I don’t think anyone was surprised by this year’s “Nobel” prize in economics, which went to three American-based specialists in the design of on-the-ground experiments in low income countries, Abhijit Banerjee, Esther Duflo and Michael Kremer. I think the award has merit, but it is important to keep in mind the severe limitations of the work being honored.
The context for this year’s prize is the long, mostly frustrating history of anti-poverty projects in the field of development economics. Much of the world, for reasons I’ll put to the side for now, is awash in poverty: billions of people lack access to decent sanitation, medical care, education and physical and legal protection, not to mention struggling to put food on the table, a roof over their head and cope with increasing demands for mobility. A lot of money has been spent by aid organizations over the years to alleviate these conditions, without nearly enough to show for it. (My specialty, incidentally, has been in child labor, which has been the focus of a large piece of this work.)
There have been various reactions to the lack of progress. One has been to argue that the effort has been too weak—that we need more money and ambition to turn the corner. This is Jeffrey Sachs, for instance. Another is that the whole enterprise is misbegotten, a relic of colonialism that was always destined to fail. You can get this in either a right wing (William Easterly) or left wing (Arturo Escobar) version. (I critiqued the "left" stance on child labor here.) A third is where this Nobel comes in.
Maybe the reason development projects weren’t working was because they had never been properly tested before widespread adoption. Societies and the people in them are complicated, and ideas that may make sense in the abstract often fail in practice. So really test them. Set up controlled experiments, whose design will ensure that measured outcomes represent causal mechanisms. One of the common elements of these designs was randomization of treatment to avoid confounding influences on who might be included in a program versus those in the control group, hence the term “randomistas”.
Without question, the experimental approach has produced genuine insights. We have a much better sense, for instance, of the role played by institutional malfeasance in places like schools and hospitals: teachers that don’t teach, medical practitioners that don’t show up or follow protocols. Just throwing money at organizations without reforming them is a dead end. In fact, implementing programs to enhance their experimental value is central to the concept of adaptive management; it should be standard practice everywhere.
All the same, there are serious limitations to a strategy centered on experimental design. Here are a few:
1. Good experimental design results in internal validity, where measurements actually measure the things they’re supposed to and confounding influences are suppressed. External validity, the extent to which results can be generalized to a wider array of situations beyond the confines of the experiment is a different matter. There are two specific aspects of experimentalism that raise questions on this front, the tendency for experiments to be small, local and time-bound (like a set of schools in one state in India in the mid-00's) and the effects of experimental control itself, when a sort of artificiality creeps in. I’m familiar with the literature on experimentally designed conditional income transfers, for instance, where every new study, with a new country location, time period or set of design tweaks seems to alter the bottom line of what works and how.
2. The strategy of experimental design virtually requires a reductionist, small-bore approach to social change. A more sweeping, structural approach to poverty and inequality introduces too many variables and defeats experimental control. Thus, without any explicit ideological justification, we end up with incremental reformism when the entire social configuration may be the true culprit.
3. Carefully controlled social experiments can be very expensive! When I read the work of the prize-winners and their coauthors, I often find myself wondering how much did it cost to do this research, and who paid for it? This is a form of Big Science, and it requires big support. That in turn lends power to the funding institutions, which can decide what problems and potential solutions deserve attention. In addition, on-the-ground experiments depend on participation from the institutions being studied. There is a tendency for randomista work to challenge the people on the lower rungs of hierarchy, like the teachers and nurses mentioned above, and leave their bosses—not to mention the elites at the top—unexamined.
On balance, I think it’s fine that this prize honors experimentalism, but we shouldn’t lose sight of the larger picture. Using experimental methods to incorporate more learning in program administration should be standard practice; perhaps some day it will be. But the big problems in poverty and oppression are too complex and encompassing to be reduced to experimental bits, and there is no substitute for theoretical analysis and a willingness to take chances with large-scale collective action.
How curious that China starting from being among the poorest of countries, far poorer than India in 1980, and having a population that is now 1.4 billion could have raised hundreds of millions to middle class well-being, could have raised hundreds of millions from poverty and coming ever closer to ending severe poverty in 2020, would have no economist worth a Nobel prize for work on poverty. To me, this is a travesty of awarding the Nobel Prize for work on poverty to 3 Massachusetts economists.
Distressing that the astonishing and wonderful progress China has made against poverty should be given no attention and credit by the Nobel Prize folks or by the articles about the prize that I have so far read. This tells me that the Massachusetts work on poverty and evaluation of the work is highly problematic, which I already knew from reading the work.
Scrap the EconNobel
Comment on Barkley Rosser on ‘A Nobel for the Randomistas’
Barkley Rosser comments: “I don’t think anyone was surprised by this year’s ‘Nobel’ prize in economics, which went to three American-based specialists in the design of on-the-ground experiments in low income countries, Abhijit Banerjee, Esther Duflo and Michael Kremer.”
