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Abhijit V. Banerjee and Esther Duflo
Public Affairs, New York, 2011, 308pp., US$26,99,
ISBN: 978-1586487980
(hardcover).
Small is Useful: The Empirical Approach to Improve Poor Economics
The award-winning 'Poor Economics' brings together recent contributions in development economics that have in common the use of randomized control trials (RCTs), or similar techniques. This research method arrives at conclusions about the effect of a certain variable by randomly selecting groups of people who will either benefit from whatever the variable content is (the treatment group) or be excluded from such content (the control group). Offering subsidized mosquito nets to fight malaria in randomly selected villages allows reaching conclusions on their validity if those villages are later compared with others in a control group who did not receive the nets. When these experiments are impossible because the policy under scrutiny was not designed accordingly, quasi-experimental evaluations could be carried out. For example, to analyze the wage effect of a school building program in Indonesia, Duflo compared generations that benefited from the new schools with older ones, controlling the fact that more schools were built in regions that initially were lagging behind in education. These are the kind of analyses used as raw material for the book.
In 2003 Banerjee and Duflo founded MIT's 'Poverty Action Lab' - currently the 'Abdul-Latif-Jameel Poverty Action Lab (J-PAL). With this institution as the centre, a group of scholars and collaborating organizations have come together with the objective of empirically evaluating development policies. Since its conception J-PAL has launched over 300 evaluations all over the world, and continues to do so in a more focused process. 'Poor economics' builds heavily - but not exclusively - on these experiences. The first half of the book includes chapters on food, health, education and...