Randomized Controlled Trials

and Poverty Alleviation

B D Nayak
PRIZE IN ECONOMIC SCIENCES 2019 .. for their
EXPERIMENTAL APPROACH TO ALLEVOATING GLOBAL POVERTY
Abhijit Vinayak Banerjee

Born - 21 February 1961, Mumbai, India

Graduation - University of Calcutta (1981)
MA in Economics at JNU (1983)
Doctorate - Harvard University (1988)

Currently - Ford Foundation International

Professor of Economics MIT

• founded the J-PAL (2003) at MIT

• Inaugural Infosys Prize (2009)
• Gerald Loeb Award (2012)
• Gerald Loeb Award (2012)
• Bernhard-Harms-Prize (2014)
 Esther Duflo

Born - 25 October 1972, Paris

Professor of Poverty Alleviation and

Development Economics at MIT

• Postgraduate from Paris School of Economics (1995)

• Doctorate at MIT (1999)
• assistant professor of Economics at MIT (1999)

• Elaine Bennett Research Prize (2002)

•  Best Young French Economist (2005)
• Calvo-Armengol International Prize (2009)
• John Bates Clark Medal (2010)
• Fortune Magazine’s 40 Under 40 list (2010)
• Gerald Loeb Award (2012)
• French Order of Merit (2013)
• Infosys Prize for Social Scince (2014)
 Michael Robert Kremer 
Born – 12 November, 1964
an American Development Economist
Gates Professor of Developing Societies
at Harvard University

graduated - Harvard University (1985)

Ph.D. in Economics (1992)
postdoc at MIT (1992-1993)
professor at MIT (1993 -1999)
professor at Harvard (1999- onwards)
 MacArthur Fellowship (1997)
 Presidential Faculty Fellowship
 Young Global Leader by the WEF
 • for using experimental approaches in global
poverty research and development economics

Nobel Prize • using randomised controlled trials (RCT), also known

as field experiments
in
Economic • Their organisation The Abdul Latif Jameel Poverty
Sciences Action Lab (J-PAL) has been funding, organising and
supervising many field experiments
2019
• Their approach remained guided by microeconomic
theory and the use of microeconomic data. But it
shifted focus towards identifying workable policies,
for which one can make causal claims of impact.
What is RCT ?
 RCT is a scientific experiment method,
• conducted to measure comparative effects of a cause, i.e., a policy
intervention
• randomly administered to a select group (treatment group)
• while keeping the behaviour or status of a compared group (control
group, constant)
• This type of methodology is popularly called as the ‘difference in
differences’ (DID) regression method.

 Esther Duflo’s early influential paper on the effect of school

construction in Indonesia on education outcomes used this DID
method.
  1747 - The first reported Clinical trial was conducted by
James Lind to identify treatment for Scurvy

 1880s - appeared in experimental Psychology, where they

were introduced by Charles Sanders Peirce  and Joseph
Jastrow, also in Education

History of  1900s - appeared in agriculture, due to Jerzy Neyman and

Rolan A. Fisher
RCT  1948 - The first published RCT in medicine appeared paper
entitled “Streptomycin treatment of pulmonary
Tuberculosis”. One of the authors of that paper was Austin
Bradford Hill, is credited as having conceived the modern
RCT.

 1970s - 1990s - progressively accepted as a tool for policy

evaluation
Types of RCT
by study design:
An analysis of the 616
•Parallel-group – each participant is randomly assigned to a RCTs indexed in PubMed
group, and all the participants in the group receive (or do  during December 2006
not receive) an intervention. found that :

•Crossover – over time, each participant receives (or does

not receive) an intervention in a random sequence.
78% - parallel group,
•Cluster – pre-existing groups of participants (e.g., villages, 16% - crossover,
schools) are randomly selected to receive (or not receive) an 2% - split-body,
intervention. 2% - cluster,
•Factorial – each participant is randomly assigned to a 2% - factorial
group that receives a particular combination of
interventions or non-interventions
 Types of RCT
By outcome of interest
Explanatory – tests efficacy in a research
setting with highly selected participants
and under highly controlled conditions.
Pragmatic – tests effectiveness in
everyday practice with relatively unselected
participants and under flexible conditions;
in this way, pragmatic RCTs can inform
decisions about practice.
By hypothesis which differ in methodology and
reporting
Superiority trials - one intervention is
hypothesized to be superior to another in a 
statistically significant way, most RCTs are
superiority trials
Noninferiority trials - to determine whether a
new treatment is no worse than a reference
treatment
Equivalence trials – the hypothesis is that two
interventions are indistinguishable from each other
• People who take up program