Indeed, the EconNobel has been criticized on various grounds: (i) male-predominance, (ii) theory-predominance, (iii) rich-western-capitalism-focused (iv) geriatric-predominance (v) University of Chicago bias. All these biases have been addressed and solved to everybody’s satisfaction with the team of young/female/poverty-concerned/empirical/Cambridge-MA prize winners.
One problem, though, has been carefully avoided, i.e. that economics is NOT a science to this day. The major approaches — Walrasianism, Keynesianism, Marxianism, Austrianism, MMT — are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concept profit wrong. Economics is a failed science.
Economics has NEVER been a science but a smokescreen for political agenda-pushing. BOTH orthodox and heterodox economists are NOT scientists but clowns and useful idiots in the political Circus Maximus. The “Bank of Sweden Prize in Economic Sciences” is a fraud for 50 years.#1
Barkley Rosser wonders “Carefully controlled social experiments can be very expensive! When I read the work of the prize-winners and their coauthors, I often find myself wondering how much did it cost to do this research, and who paid for it? This is a form of Big Science, and it requires big support.”
This is an easy question. Economics departments, chairs, institutions, and pre-selected individuals are traditionally funded by the Oligarchy. Rockefeller called the university ‘the best investment’ he ever made. In our days, though, the quality of sponsors/funders/agenda-pushers has considerably deteriorated. The active players are not at all secret, the New York Times shows a meeting-photo of well-known billionaire Jeffrey Epstein and well-known Harvard economist and political busybody Larry Summers.#2
From all this one can conclude with a high degree of probability that the EconNobel is a well-calculated, Oligarchy-sponsored, aristocracy-decorated PR stunt that has much to do with the deception of the general public and NOTHING at all with science.
#1 For details see
#2 New York Times
To a large degree the Nobel for Chinese growth was given a long time ago to Robert Solow. A nation that invests more grows more. That is pretty much it, and some others have done it as spectacularly as China, including Japan and South Korea and Taiwan, all of which have substantially higher real per capita incomes as well as greater degrees of income equality than China, not to mention all of them being democratic.
This post was by Peter Dorman, not by me.
For Barkley Rosser read Peter Dorman.
Barkley Rosser as always explains the problem. I am so grateful.
The Chinese are too unlearned to have ideas about economics and not democratic enough to count even for the economics they might learn from Harvard and MIT folks who evidently know all the economics about poverty reduction and ending that is worth knowing. Besides, the 1.4 billion Chinese are not as rich as the Japanese and rural China is poorer than urban China so there is inequality.
So, now to dismiss the last 42 years of Chinese per capita that seemed to have been unequaled in history, now to dismiss the raising of hundreds of millions of Chinese from poverty as of no value to the countless lives that have been vastly bettered. Do Chinese lives matter, after all? I suppose not, since they are not the lives prescribed by Harvard and MIT folks.
I am so grateful for the instruction.
To a large degree the Nobel for Chinese growth was given a long time ago to Robert Solow....
-- Barkley Rosser
[ No doubt I am wrong as always, but to me this is nonsense and wildly offensive nonsense at that. Why is it necessary to dismiss or belittle the accomplishments of 1.4 billion people?
Oh well, I am sure this is all just too difficult for a fool like me to understand so I too will go with Solow. ]
I get a hint of sarcasm here. A reason China seems on the surface so impressive is that it is so large. So even though it is behind the nations I mentioned on lots of important grounds, its sheer size means that its growth has led to a much larger change in aggregate standing in the world. In real PPP terms China is now the highest GDP nation even ahead of US. So this is dramatic.
But, frankly, the other nations I mentioned have arguably done better in many ways than China has. But all of them followed Solow by having has long periods of high rates of capital investment.
"A reason China seems on the surface so impressive is that it is so large. So even though it is behind the nations I mentioned on lots of important grounds....
"But, frankly, the other nations I mentioned have arguably done better in many ways than China has...."
Surely so, and I will be thinking of all the ways China has fared poorly while still wondering why a Chinese poverty-focused economist failed to win the prize since dramatically improving the lives of hundreds of millions of people since 1980 in a country that was far poorer in per capita terms than India and is now far richer strikes me as important and praise-worthy enough.
Investing lots and lots in development is really important. Solow was completely right and needs to be amply credited, but to dismiss what China has accomplished and what should serve as a profound example even for an India strikes me as unfortunately saddening. I do understand the disdain for China which is being cultivated in America, but we need to try to know when we are being politically directed in blinding ways.
Do try to think beyond the cultivation disdain for China. Try.
