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IPA Affiliates Abhijit Banerjee and Esther Duflo attended Tehelka-Newsweek's Thinkfest, a festival offering "the opportunity to interact and debate with the foremost thinkers and innovators from India, Pakistan, USA, Britain, China, Israel, the Middle East and Europe."
The Times of India summarizes:
A session at Thinkfest on 'why Indian schools are failing our children' turned out to be strong critique on the present education system in India.
Abhijit Banerjee, the Ford Foundation International professor of economics at the Massachusetts Institute of Technology felt the Right To Education (RTE) Act was how someone 'elite' in Delhi thinks of helping the poor.
"The whole bill reads like a building catalogue," said Banerjee. He felt the rigid requirements of the RTE would lead to many smaller educational institutes operating without proper infrastructure but still providing education to many having to shut down as a result of "falling foul of RTE. The students will then be herded back to these (government schools that have proper classrooms, a playground... but no teachers."
He also faulted parents for their approach to their children's education.
"Very early parents decide the purpose of education is to get to Class XII and get a job," Banerjee said.
French economist Esther Duflo, attributed the lack of resolve among a majority of teachers in government schools to the unclear way the mission is defined. "So many students go to school, but at the end of five years they cannot read," Duflo said. She lamented that lower class teachers affect discrimination in grading lower caste students out of conviction that the upper caste students are better. "They believe the lower caste children can't do it. Then the students themselves believe they can't do it and then they really can't do it," she added.
Broaching the subject of testing, Banerjee said "Testing is important because semi-literate parents have the choice between government and private schools and there has to be a criterion on which they can base their choices."
In his blog, Forbes' Tim Ferguson brings attention to an investment into a development think tank at Stanford:
Investor Robert E. King and his wife have given $150 million (part of which is a challenge grant) to found the Stanford school’s Institute for Innovation in Developing Economies, which will informally be known as SEED. It will join the other work being done to identify and remediate social, cultural, physical and legal barriers to uplift from poverty.
Ferguson brings up IPA Affiliates' two most recent books, noting the active work in development recently as he joins others in the business world calling attention to the field.
Beyond Collier’s early work, others active intellectually in this field include Yale’s Dean Karlan, author of “More than Good Intentions: How a New Economics Is Helping to Solve Global Poverty,” and Esther Duflo, winner of the John Bates Clark Award for outstanding young economist and co-author of “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty.” (SEED itself will be chaired by Nobel winner Michael Spence, another specialist on development economics and dean emeritus of Stanford GSB.)
Read his full post here.
Press release commends book as "at once radical in its rethinking of the economics of poverty and entirely practical in the suggestions it offers, allowing a ringside view of the lives of the world's poorest."
IPA Research Affiliates Abhijit Banerjee and Esther Duflo's Poor Economics has won the Financial Times and Goldman Sachs Business Book of the Year Award, a distinction established in 2005 to highlight one book each year that has provided "the most compelling and enjoyable insight into modern business issues."
Bloomberg reports on the story:
Abhijit V. Banerjee and Esther Duflo’s “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty” won the Financial Times and Goldman Sachs Business Book of the Year Award.
Banerjee and Duflo, MIT economists and co-founders of the Abdul Latif Jameel Poverty Action Lab, overcame competition from Barry Eichengreen’s “Exorbitant Privilege,” Daniel Yergin’s “The Quest” and other finalists to claim the award of 30,000 pounds ($48,000) during a dinner last night at the Wallace Collection in London.
In “Poor Economics” (PublicAffairs), Banerjee and Duflo use randomized control trials of the type used to assess new drugs to study the behavior of poor people and the best ways to alleviate poverty.
Addressing topics from health to education, the authors build a shrewd yet sympathetic portrait of a problem as complex as those individuals who make up the all-too-often stereotyped poor. They shed light on seemingly irrational behavior, such as the Moroccan farmer who finds money to buy a television when he can’t afford food.
Ultimately, they argue that aid can work, as long as what they call “the three I’s: ignorance, ideology, and inertia” are banished from policy making.
The authors didn’t think they were writing a business book, Banerjee said.
“What’s particularly wonderful about winning this award is that these ideas, that in some ways come from a very different world -- the world we live in, which is a world of poverty and policy -- resonate with people who are from the world of business,” Banerjee said after the ceremony. “That these ideas have managed to cross that boundary -- it’s really very rewarding.”
