Abhijit Bannerjee's Nobel for nonsense

2019 saw the Global extreme poverty level to fall to just 8 % from 28 % two decades previously. In India it is now thought to be 3 %.

What has driven this change? The collapse of the Left which in turn has meant much greater inequality in Wealth and Income. One consequence of much greater inequality is that there's more money to be spent on studying poverty alleviation rather than actually doing it. For a little while longer, Whitey can get to pat itself on the back even if this means including a darkie in its circle jerk of self congratulation. Yet, the stark fact is, this year's laureates were financed by a Saudi business family- I believe the were the first Toyota distributor in the Kingdom- and thus Whitey is taking credit for stuff done with non White money.

The Econ Nobel Prize committee writes-

Despite massive progress in the past few decades, global poverty — in all its different dimensions — remains a broad and entrenched problem. For example, today, more than 700 million people subsist on extremely low incomes.

The reason for this is obvious as is what needs to change for this to cease to be the case. The people who have moved out of extreme poverty and those who helped them do it were not Academic Economists. Deprivation is idiographic, not nomothetic. It is something better understood by those with no theoretical blinkers. No doubt, in the past, Economists were able to create poverty because it was not widely known that they were all cretins. But those days are long gone. If a person is a good Economist then they can get rich themselves or run a charity better than any one else.

We don't expect Professors of Literature to be good writers- or to be able to tell good Literature from bad. Nor do we expect Economists to actually economize on any scarce resource. Still, Literary Theorists are welcome to compete with each other just as Academic Economists afford us entertainment by outdoing each other's cretinism.

How to effectively reduce global poverty remains one of humankind’s most pressing questions.

This isn't true in the slightest. It declined precisely because 'humankind' realized that the extremely poor can't topple governments. All they can do is starve to death. It was up to those at risk of falling into extreme poverty to take preventive measures. Improved communications and mimetic effects have played a part in this. However, where the Left still rules, extreme poverty can increase.

It is also one of the biggest questions facing the discipline of economics since its very inception.

Ricardo and Malthus between them saddled Economics with the notion that, as the Bible says, the poor we shall always have with us. Yet, the solution was simple. Don't let parents make money off their kids and implement a social insurance scheme and the problem disappears.

So how best to identify strategies to help the least well-off?

Only one thing works- giving those who are somewhat better off an incentive to extend a social insurance scheme to the very poorest. They can also impose norms and set off mimetic processes such that the problem diminishes and a 'social minimum' becomes more and more affordable. However, this can only be done on their own terms. Accountants or Economists or Actuaries are welcome to advise but the scheme must be felt to be autochthonous.

This year’s Prize in Economic Sciences rewards the experimental approach that has transformed development economics, a field that studies the causes of global poverty and how best to combat it.

Development Economics started out by telling countries what to do to become Developed. Sadly, it fucked up massively. Still, for a while it attracted world class economists like Samuelson. It was linked to mathematical growth and capital theory- both of which imploded. By the time I got to University- in 1979- it was linked to Trade theory. The latter thrived. Development Economics went down the toilet. On the one hand, the case against overseas aid had won the day. On the other, the reputation building effect of appearing to help very poor black people had increased thanks to things like Band-Aid. Given this pincer movement, touting silly panaceas- like micro-finance, which featured on the Simpsons- and then doing statistical work showing it wasn't a panacea was the sort of junk social science which drove clicks and careers.

In other words, Economists no longer pretend they can do anything save hand out gold stars or frowny faces- if not medals like the Nobel Committee. Thus this year's Econ Nobel is a medal for giving out brownie points. Obviously, this is connected to Global Poverty alleviation because...urm... well Banerjee looks kind of brown and probably could use a square meal or three.

In just two decades, the pioneering work by this year’s Laureates
has turned development economics ― the field that studies what causes global poverty and how best to combat it ― into a blossoming, largely experimental field.

This is nonsense. What has happened is that Economists get to do experiments in very poor countries provided those experiments don't matter in the slightest. The thing is like ecological tourism- a fad among the Rich which the poor are supposed to be thankful for.

Innovations both inside and outside of this field helped sow the seeds of the transformation. Inside the field, 2015 Laureate Angus Deaton pushed the research in development economics towards microeconomic analysis. He also championed the idea that the measurement of well-being, especially the well-being of the poor, must
be closely integrated into the fight against poverty.

Deaton was a good econometrician whose work was probably quite useful to Advanced countries. He was a good man and it may be that his work helped people interested in Overseas Aid. But Aid is not the solution- it can be a big part of the problem.

