GOING BY THE EVIDENCE
Economists are not known for their timing or predictions. However, the release of Good Economics for Hard Times could not be better timed, given the recent award of the Nobel prize to its two authors. Approbative cover blurbs from Raghuram Rajan and Thomas Piketty set the expectations even higher. And the book meets those expectations. One should read it not only for a very insightful review of contemporary economic research but also the questions it raises about the practice of economics.
One of the concerns for authors Abhijit Banerjee and Esther Duflo is that the ‘general public has stopped listening to economists about economics’. A consequent objective of the book is to share the ‘useful expertise no one else has’. Ironically, the authors argue, questioning some of its fundamental tenets is what might allow economics to be ‘good’ for some of the most pressing challenges: rising xenophobia, climate catastrophe, declining employment, among others.
The masterful weaving of narratives with evidence allows the authors to highlight what much of economics has ignored and only recently started to recognise—the dignity attached to work; the idea that individual preferences are not stable; the obsession with growth in policymaking, which, besides wrecking the planet, has also sidelined more fundamental questions of equity and justice. While disciplines like anthropology and public policy got there much earlier, the fact that these ideas are finding support from Nobel laureates will hopefully make them a whole lot more popular.
As professionals, Banerjee and Duflo would like to see themselves as “plumbers”, working without any ideological positions, with the sole intention of fixing the world’s problems through evidence-based solutions. While the ethics of conducting experiments that carry the threat of leaving some participants ‘discouraged and working less’ need greater elaboration, the authors continue to be closely involved, globally, in testing policy instruments like cash transfers via field experiments. The debate between cash transfers and other instruments of social policy, such as MGNREGA or the Public Distribution System, is a lively one and one that rightly finds a lot of space in the book as well.
Despite acknowledging the role that economists have played in delegitimising governments in the West, the authors do not exercise caution in running down governments (and other principles for that matter) in their enthusiastic advocacy of cash transfers in developing countries. They admit to the popularity of MGNREGA among the poor and yet label the Indian experience of it unfavourably. Their sweeping generalisations ignore the ‘evidence’ pointing to the diversity of experiences across Indian states in using instruments like an employment guarantee or a public distribution system. Glossing over the unfavourable evidence around cash transfers in the West, they simply argue that people in developed countries look to find meaning and identity in work while those in developing countries do not. For researchers otherwise obsessed with evidence, there is none offered here. And even if one found this to be true on average, how does one justify a policy like Universal Basic Income when they know that it deprives people of their sense of self-worth. In their numerous field experiments among the poor, the authors would surely have met many individuals for whom work was not just about money but also about the dignity it brought with it.
To their credit, they do share snippets of evidence contrary to their views but not without labelling it as coming from ‘left-wing intellectuals’. One might ask which ‘-wing’ the authors belong to, but it is truly perplexing to find individuals so skilled at their work—and with their words—relying on caricatures to devalue evidence disagreeable to them.
A good book is one that leaves you thinking differently about the world, and Good Economics is sure to do that for anyone with a reasonably curious mind. Read it closely, and you will also start recognising the humanity in the science. ■
Ankur Sarin is a faculty member in the Public Systems Group, IIM Ahmedabad
FOR RESEARCHERS WHO ARE COMMITTED TO ‘EVIDENCE’, THE AUTHORS GLOSS OVER EVIDENCE THAT CASTS A HARSH LIGHT ON THE EFFICACY OF THE CASH TRANSFERS THEY ADVOCATE