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HomeOpinionNobel winner Abhijit Banerjee offers cure to India’s ideology-driven public policy ailment

Nobel winner Abhijit Banerjee offers cure to India’s ideology-driven public policy ailment

Indians’ tendency to use ready-made frames, both by Left and Right, makes policy prescriptions utterly predictable and not so useful.

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If your friend gets the Nobel Prize, I suppose it is all right to bask in the reflected glory, at least for a day. So I did, after the announcement of the Nobel Prize for Economics this year to Abhijit Banerjee and his two colleagues. My family and friends are duly impressed. But this is not my-reminiscing-about-the-latest-Nobel-Laureate piece. I am hopeless at telling stories, even remembering them. This is about my odd friendship and admiration for Abhijit, for I suspect some of those reasons may be of wider interest.

We were in the same Masters’ batch (1981-83) at JNU, but in different disciplines. He was pursuing MA (Economics) at the hallowed Centre for Economic Studies and Planning (CESP). I was pursuing the more humble MA (Political Science). My first distinct impression of him was a man sitting outside the ramshackle dhaba at the back (now the main entrance) of the library building. A gangly, bespectacled man with a slight stoop, dangling a cotton Santiniketan bag (not the radical jhola!), passionately involved in an argument with a group of history students.

I kept my distance. I was still awkward in English-speaking Delhi and somewhat in awe of his reputation. Rumour had it that he was a ‘Presidency topper’ who had secured an ‘A Plus’ (highest grade in JNU’s 9-point scale) in the first semester. He was not overtly political. He did not join any of the political organisations on the campus, but would turn up for many post-dinner political meetings.

During those two years, we had no more than a nodding acquaintance. We got to know each other afresh some 20 years later when he turned up for my talk at Harvard. He stayed back and we talked about JNU days, joked about how little we had learnt inside the classroom. This is when we became friends.

Since then – I suppose it was 2003 – we have met often, during my infrequent visits to the US or his frequent visits to India. Like a good Bengali intellectual, he can hold forth on anything under the sun: from literature and cinema (he has actually directed a short documentary film) to history and politics. My bandwidth is narrower. Like all Bengalis, he is a foodie, who, unlike most Bengali men, can also cook rather well. I am no foodie.

Worse, we don’t quite share our politics. He did take keen interest in the AAP experience, but hasn’t shown much interest in India’s democratic socialist tradition that I come from or in my organisation, Swaraj India. My colleagues and friends are surprised, some even dismayed, at my interest in and admiration for his work. The red and the green friends don’t find him radical enough. My movement friends violently disagree with many of his policy prescriptions, especially on cash transfer and learning assessments. Yet, I look forward to talking to and learning from him.

Also read: Economics Nobel for Abhijit Banerjee celebrates asking the right questions

Public policy & economic reasoning

The reasons are not his technical accomplishments that have, rightly, impressed the Nobel committee. He has come to be seen as the pioneer of clever experimentation as a method of gathering robust evidence on the efficacy of any policy. The use of randomised controlled trial (RCT), which was earlier used in medical sciences, by Abhijit, Esther Duflo and Michael Kremer changed the face of the sub-discipline of developmental economics within a decade or so. This is why they got the Nobel, rather early by the standards of the Nobel committee.

But as economists like Angus Deaton point out, RCT is neither necessary nor a sufficient method of gathering robust evidence. Jean Drèze has drawn attention to the perils of doing policy advocacy based solely on RCT. Pranab Bardhan alerts us that RCT as a fad can take our attention away from deeper and larger issues that affect public policy.

What attracts me to Abhijit’s economic reasoning is something more generic that should be relevant to anyone who cares for public policy. Thinking about public policy in our country is over- ideologised, over-generalised and over-optimistic or over-cynical. Abhijit and colleagues offer a cure to this debilitating condition. This is why political activists like me must listen to economists like them.

Also read: Abhijit Banerjee’s Nobel in the US: Is it a comment on the quality of Indian institutions?

