Which Poverty-Fighting Policies Work? J-PAL Has the Answer

A global league of economists called J-PAL is deploying its experimental methods and one all-powerful asset -- data -- to explain human behavior, change how we help the poor, and try to save the world.

BY Ryan Blitstein | December 1, 2009

J-PAL, MIT, Abhijit Banerjee, Esther Duflo, Rachel Glennerster

FROM LEFT MIT profs Abhijit Banerjee, Esther Duflo, and Rachel Glennerster | Photograph by Doug Menuez

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FAREWELL, POVERTY Banerjee, Duflo, and Glennerster believe J-PAL's work is helping the poor, but systemic change will not come quickly. | Photograph by Doug Menuez

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Every year, wealthy countries and donors ship billions upon billions of dollars in aid to the developing world. The money has not bought prosperity: Diarrhea still kills 1.5 million children annually. More than 210 million kids work when they should be in a classroom. Polio, which had once been eradicated in all but four countries, is spreading across

Africa again. Some 2.6 billion people have no access to modern toilets. And more than 1 billion people don't have enough to eat in 2009, setting a new record.

Why? From an unremarkable old building overlooking the Charles River in Cambridge, Massachusetts, a trio of MIT economists is leading a remarkable global movement that's working to find out. "A lot of money gets spent by well-meaning people with no idea what they're doing," says Abhijit Banerjee, who has spent much of his career studying corruption. "It's wasted."

Obviously, much of the money that goes to help the developing world is not being used effectively. But what's not so obvious is how all that money should be spent. That's where the Jameel Poverty Action Lab (J-PAL) comes in. Led by the Indian-born Banerjee, Briton Rachel Glennerster, and Esther Duflo -- a Frenchwoman who just won a MacArthur genius grant for her work on poverty -- this global network of researchers has one joint ambition: to transform the living conditions of 100 million poverty-stricken people in Africa, Asia, and Latin America. Within the next five years. On a budget of barely $10 million. While building development models that could eventually effect change for billions more people.

The word "lab" is key to the work: The academics are succeeding, in large part, by using the world's poorest citizens -- and their villages and nations -- as subjects in real-life experiments. Sometimes controversially, they have applied the kinds of clinical-trial techniques that have long been standard in medicine but until now have been rarely used in economics. The data they've gathered have changed the way leaders of some of the world's largest charities and governments give to the poor.

J-PAL's save-the-world goal would be laugh-out-loud ridiculous if not for the research that has come out of the six-year-old group. The results have been impressive -- and not just in the head-nodding way that academic papers can be. The wonks who belong to the lab have collectively helped 30 million people, from small farmers in Kenya who now use fertilizer to mothers in rural India who immunized their infants to poor Peruvians who opened savings accounts for the first time in their lives.

The hopes of the J-PAL academics remain as huge as the problem of poverty itself. "We're not interested in making a few villages wonderful," says Glennerster. "We're interested in changing millions of people's lives."

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Traditional economics, for all its complexity, boils down to two steps: One, observe events and actions. Two, create a theory explaining them. Practitioners of the dismal science have always been good at coming up with more theories, but in development economics, they have always been particularly dismal at translating those theories into successful, real-world methods for fixing what's broken. During the 1960s and 1970s, they created models for fighting poverty that were backed up with inadequate data, and by the 1980s, development was relegated to the dark corners of economics departments. That changed in the 1990s, when databases like the World Bank's World Tables made testing macroeconomic theories easier, and laptops and globalization made fieldwork in far-flung locales incredibly cheap.

Around that time, randomized controlled trials, the experimental method long used in medicine, began coming into vogue in economics. Inspired by researchers including Paul Gertler of the University of California, Berkeley, and Harvard's Michael Kremer (Glennerster's husband and now a J-PAL member), a new generation of economists has adopted the technique over the last decade. In 2003, Banerjee, Duflo, and Harvard's Sendhil Mullainathan formed the Poverty Action Laboratory to coordinate the efforts of like-minded academics and spread the gospel of experimentation. (After a gift from MIT alumnus Mohammed Abdul Latif Jameel, scion of a Saudi family that owns the world's largest chain of Toyota dealerships, the lab was renamed in honor of Jameel's late father.)

J-PAL is a loose club of professors, and membership -- limited to those who use experimentation to explore poverty-related issues -- is by invitation only. The lab plays matchmaker, teaming its members with one another and with outside organizations seeking academic collaborators. It also acts as a clearinghouse for economics research done via randomized trial, aggregating its members' work and turning it into more than the sum of its parts. "Individually, I could raise money and do projects," Duflo says, "but I could not have the power of all the projects together."

From Issue 141 | December 2009