John Maynard Keynes said economics should be likened to dentistry. Esther Duflo and Abhijit Banerjee use another metaphor: the economist as plumber. In lectures and books, the wife-and-husband team, both professors at MIT, have pushed for research on the “plumbing” of economic systems. That is, the details of how different policies empirically affect behaviour in real-world situations rather than grand theory.
Duflo and Banerjee’s research on which policy interventions work to reduce poverty in developing countries, using randomised experiments to document the effects of policies, earned them the Nobel Prize in economics in 2019 (together with their frequent collaborator Michael Kremer).
In this conversation with Martin Sandbu, the FT’s European economics commentator, they discuss the sorry state of “plumbing” around the world as revealed by the pandemic. When economies had to be locked down to stop the spread of coronavirus, many countries lacked the systems for giving people social protection. They highlight that even the best plumbing — and there are surprising examples of poor countries with excellent benefit delivery systems — does not help a country with no money. They suggest that the proposal for new “special drawing rights” at the IMF should be realised and channelled to poor countries.