• Difference in take up caused by

encouragement
Targeting the Ultra Poor Program: Coordinated
evaluation in several countries

Productive asset Savings

transfer

Health Beneficiary Home

visits

Consumption support Technical skills training

12
Country by country results: Assets

Endline 1 Endline 2
Asset change (standard deviations) 0.8

0.5

0.2

-
0.1

Banerjee et al, 2015

13
 Country by country results: Consumption

20%
% Change in per c apita consumption
Endline 1 Endline 2
15%

10%

5%

0%

-5%
14
 Many sectors, many countries
• a network of nearly
200 researchers
performing RCT
experiments in
economics.

• So far, researchers
associated with J-
PAL have performed
978 studies in 83
countries.
Over 200 million people reached through scale-ups
of programs evaluated by J-PAL researchers
Programme reach

School based Deworming 95

Raskin : Subsidized Rice (Indonesia) 66

Teaching at the Right Level (India) 34

Generasi : Conditional Community 6

Block Grants (Indonesia)

Chlorine Dispensers for Safe Water 0.5

(East Africa)

Free Insecticidal Bed-nets Policy influence

Police Skills TRaining Policy Influence

TOTAL 202
Why have RCT so much impact?

• Focus on identific ation of causal effects (across the board)

• Assessing External Validity
• Observing Unobservables
• Data collection
• Iterative Experimentation
• Unpack impacts
 Disadvantages

• Time consuming one study found 28 Phase III 

RCTs funded by the 
• Cost intensive National Institute of Neurologic
al Disorders and Stroke
• Conflict of interest dangers  prior to 2000 with a total cost
of US$335 million, for a mean
• Ethics  cost of US$12 million per RCT.
 Pooreconomics
Poor economics
"This urge to reduce the poor to a set of clichés has
been with us for as long as there has been poverty. The
poor appear, in social theory, as much as in literature,
by turns lazy or enterprising, noble or thievish, angry
or passive, helpless or self-sufficient”

Poor Economics, Mr Banerjee and Ms Duflo,

“The goal of our work is to make sure

that the fight against poverty is based on
scientific evidence”
Esther Duflo, Massachusetts Institute of Technology
 Pooreconomics
Poor economics
The modern approach to development economics relies on two simple
but powerful ideas.

1. empirical micro-level studies guided by economic theory can

provide crucial insights into the design of policies for effective
poverty alleviation.

2. the best way to draw precise conclusions about the true path from
causes to effects is often to conduct a randomized controlled field
trial.

The systematic application of these ideas over the past 20 years has
paved the way for the transformation of development research.
 Pooreconomics
Poor economics

“All too often, the economics of poverty gets mistaken for poor economics.
Because the poor possess very little, it is assumed that there is nothing
interesting about their economic existence."

Economists (and other experts) seem to have very little useful to say
about why some countries grow and others do not. In retrospect, it is
always possible to construct a rationale for what happened in each place.

the poor bear responsibility for too many aspects of their lives. The
richer you are, the more the “right” decisions are made for you.
 Pooreconomics
Poor economics

policy stances with simple formulas
for tackling poverty :
• Free markets for the poor
• Make human rights substantial
• Deal with conflict first
• Give more money to the poorest
• Foreign aid kills development
there are no magic bullets to end poverty.
Instead, there are a number of things which
could help improve their lives:
• a simple piece of information can make a big
difference,
• doing the right thing based on what we know
• helpful innovations (microcredit or electronic
money transfers using mobile phones).

"poor countries are not doomed to failure because they are poor, or because
they have had an unfortunate history. What often needs to be fought is
"ignorance, ideology and inertia".
So close we are with this ideology!!

• Identification of problems
• Understanding the strength of poor
• Innovations
• Research & Development
• Inclusive growth models
• Piloting, experimenting, trials

WE ARE ALMOST THERE. PERHAPS WE LACK THE

SKILL OF TELLING OTHERS