Attention to policy design

The problem with most activists and political workers, including the most courageous, honest and intelligent ones, is this: when it comes to framing economic policy in general and social policy in particular, they draw from first principles, as they should, but rush straight to policy prescriptions. There is a strange bundling of ends and means. Those who value equality, for example, automatically trust state, prefer public sector and advocate controls and regulations.

The tendency to use ready-made frames, both by the Left and the Right, makes policy prescriptions utterly predictable and not so useful. Abhijit and his colleagues have ensured that the values of a welfare state speak to instruments of a market economy that we live in.

They have done so by breaking down big public policy debates into small bits, and then resolving each bit with the help of rigorous evidence. For example, instead of debating the merits or otherwise of a common school system, which is not a feasible option for us today, it would be much better if we focus on how to deal with teacher absenteeism and learning deficits in government schools.

This move from general to specific makes the debate more meaningful and usable. It forces the policy-makers as well as social activists to pay attention to one of the weakest links of our policies: their design. From Women’s Reservation Bill to Right to Education, we have umpteen examples of well-intentioned but poorly designed policies that achieve the opposite of what they set out to do.

Attention to policy design can cure the ideological activists of their contempt for details. What is so refreshing about Abhijit, his colleagues and their students is their keenness to dirty their hands, to visit the sites where policy touches the people, and to understand the smallest of details.

This is what public policy must do. In that sense, Abhijit, Esther Duflo and Michael Kremer have nudged the esoteric discipline of economics back towards real life. Their rigorous testing of the impact of public policy is one of the best cures for the congenital cynicism about the role of the state. Their work convinces us that public policies, which are normatively oriented and intelligently designed, can achieve the desired goals. They are not the only ones: there are many other economists who can help us in this task. But social activists must learn to look beyond their cosy circles.

Now that the Nobel is behind him, should we expect Abhijit to take a step forward? What we really need in these times is a frame that brings together ethical norms, ecological sustainability and economic rationality. I have called it the search for Eco-normics. Our received economic ideologies fail to provide us with such a frame. Gifted with a beautiful mind, Abhijit is among the very few who can address this pressing need of our times.

Also read: Nobel for Abhijit Banerjee and co shows how Economics as a discipline is changing

The author is the national president of Swaraj India. Views are personal.

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  1. NYAY or Nyunatam Ay Yojana, guaranteeing minimum income to rural folk, proposed by Congress to the voter before the General Election of 2019 seems to be a very good scheme to improve buying power of rural folk. A total annual income of Rs. 72,000/- for every family in rural India would have worked well to boost the income of farmers thereby boosting economic demand of the rural India. This scheme was said to be based on the advice of Dr. Abhijit Banerjee, the Nobel Laureate. The BJP government should pursue this scheme in the rural area forgetting its partisan spirit because the scheme was mooted first by its political rival Congress. This scheme would help India to boost demand in the rural economy. This would be a more effective step than giving tax reduction to Corporate enterpreneur in which case there is no guarantee that the surplus derived would be reinvested by the Corporate player.

  2. I have no wish to enter into a debate on the merits of the Nobel Committee nor on the relative merits of the subject – the difference between practice vs percept. The main issues that has overwhelmed me since the Asian Flu of 1998 are (1) measurement/definition of poverty and (2) a historical perspective as to why poverty at all exists. My search has not led me to an answer despite the financial crisis of 2008 and the looming recession the world over. Somewhere down the line – microeconomic modelling is at significant difference when scaled to the macroeconomic study. My maid is poor because she cannot afford an apartment and must rent an accommodation in a slum. She does earn Rs 20-k a month but of course can’t afford to send her son to a highly denominated neighbourhood school. Recession will not affect her. But price rise will. So in a micro-economic sense people of this working group are affected socially in a common way. They are certainly not going to be affected hugely by the looming recession, they remained unaffected by the Asian Flu or the financial crisis of 2008. What is the resolution? May I invite a proper analysis of this situation in regard to poverty alleviation.