Still, the White Man has an interest in magnifying this type of achievement. I myself have awarded the Iyer Prize to myself for my work in alleviating spiritual poverty in Advanced Societies. Atul Gopichand, a previous Iyer Prize recipient, has remarked that though I have not farted and exited an elevator when Amartya Sen entered it, nevertheless I would certainly do so if afforded the opportunity. Thus I certainly deserve the Iyer Prize which I may mention was the joint winner, in 1997, along with the Nobel Prize, of the Iyer Prize Prize which is given annually to the best Prize in the world.

Outside the field, the so-called credibility revolution, which first took off within labor economics in the early 1990s, pushed economic research in several areas towards a stronger focus on estimating causal effects.

This 'credibility revolution' was about taking the con out of econometrics. However, this also meant that the subject could no longer even pretend to alleviate anything. It would be like Astrology admitting it does not matter what star sign you were born under. On the other hand, using statistics, they might be able to connect your birthday with your personality type- perhaps if you were born in winter you'd have started crawling when it was sunny and so you'd have a sunny disposition. Alternatively, if you were born late in the year, perhaps you'd have been developmentally behind kids born early in the year and this might affect your academic performance. Stuff like this may be interesting but it isn't 'Astrology' any more than it is 'Economics'.

Certainly, it could lead to poverty alleviation if a guy figured out how to make a lot of money out of this statistical regularity and then gave that money to the poor.

In addition, a well-articulated microeconomic theory appeared on how incentives and information, together with behavioral constraints, shape human behavior.

The problem with this theory was that it was still crap compared to what people with idiographic knowledge and 'skin in the game' came up with by themselves. It had no link to norms or mimetic effects. It was just something to show on the blackboard to young people seeking to acquire a Credential which might land them a nice white collar job.

This theory — rewarded with several Economics Prizes — gave researchers a powerful analytical tool kit to analyze the determinants of poverty and channels of poverty alleviation.

But these researchers were as stupid as shit. Poverty alleviation was occurring for reasons they either did not understand or considered undesirable.

 These methodological gains were prerequisites for the transformation to follow, but a core piece of the puzzle was still missing.

WTF? Did Deng Xioping ever read any of this shite? Of course not! He sent out plenty of young Chinese people to study STEM subjects. But not Econ. The thing is useless.

These methodological gains were prerequisites for the transformation to follow, but a core piece of the puzzle was still missing.

What fucking transformation? The world was changing because Leftist Economics bit the dust in the same way that Development Economics had given up the ghost. Who cares how the Econ curriculum in a shite branch of the subject changed?

 Specifically, a well-articulated theory may be crucial to discovering possible mechanisms behind poverty and to guiding the search for effective ways to combat it.

But history shows that 'well-articulated theories' about redistributing land to peasants and taxing the fuck out of 'luxury' goods, were complete bollocks.  Poverty diminished because politicians decided that 'to get rich is glorious'.

But it is not sufficient to guide policy. While theory can pinpoint certain incentives, it does not tell us how powerful these are in practice.

Don't guide policy. Give policy makers an incentive to let others get rich rather than fucking them over incessantly in the name of alleviating poverty and economic injustice. Just bribe them or ensure they recruit only utter cretins.

To give just a few examples, theory cannot tell us whether temporarily employing additional contract teachers with a possibility of re-employment is a more cost-effective way to raise the quality of education than reducing class sizes.

Nothing can tell us the answer to this question. The thing is wholly idiographic.

Neither can it tell us whether microfinance programs effectively boost entrepreneurship among the poor.

Obviously not!

Nor does it reveal the extent to which subsidized health-care products will raise poor people’s investment in their own health.

It will do so to the extent given by the answer to the question 'how long is a piece of string?'

Knowing the right quantitative answers to such specific questions is vital for enhancing human capital, increasing income, and improving health among the poor.

There are no right quantitative answers to these questions. Telling economists and other cretins to fuck off, however, is vital for enhancing human capital etc. How would you like it if some fucking economist interposed herself between you and your G.P or your kids and the School they attend? How would you like to be part of a randomized controlled trial? You may not greatly care if the thing is done to convicted child molesters in a prison but you don't want your Government to dick around with you in that manner so some stupid pedant gets her jollies.

Answering these questions requires an empirical approach that allows researchers to draw firm conclusions about causal effects.

Pretending these questions have nomothetic answers is mischievous. Researchers don't matter. Only those with skin in the game can do anything scalable and sustainable.

By pioneering an approach to empirical research for providing such answers, the 2019 Laureates ― Abhijit Banerjee, Esther Duflo and Michael Kremer ― have transformed development economics. 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. As a result, we now have a large number of concrete results on specific mechanisms behind poverty and specific interventions to alleviate it.