According to the IMF (October 2019):
In 1980 real per capita GDP in China was 55% that of India, but in 2018 real per capita GDP in China was 230% that of India.
I would say knowing why would be worth a Chinese Nobel Prize or several; apart from the cultivated American disdain for China. I would bet (I am sure) Amartya Sen would agree.
Look, Nobel prizes, including even the "fake" economics one given out by the Sveriges Riksbank for the last half century, focus on people who generate new ideas, not policymakers who may have achieved successful outcomes. You suggest that "a poverty-oriented Chinese economist" deserves the prize, but somehow you do not provide a name. And I would suggest you will not be able to because no Chinese economist has generated any important new ideas on this. Offhand, of the four nations I mentioned that have done about as well as China (arguably better by some measures) have also not have had any economists who have received the prize, with Japan in particular having several who arguably should have but have not, including Hirofumi Uzawa and Masahisa Fujita.
Actually Solow was not the originator of the main policy followed by all four of the nations I mentioned, having a high rate of capital investment. This is an idea that dates back to at least the 1920s with some Soviet economists such as Feld'man advocating it, but with these people dead by the time the prize got going in 1969.
There have been some unique aspects of the Chinese development pattern, notably some institutional ones such as their use of town and village enterprises. However that was a policy, largely now passed, that simply arose out of policy changes without any grand theory from a particular economist, Chinese or otherwise.
BTW, charging that this somehow reflects some sort of unfair disrespect to China is just ridiculous. Sorry if that is too blunt, but it is true. As it is, there is much to admire and respect in the Chinese record, but also things that are not so admirable. But both sides of that have nothing to do with an anonymous Chinese economist deserves the econ Nobel or not.
The first--and only--graduate course I took in economic development had a large section on land reform policies in (as I recall; I took the course 49 years ago) Colombia. It wasn't an experimental program, and I'm not going to describe it here (I have, you will not be surprised to hear, forgotten many of the detains). The program was killed quickly, because, so far as the current lanwdowners were concerned, it was working *too* well...
Was that in a course taught by Kamala Harris's dad, Don Harris?
You say: “To a large degree the Nobel for Chinese growth was given a long time ago to Robert Solow. A nation that invests more grows more. That is pretty much it, …” and “Look, Nobel prizes, including even the ‘fake’ economics one given out by the Sveriges Riksbank for the last half century, focus on people who generate new ideas, not policymakers who may have achieved successful outcomes. You suggest that ‘a poverty-oriented Chinese economist’ deserves the prize, but somehow you do not provide a name. And I would suggest you will not be able to because no Chinese economist has generated any important new ideas on this.”
Solow criticized the DSGE-Orthodoxy: “Since I find that fundamental framework ludicrous, I respond by treating it as ludicrous ― that is, by laughing at it ― so as not to fall into the trap of taking it seriously and passing on to matters of technique.”#1
The same holds, though, for Solow’s own growth model.#2
Nevertheless, the EconNobel “was given a long time ago to Robert Solow”.
It is pretty obvious why the EconNobel will not be given to a Chinese economist. The EconNobel is a Hollywood production for the western audience initiated and sponsored by the US Oligarchy to reward US economists for their propaganda services to “scientifically” prove the superiority of the US-version of self-optimizing supply-demand-equilibrium.
The EconNobel had NO scientific significance 50 years ago and has none this year. And this is NOT because “no Chinese economist has generated any important new ideas” but because no US economist has generated any important new ideas. Walrasianism, Keynesianism, Marxianism, Austrianism, MMT is ludicrous proto-scientific garbage to this day.
#1 Solow and the ludicrousness of economics
#2 Sending Solow’s growth model to the dump of proto-scientific history
"Don,Was that in a course taught by Kamala Harris's dad, Don Harris?"
No; he did teach the second macro course (which was excellent). I don't remember the name of the prof who taught the econ development course. He had, however, been instrumental in establishing the reform that got reversed. It was a modification of property (especially land) taxes, which allowed property owners to self-assess--but then published the assessments--and the law required that if someone wanted to buy the property at the self-assessed value, the owner was required to sell it...or submit a new assessment. (Only one submission of a new assessment was allowed.) I think, but am not sure my memory is accurate, the self-assessment system applied only to property with a value above some threshold. Fairly easy to see why large property owners were, to say the least, not happy.
I am not all that much of a fan of the Solow model myself. I am a critic of it based on my taking the Cambridge critique of capital theory seriously, and those aggregate production functions Solow has been into are really seriously flawed. That they are so widely used I find frustrating.
It was from Don Harris in that Advanced Macro class at UW that I first got into that old Cambridge capital theory critique.
You suggest that "a poverty-oriented Chinese economist" deserves the prize, but somehow you do not provide a name. And I would suggest you will not be able to because no Chinese economist has generated any important new ideas on this....
