Meet Nobel laureate Abhijit Banerjee, the mild-mannered sharp shooter

Banerjee tells Anjuli Bhargava he wants the world to have the right conversations before marching on in its battle against extreme poverty

If ideology, ignorance and inertia were human and Abhijit Vinayak Banerjee, economist and one of the three 2019 Nobel laureates for economics, had a licence to kill, he’d shoot with gay abandon. And while at it, he would probably also eliminate hunches, preconceived notions and bad advice being dished out by consultants (all of you in immaculate blue pinstripes and pink ties, watch out!) who appear to have all the answers, but evidently don’t. 

A lethal combination of faulty diagnosis along with superficial treatment explains why almost 700 million people still live in extreme poverty globally, although substantial progress has been made between 1990 and 2019. Post-pandemic, a reassessment would be needed, he reckons.

Banerjee and I are on Zoom for a coffee on a Monday. He’s just finished his morning exercise at home in Paris and I’m done with lunch in Dehradun. I log in almost 20 minutes early with my tiny Sony digital recorder next to my laptop –evidence of my own preconceived notion that technology can let you down when you most need it. He has his mug of coffee by his side and I stick with water.

Being surrounded by abject poverty as a child may be gutting for some, but for him, it was in a sense seminal. Growing up in a middle-income Kolkata family in the 1960s in a house that faced one of the city’s largest slums gave him a constant ringside view of the grinding poverty and lives of the residents. The 1960s was a time when the city was shedding its past glory and embracing a grand decline. Industries were closing, people had no jobs, women worked as domestic helps, eking out an income that would barely meet their basic needs. The children –some were his playmates – were raised on a diet of neglect, domestic violence and abuse. The in-your-face poverty he witnessed left him acutely sensitised to his own privileged existence, human resilience and the sense of hopelessness that can envelope lives even before they begin for real. Had the state of those residing around him in the slums somehow escaped his attention, a “running commentary” provided by his left-leaning activist, social scientist mother offered him a pretty thorough grounding in the theoretical aspects of poverty through his growing years.

I interrupt to ask whether it was at this time that he made up his mind to do something about it, assuming that to win the Nobel prize at 58 years, he must have started in his diapers. “It would be wholly inaccurate and self-aggrandising to claim so,” he quickly counters, adding that he pretty much strayed into his field of study more by accident than design, although he doesn’t deny that childhood influences may have played a role.

The contrast between his own life and those he was surrounded by was stark in every aspect, including in the dingy government schools attended by the slum kids and his own local English-medium school. His school, however, was neither convent nor elite. Money was tight as incomes were falling for university professors like his father, and the school charged no more than $5 a month, making money on volumes. A “hard-headed, unforgiving, dog-eat-dog” type of institution, the school routinely pruned the number of students in a class based on their academic prowess, advertising its achievements without pointing out that this was more by construction than anything else. But it did what middle-class Bengali parents expected: Browbeat students to do their best academically so they’d be ready to compete for IIT or medical school. The “awful, monstrous enterprise”, however, failed entirely in what he believes is a school’s raison d’etre: To produce confident, well-rounded human beings who can proceed to find their place in the world.

It was more by a trace of complacency than any great calling that Banerjee found himself enrolled in a bachelor’s degree in economics at Presidency College, one of the best undergraduate educations one could get in India back then. Academically quick, at the age of 20, he went on to join Jawaharlal Nehru University (JNU) in Delhi for a master’s where he (coming from the high standards set by Presidency) learnt very little additional economics, but got a highly enriching lesson in what comprised India – a country he had barely been exposed to with his elite, intellectual background. Among his fellow students were “sons of poor farmers from Odisha and Maharashtra, the kind I had never met,” he says. JNU offered him a lesson in humility as he understood the hardships, sheer will and diligence these students had displayed to pull themselves out of their circumstances and make it to an aspirational institute in Delhi.

Through his doctorate, he was disconcerted by the willingness of those he was surrounded by to make many grand, “breathtaking” assumptions like “the markets always work efficiently”. More often than not, these assumptions didn’t quite tie in with the world he saw unfolding around him. By his late 20s to early 30s, his frustration with the inaccurate diagnosis he saw across the world was growing as was his exasperation with the solutions on offer. “The prescriptions didn’t model the reality carefully enough and the solutions, even when sort of right, were too superficial.”