Nonsense! Economists have no idea why some places are war-torn and others are progressing. Ordinary people, on the other hand, can figure this sort of thing out pretty quickly for themselves.

For example, on schooling, strong evidence now shows that the employment of contract teachers is generally a cost-effective way to improve student learning, while the impact of reduced class size is mixed, at best.

Baloney! You can have crap contract teachers paying kickbacks to the contractor. What determines outcomes is stuff the economist can't see.

On health, poor people’s investment in preventive care has been shown to be very sensitive to the prices of health products or services, giving a strong argument for generous subsidies to such investments.

Wow! What an amazing discovery! What's next? Discovering that having your head chopped off could decrease your productivity and negatively impact your social life?

On credit, growing evidence indicates that microfinance programs do not have the development effects that many had thought when these programs were introduced on a large scale.

Many? Are you kidding me? The thing was an obvious fraud.

The transformation of the field involved important contributions by several scholars. Three contributions by the Laureates, however, stand out. First, in the mid-1990s, Kremer and his co-authors launched a set of randomized controlled trials on schooling in Kenya.

But what caused Kenya to develop such an extensive primary school system in the first place? How did the Government overcome traditional opposition to a new fangled type of education?

In effect, their approach amounted to splitting up the question of how to boost human capital in low-income countries into smaller and more manageable specific topics, each of which could be rigorously studied via a carefully designed field experiment.

Rubbish. All these guys could do was measure outcomes with respect to things which were already being done. Kenyans know very well how to 'boost human capital' but they also know why there are vested interests- not least those of teachers- to prevent any such outcome.
American Universities could easily boost the marginal efficiency of the human capital they impart. But they don't coz it would mean sacking a whole bunch of Professors and closing down worthless Departments. Also, a lot of admin staff get chucked out.

Soon thereafter, Banerjee and Duflo, often together with Kremer or others, broadened the set of educational topics and expanded the scope of the research to other areas, including health, credit and agriculture.

Cool! They set up hospitals and clinics and Banks and discovered new crop strains with higher yields. Oh. Just checked. They did nothing of the sort.

Second, in a series of contributions, Banerjee and Duflo articulated how pieces from such microeconomic studies can help us get closer to solving the broad development puzzle: what explains the enormous difference in per-capita income across countries?

Productivity. That's it. No more puzzle.

They started by documenting a striking empirical fact: low- and middleincome economies encompass enormous heterogeneities in the rates of return to the same factors of production within countries, which dwarf observed cross-country heterogeneities in economy-wide (average) returns.

But everybody already knew this. People could see with their own eyes that the pilot of the plane on which they flew into the shit-hole in question was highly productive coz the plane was worth millions of dollars. By comparison the guy digging the ground with a stick was not very productive at all coz all he had was a stick.

In other words, some firms and individuals in developing countries use the latest technology, while others in the same country and sector use outdated production methods.

Looking at a picture in National Geographic of a half naked guy digging the ground with a stick conveyed the same information.

In high-income countries, these within-sector differences in productivity are much smaller.

Coz nice shiny tools are cheap and ubiquitous. If you go into the garden and start digging the ground with a stick, some helpful neighbor will give you a spade.

A deeper understanding of the development problem thus requires an explanation of why some firms and individuals do not take advantage of the best available opportunities and technologies.

How come the guy digging the ground with a stick isn't using a combine harvester which can be bought for the low low price of 50,000 dollars?  Please, please, Mr. Nobel Laureate, come and explain to me why this is happening!

Banerjee and Duflo further argued that these misallocations can be traced back to various market imperfections and government failures.

Like the fact that the guy doesn't have 50,000 smackers in his pocket.

Hence, a core step in understanding, and ultimately alleviating, poverty is to identify sources of the observed inefficiencies as well as policies that could address them.

Sadly, everybody else has not just taken this 'core step' but gone much further down the highway because they know that the only policy which can address the 'inefficiency' of not having any money in your pocket is to go somewhere you can earn some money.

Finally, by designing new experimental research methods and by addressing the key challenge of generalizing results from a specific experiment — i.e., the issue of external validity — the Laureates firmly established this transformed approach to development economics. This laid a solid stepping stone for a new generation of researchers in development economics and other fields.

But, sooner or later, these fuckwits will be chased away by irate locals.

In sum, by bringing the theory of incentives closer to direct applicability, the research by the Laureates has profoundly altered the practice of development economics.

But the practice of development economics remains entirely worthless. What is actually happening is that pedants teaching a bogus subject are getting a little publicity so as to keep up this Ponzi scheme for a little while longer.