In other media:
A LiveMint.com article uses evidence from a study by Abhijit Banerjee and Thomas Piketty to show how India, despite ranking low in income inequality compared to other similar economies, has still experienced a rise in inequality:
"Occupy Wall Street (OWS) captured the anger of an American public that feels cheated by the top 1% of earners in the United States, who appear to have emerged largely unscathed from the recession they helped engineer in 2008. This deep well of anger found echoes around the world as the OWS movement went global. India is not exempt – Occupy Dalal Street kicks off on Friday. The rise in income inequality in America is well-documented and is considered to be a root cause for the existence of OWS; as data show, India, despite ranking relatively low in income inequality, has still seen inequality increase in the last 25 years.
"Economists Abhijit Banerjee and Thomas Piketty charted the income share of the top 1% of earners in India from 1922 to 1999, based on tabulations of annual tax returns published by the Indian tax administration. Their results show that the socialist policies adopted after independence had their intended effect, with income shares for the top 1% falling between 1950 and 1981. The top 1% income share went from about 12-13% in the 1950s to 4-5% in the early 1980s. In the late 1990s, income share rose to 9-10%. It is interesting to note that the turning point according to this data appears to be 1980/81, rather than 1991 (when the economy was liberalized) – the share of the top 1% doubled through the 1980s. This is consistent with the view shared by economists such as Dani Rodrik and J Bradford Delong that there was a structural shift in the Indian economy in the early to mid 1980s. [...]
"Banerjee and Piketty found that the top 0.1% were able to garner a larger share of total income in the 1990s, suggesting that they were best positioned to take advantage of the new opportunities accorded by the opening up of the economy. It would be interesting to see if this trend has continued over the 2000s, or if the share of the top 0.1% has stabilized since, with more people now equipped to take advantage of their connection to the global economy."
A Slate article highlights doctoral researchers Michael Callen and James Long's field experiment intending to explore the potential of "camera auditing" to reduce corruption in electoral process in Afghanistan. The researchers cite Duflo's study, Encouraging Teacher Attendance through Monitoring with Cameras in Rural India, as inspiration for their work:
"If computerized balloting and transmission of results would be too expensive for a country like Afghanistan, mobile-phone technology holds much greater promise. (Besides, given the amount of corruption, any fancy election equipment would just get stolen anyway.) For improving election accountability, authors Callen and Long took as inspiration a study of teacher absenteeism in India, which showed that simply having a student photograph his teacher each morning sitting with the other students cut teacher absences in half and boosted students’ test scores.
For their election study, Callen and Long applied the same camera-audit approach to crack down on a common form of election fraud."
Citing a paper headed by IPA Research Affiliate Abhijit Banerjee, "Do Informed Voters Make Better Choices? Experimental Evidence from Urban India," the article notes the growing trend toward running randomized field experiments within the social sciences, and specifically in electoral political research.
Read the full article here.
The younger you are, the more freaked out you are likely to be by the housing market crash.
A new paper by Federal Reserve Bank of Boston economists used consumer sentiment data collected in the Michigan Survey of Consumers over the summer to try to find out how the housing market’s terrible state of affairs was affecting the willingness to buy a new home. Age mattered, which suggests a new generation may be coming along that will cast a wary eye at home ownership for a long time to come. The finding also suggests a new headwind to future growth levels, given that it’s hard for the economy to achieve a better rate of growth when the housing sector remains moribund.
The Michigan data suggests younger survey respondents “are relatively less confident about home ownership after larger declines, while older respondents are relatively more confident,” the paper said.
Importantly, attitudes were affected by personal experience. For both age groups attitude changes were “observed only for those with personal experience of loss (via themselves or someone close) during the crash.”
The paper said that older survey respondents with stable attitudes on home ownership’s value, even in the face of price declines, were over the age of 58. The paper’s authors, Anat Bracha and Julian Jamison, both of the Boston Fed, speculated “in terms of the striking age differential, one possibility is that relatively younger respondents were indeed more malleable, and hence they internalized the sharp drop as a regime change.”
Meanwhile, “older respondents — whose models of the world are harder to alter — see the drop in house prices as a temporary dip in a stable long-term upward trend, making it a particularly good time to purchase.”
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