[ Thank you so much for this explanation. I am sorry if I try your patience, but your patience is always amply rewarded by what I learn from you. Surely "no Chinese economist has generated any important new ideas on" poverty alleviation all the while 800 million or so Chinese were being lifted from poverty.
I understand, all the ideas were always in Massachusetts which is fortunate for where would the Chinese who borrowed those ideas be otherwise?
I understand, and as always am ever so grateful for the instruction though more so in this instance because I sort of thought there might be at least a little to be learned from what will be the elimination of severe poverty in a country of 1.4 billion that had only 55% the real per capita GDP of India in 1980. ]
You suggest that "a poverty-oriented Chinese economist" deserves the prize, but somehow you do not provide a name. And I would suggest you will not be able to because no Chinese economist has generated any important new ideas on this....
[ Me, I sort of admire Yuan Longping to begin with and since this is China and there are many people who have worked on poverty alleviation I could go on but being properly chastened will stop there. I know though, the Massachusetts folks are the ones I should be admiring exclusively.
Thank you so much for properly educating me, and have faith for I am trying to learn. ]
I really am glad that the Massachusetts folks were rewarded for studying poverty and I do admire Solow. Just that in the matter of poverty, I think the Chinese know at least a little. However, I know the antipathy that is being cultivated in and by America now towards China and I realize that it is risky in America to openly commend the Chinese even for ending poverty for 800 million.
No matter, Chinese development efforts have been and promise to continue to be successful.
BTW, charging that this somehow reflects some sort of unfair disrespect to China is just ridiculous.
[ Absolutely so; I agree completely and never ever would suggest otherwise. I never used the word "disrespect," nor the word "unfair." ]
Thank you so much for correcting and helping me. You are completely right and I was incorrect as usual. Massachusetts is the place to turn for instruction on poverty alleviation.
Regarding the matter of lifting millions out of poverty in China, which largely relied on the same ideas used to do so about as rapidly if for fewer people in Japan, South Korea, and Taiwan, it was not people in Massachusetts even though I initially said it was Robert Solow. No, it was people in Russia in the 1920s who died before the prize was established.
As it is, while I think the current prize is deserved, I am aware that several prominent economists, including Nobelists Joseph Stiglitz, Angus Deaton, and James Heckman, none of them located in Massachuswetts, wrote a letter to the Guardian a year ago in August, criticizing the work of Duflo et al as being too narrowly focused and too micro to really solve poverty problems substantially, that that there experiments cannot be scaled up to really help implement policies that would help large numbers of people, your complaint, I believe. They did grant that the RCTs might be useful in a more negative way to warn against certain policies, which strikes me as quite likely true.
You say: “Look, Nobel prizes, including even the ‘fake’ economics one given out by the Sveriges Riksbank for the last half century, focus on people who generate new ideas, not policymakers who may have achieved successful outcomes.”
This, of course, is absolutely correct. But then, is your discussion about whether China or the Massachusetts team has been more successful in alleviating poverty not a bit beside the point?
What you are constantly doing is to confound science and politics. This is a hereditary mental and moral disease among economists since Adam Smith. However, the founding fathers were at least honest people and called themselves Political Economists. The denomination “political” was later scrapped by Jevons. This was roughly at the same time when the War Ministries were renamed Defense Ministries.
What the general public does not understand is that there is political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.
The fraud of economists consists of telling the public that they are doing science while, in fact, they are doing agenda-pushing. The fraud is in the title “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”. There would be no problem at all if the title was “Bank of Sweden Prize in Economic Propaganda on Behalf of the US Oligarchy”.
With regard to ‘Economic Sciences’, economists still behind the curve:
• Science manifests itself in the form of the true theory.
• Truth is well-defined by material and formal consistency.
• Logical consistency is secured by applying the axiomatic-deductive method and material consistency is secured by applying state-of-art testing.
• The true theory/model is the humanly best mental representation of reality.
• The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are axiomatically false, materially/formally inconsistent, and mutually contradictory.
• Orthodox and heterodox economics is failed/fake/cargo-cult science, i.e. political agenda pushing without valid scientific foundations.
The “alleviation of global poverty” by the Massachusetts team is politically fictitious and scientifically worthless.
The political reality is that MMT academics claim on the basis of an algebraically false sectoral balances equation that public deficits are beneficial for WeThePeople and that they increase “private wealth” while the analytically correct balances equation says that Public Deficit = Private Profit which is obviously beneficial alone to the Oligarchy.
So, while academic economists pretend with this year’s EconNobel to care about the alleviation of poverty, they politically accept/promote the explosion of the Oligarchy’s financial wealth by exploding the public debt.
Clearly, economists have to be thrown out of the scientific community.
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