After a period of relative marginalization, development economics has now reemerged into the mainstream of most economics departments, attracting some of the brightest talents in the field. It is no longer the preserve of development “experts” who pronounce on the strange ways of the world outside high-income countries, but instead serves as a testing ground for fundamental economic theories and the source of exciting new ideas.
…We believe that one of the reasons for the field’s vitality is the opportunity it offers to successfully integrate theoretical thinking and empirical testing, and the rich dialogue that can potentially take place between the two. The culture of development economics is particularly well-suited to this tight integration because of the emphasis on collecting one’s own primary data based on the theories that are to be tested.
That is Abhijit Banerjee and Esther Duflo. The paper takes credit markets as an example of the revolution that development economics has prompted in the larger profession.
Meanwhile, Angus Deaton ruminates on the best direction of development economics:
I argue that progress in understanding economic development (as in other branches of economics) must come from the investigation of mechanisms; the associated empirical analysis can usefully employ a wide range of experimental and non-experimental methods.
I discuss three different areas of research: the life-cycle saving hypothesis and its implication that economic growth drives higher rates of national saving, the theory of speculative commodity storage and its implications for the time-series behavior of commodity prices, and the relationship between economic growth and nutritional improvement.
None of these projects has yet been entirely successful in offering a coherent account of the evidence, but all illustrate a process of trial and error, in which although mechanisms are often rejected, unlikely theoretical propositions are sometimes surprisingly verified, while in all cases there is a process of learning about and subsequently modifying our understanding of the underlying mechanisms.
3 Responses
I see that heightened interest in development economics is in part connected to a resurgence of interest in rigorous impact evaluations. There is an analogy to surgeons here. Young surgeons sometimes spend time in poor countries to get the chance to practice their craft. Similarly, economists are able to have projects structured in developing countries in ways not possible in richer countries (typically, experimental designs).
I tend to be skeptical of big, bold statements like this. But according to the WSJ the two frontrunners for the John Bates Clark Medal are both development economists (Duflo and Mullanaithan). That has to mean something, especially considering the condescending way economists used to talk about the field when I was starting out, which was only about 10 years ago.
One area that I think is promising is that the simplicity of RCTs might be able to draw in people from other disciplines to contribute to a richer dialogue that could teach us a lot. There are political scientists and anthropologists and geographers who want to understand the world just like we (economists) do. But they dont have very solid methodoloigcal training available to them, aand they get drowned out by the people who like to howl about neo liberalism.
RCTs could offer a way for those non-econ but scienificially minded types with good ideas to escape the howling neo-liberals. By teaming up with econonmists, lots of interesting research could be done, on the questions economists woudl never think to ask that could be answered with methodologies the political scientists have never been exposed to.
If anybody want to discuss pursuing someting like this, please get in touch with me via my blog… sorry for hogging yours, Chirs!
Is it plausible that this is the result of “the mainstream” (i.e a handful of American departments) increasingly having a student body drawn from outside the US and particularly from the developing world.
They naturally have the same concerns and interests in economics they generally would have and would have been doing at home, but now it is legitimate and important. After all, nothing important or interesting happens outside these departments. If it was important and interesting these departments would be doing it.