It was when he began teaching a class on what makes people poor as part of development economics at Princeton University that Banerjee realised how little descriptive material was available to truly understand the lives of the poor. “How do you get students who have never been exposed to such grinding poverty to get a concrete feel of it?” he asks. This, in some sense, provided the impetus for his first book, “Poor Economics”, co-authored with his former student, future wife and Nobel co-winner Esther Duflo.

I ask how much of the extreme poverty we see in India is fuelled by poor diagnosis; how much by poor implementation; and how much by lack of intent or willingness to take the bull by its horns? He cites the failure of India’s education system as the one big elephant in the room. The failure of India’s education system, he says, is at the core of the failure to reduce inequality and lift people out of poverty. All three factors have combined to land the country where it finds itself today. Poor diagnosis: It has taken almost 25 years to come up with a National Education Policy that shifts the focus from inputs to learning outcomes. Poor implementation: Governments have chosen the easier, politically expedient reforms such as build a school or a new classroom rather than drive pedagogical reforms. Poor or lack of intent: An elitist mindset where good education is the exclusive preserve of a few.

But unfortunately, poverty is not one problem; it’s the sum of a hundred different problems that need to be tackled simultaneously. Growth, he adds, has managed to lift many out of their dire situations, even if it was “inadequate, unfairly distributed and imperfectly implemented”. The base was so low that even a small trickle-down lifted many out of their circumstances. The interplay between growth and redistribution remains critical as we march on, so governments and their policies remain “highly consequential”.

In recent discussions with India’s policy-makers, he has suggested two key reforms. Ensuring that migrations are longer for the rural poor by improving the quality of their living conditions in cities, thus helping them acquire some skills through the length of time spent. Although cities may appear overcrowded, better use of land resources can be undertaken to build cheap hostels to house migrants instead of them sleeping in construction sites and under trucks. And second, the one nation, one ration card scheme (or cash transfers) needs to be operationalised on a priority basis – a lesson learnt from the pandemic. In the 21st century, migrants cannot be allowed to starve in an alien city with no roof over their heads, if one has one’s heart in the right place.

I shift gears to the Nobel prize. Does the way one looks at the world change after the Nobel? The way the world looks at you certainly does, and rather dramatically too. He can’t, for instance, slip into a room unnoticed anymore, I presume.

Well, that depends, he says. The spotlight, he hopes, is transitory. In India and in his hometown Kolkata, he can’t slip by unnoticed for the time being as reporters are lined up outside his residence. However, if he was in a small town in Italy, he could. He does find the public glare a bit overwhelming, but there’s no denying that the positives outweigh the negatives. “It would be churlish to claim otherwise,” he adds. The Nobel prize has multiplied the demands on his time and he’s learning to say no.

But what does an economist aspire to post the Nobel, I ask. What’s left to achieve? He says this could be a problem for some, but is easier in their (his and Duflo’s) case since they have the Poverty Action Lab, which has grown enormously from eight people at inception to a few thousand today. “But we can grow much more. So we can just take this agenda and run with it”, and in some ways, having won the prize helps.

As we get deeper into our chat, I cotton on to the fact that Banerjee has a deceptively mild-mannered, matter-of-fact way of making some of the most outrageous statements, ones you could be forgiven for missing altogether. I get a taste of this when I ask what he hopes he can achieve, given a finite number of years. Eradicating global poverty sounds both lofty and unrealistic, given the limitations of a single lifetime. 

If public conversation, debate and actions could be based more on evidence and move away from “this sounds cool” or “so and so thinks this would work”, he’d consider it a success. So much of development policy is driven by “bad advice” from management consultants and people who have “no business being in it, know very little and are only doing it to make money” that it often drowns out the more urgent, evidence-based solutions. He’s not saying all consultancy firms do bad work – sounding more doubtful than ever – but to allow them to drive development policy based on hunches and intuition makes no sense. As I listen, I realise he has effectively shot down the blue-sky-thinking gang that functions out of gleaming skyscrapers with a silent shotgun in his characteristic easy-going style.

But he’s not claiming to be Mr Know-It-All either. He (and his co-winners) are well aware that randomised control trials have their own flaws and economists in general need to be” more modest” about what they know. “Some interventions work, others fail, some countries get lucky, others have disasters,” he explains. The first step forward is to have the right conversations.