Monday, November 30, 2015

REPOST: Esther Duflo: using randomized controlled trials to fight poverty

Why businesses don't do this more frequently is beyond me.


  1. In the TED Talk program, Esther Duflo discussed the importance of investing in certain results versus uncertain gains. Duflo explains that providing aide/humanitarian funding in foreign countries is important but the social implications of that intervention must be considered. For example, Malaria is a major concern in subsaharan Africa killing thousands each year. To limit the infection from Anopheles Mosquitos, nets were considered for locals to put around their bed at night. Following this easy limitation of risk, several questions were considered to locals to determine their needs. What would happen if charged for the nets vs. free nets? How often would they be utilized? Would the marketplace be affected after some time passes for locals to purchase additional nets (whether purchased initially or given freely)? Locals did use the nets in great frequency; the increased cost affected the purchasing of nets as suggested by the elastic nature of the product (even though no substitutes for this product). Also, free nets did not affect the future of individuals purchasing nets.

    From this concept, social policy needs to be more scientifically proven to improve results to help more individuals each year. Similarly, businesses can conduct studies to effectively understand the buying power of consumers on specific products depending specific regions and who would be more likely to purchase specific products. Although this does happen in business, it should be done in greater frequency, as it is likely to bring higher returns on investment. It is also likely to determine what is not working and what is.

    Finally, I am a healthcare provider. In the healthcare field, providers consistently must maintain the standard of care depending on the medical conditions presented for each patient. By utilizing evidence-based treatment approach, patients will be able to be given the odds as well as the understanding of the treatment he or she is undertaking. Controlled trials provide that type of meta-data and businesses might consider investing great moving forward to maximize revenue streams

  2. With an immense global issue, we will never know the perfect way to go about solving it. However Esther Duflo has brought some great points to the discussion. A multi-faceted approach to a multi-faceted issue. Taking the initiative to concentrate on certain results vs uncertainty, an increase to the quality of life can be gained. Using simple business analytics she demonstrated solving three smaller questions which lead to a start of a solution to the overarching social issue of world poverty.

    “The art of economics consists in looking not merely at the immediate but the longer effects of any act or policy; it consists of tracing the consequences of that policy not merely for one group but for all groups” (Froeb et al. 2014 p18). We have previously study examples where government intervened only to cause dependency on the system. If you give people ownership to their problems they will care for themselves (Froeb McCann, Shor & Ward 2014).

    Giving people incentives to get immunizations, providing bed nets to protect themselves from disease biting insects, and curing children of intestinal worms, increases their well-being and provides them with the initial steps to combat poverty.

    Froeb, L. & McCann, B. & Shor,M. & Ward, M.(2016) Managerial Economics: A Problem Solving Approach. Boston, Massachusets: Cengage Learning