due to insufficient data for Poor Economics was the impact of microcredit programmes on entrepreneurship. Initially, some scientists were dismissive of the idea that microcredit could help get people out of poverty, but new research has shown that some people benefited from access to credit, Banerjee said. In Hyderabad, India, their research found that “gung-ho entrepreneurs”, households who were already running a business before microfinance entered, show persistent benefits that increase over time.
“It turns out that when we went back to these people and we looked more carefully at long-term data, we could see that there were people who really benefited from access to credit.” Banerjee said results show that heterogeneity in entrepreneurial ability is important and persistent. For talented but low-wealth entrepreneurs, short-term access to credit can indeed facilitate escape from a poverty trap.
Banerjee’s wife and J-PAL co-founder Duflo explained she would focus on oversights in their thinking about poverty when they wrote Poor Economics. She started by discussing the omission of social protection, highlighting its increased acceptability and growth in low-income countries since the book’s publication. Duflo explained research on targeting beneficiaries for social protection programmes, mentioning the challenges of identifying and reaching the most vulnerable populations.
In many countries, providing cash instead of food aid has been shown to be more effective in improving food security, as it allows households to purchase food from local markets and supports local economies, Duflo noted. She said studies suggest that people may prefer to work rather than receive just cash, with positive effects on mental and physical health.
Gender and climate change
Another aspect they didn’t address in detail in Poor Economics is gender, Duflo pointed out. “We mostly talked about gender in the family chapter, which in retrospect, I feel kind of bad about because it’s putting women back in the house, which is precisely where they don’t want to be. A large number of women want to work but they face many challenges. In India, an estimated 100 million women would like to work but cannot because of social norms – a clash between traditional female roles and because they have little agency in the household.”
Duflo elaborated on the complex relationship between income, female labour force participation and societal norms, emphasising the challenges faced by women in balancing work and household responsibilities. She presented research findings on empowering women to increase their workforce participation and the importance of adjusting job structures to facilitate women’s employment, especially by allowing work from home.
Finally, Duflo addressed the pressing issue of climate change, a glaring omission in Poor Economics, she admitted. “There is no chapter on climate in our book. In fact, there is no chapter on the environment. We just missed that. And of course, it’s a bit embarrassing, given the situation now,” she added.
Duflo attributed a significant portion of responsibility for harmful emissions to affluent countries. “When you take consumption emission, it is still the case that most emissions are being produced in rich countries, and in a way, that’s totally warped – the 10% highest emitters are responsible for 50% of the emissions. Most of these people are in rich countries, certainly not in Africa. There is no trade-off between alleviating poverty and fighting climate change,” Duflo concluded.
She stressed the need for a dual approach to addressing poverty and climate change simultaneously, highlighting the disproportionate impact of climate change on vulnerable populations in regions like Africa and India. Duflo underscored the urgency of proactive adaptation strategies to mitigate the adverse effects of climate change, stressing the importance of research and innovative solutions to tackle this global challenge effectively.
At the end of the lecture, the Chancellor thanked the speakers for their insights. “It’s been a humbling and insightful experience. There is a risk that our world could be destroyed through ideology and simplicity. You have brought us the most beautiful complexity tonight,” Cameron said.