  3. 1. I feel that award of Economics Nobel prize jointly to Abhijit Banerjee, his wife and another economist provides an opportunity to citizen-voters in our country to view things in proper perspective. 2. If I am right, Abhijit Banerjee had given a suggestion to the Congress Party with regard to NYAY or Minimum Income Guarantee Scheme (MIGS). 3. Abhijit Banerjee had suggested a minimum income guarantee of Rs 2500/- per month (Rs 30,000/- annual) per poor person, from “Below Poverty Line” or BPL families. Perhaps such a scheme was a viable proposition but wise leaders of the Congress party increased the income to Rs 72,000/-, per year in Congress party’s manifesto issued just before Lok Sabha (LS) election. 4. Everyone knows what happened to political fortunes of the Congress party in LS election. Ironically, NYAY or MIGS has been quietly dumped by the Congress party after the LS debacle. This kind of quick rejection of NYAY or MIGS clearly demonstrates Congress party’s concern for our country’s poor and Congress leaders’ respect for India’s Nobel laureate Abhijit Banerjee. 5. NYAY or MIGS, with income guarantee of Rs 72,000/-, per year was an empty promise, made without any serious calculation of resources required to pay that kind of money to crores of poor citizens. Needless to say citizen-voters have rejected all such empty promises.

  4. I request ThePrint to do a piece on India’s position in the Global Hunger Index. We are at 103 out of 119 countries.

    Please focus on these issues regularly. A lot of our fellow citizens it seems, need regular reminders of where we are, and what we need to be focusing on.

    • I fully support your request. It is time we avoid or better still ignore useless debates on nationalism, and become true nationalist concerned about uplift of our people.

  5. Any apolitical citizen will cry out aloud about his diminishing buying power after demonetization, GST . Farmers need sustained support not quickies.
    Government should heed Mr Baneerjee listen and motivate consumer demand than corporate tax exemptions. See how effective MNREGA and shuld encourage similar schemes

  6. Getting information about the deep concern of the economist and his Indian friends, I recall an incident. Comrade S.M. Banerjee, a trade unionist who represented Kanpur as an independent candidate for several terms in the Lok Sabha, was an orator. He was seen most often in a well-starched dhoti-kurta and looked very much like a typical Bengali “bhadralok” gentleman. Known for his impromptu style, Banerjee’s public addresses drew large crowds. During one such speech, he noticed a daily wage labourer, holding his toddler in his lap, listening with rapt attention to every word. Pausing for effect, Banerjee pointed to the labourer and said, “Look! Our democracy, Prajatantra, Jamhuriyat! This young, poor boy may become the country’s Prime Minister one day! Such is the power of our democracy. It leaves no one behind.”
    The daily wage labourer, consumed by this life-changing sentence, did not wait to hear more but ran at frantic speed to his home—a small dilapidated room. He banged on the door incessantly till his wife opened the door and said excitedly to her, “Our boy is going to be the Prime Minister! Our boy is going to be the Prime Minister! Banerjee sahib said so himself!”
    The couple spent a joyful evening, revelling in their simple happiness and showering love on their child. As time went by, the labourer failed to pay his son’s meagre government school fee and the boy was put to work as a shoe polisher. All dreams and aspirations lay forgotten to feed the belly.

  7. He offers nothing. Just like all the US Presidents conferred with Nobel Peace Prize, never had any peace to offer. All that they have offered over the decades is war and strife…

  8. He could have achieved the same result of alleviating poverty by opting to remain in India, create job opportunities here with his intellect.
    YY and similar ilk are experts in celebrating who move out and pulling down who work here within India.
    By the Nobel yardstick for this alleviating poverty, then Swachch Bharat Mission, Ujjwala Yojana have achieved 100 times more in absolute numbers and purpose. Yet, the same intellectuals are busy deriding the government at every available opportunity.

    • You don’t seem to be condemning the 50000 plus Indian NRIs who have left our land to seek a wealthy and cushy life in the US, and were lauded and praised by our PM!?
      But, Mr. Banerjee, who went there to pursue academic excellence and justified it by winning the Nobel Prize is vilified by you?!?! Amazing logic!! Don’t you think we should ask these Rich NRIs to come back and help in creating jobs here…????

  9. Kashmir today is a laboratory for RCTs. Such an immense decision has been taken, with no interaction with small groups of people who will be affected for the rest of their lives, possibly generations, by it. It may not be too late to start many conversations.

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