MAG is a FREE publication product by AEG Corporation Limited Uk – International Advice.
MAG can be downloaded for free in PDF.
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2019 (commonly known as the Nobel Prize for Economics) has been awarded to Abhijit Banerjee, Esther Duflo and Michael Kremer “for their experimental approach to alleviating global poverty”. Through the award, the Nobel committee recognised both the significance of development economics in the world today and the innovative approaches developed by these three economists.
Global poverty continues to be a massive challenge. The award follows Angus Deaton, who received it in 2015 for his contributions to development economics – the field that studies the causes of global poverty and how best to combat it – particularly, his emphasis on people’s consumption choices and the measurement of well-being, especially the well-being of the poor.
Well-developed theory can highlight what causes poverty and, based on this, suggest policies to combat it. But it cannot tell us exactly how powerful specific policy measures will be in practice. This is precisely where the contributions of Banerjee, Duflo and Kremer lie. The Nobel citation gives several examples of their impact, including how their research has helped education, health and access to credit for many in the developing world, most famously in India and Kenya.
Consider, for example, child mortality and health – issues of immense significance in the developing world. Theory can tell us that women’s empowerment is important for child health and mortality outcomes, but cannot tell us which policy will be most effective in combating this. It could be a focus on educating mothers, or access to healthcare, or electoral representation, or marital age legislation.
Perhaps, more importantly, theory cannot tell us how large and significant the impact will be of these various policies. And this is where the significance of the Nobel Prize this year comes in.
The fundamental contribution of Banerjee, Duflo and Kremer was to develop an experimental approach to development economics. They built a scientific framework and used hard data to identify causes of poverty, estimate the effects of different policies and then evaluate their cost effectiveness. Specifically, they developed randomised control trials (RCTs) to do this. They used these to study different policies in action and to promote those that were most effective.
Starting in the mid-1990s, Kremer and co-authors started a series of RCTs on schooling in Kenya, designing field experiments to evaluate the impact of specific policies on improving outcomes. This approach was revolutionary. The experiments showed that neither more textbooks nor free school meals made any real difference to learning outcomes. Instead, it was the way that teaching was carried out that was the biggest factor.
Studies by Banerjee and Duflo, often together with Kremer and others, followed. They initially focused on education, and then expanded into other areas, including health, credit and agriculture.
Banerjee and Duflo were able to use these studies to explain why some businesses and people in less developed countries do not take advantage of the best available technologies. They highlighted the significance of market imperfections and government failures. By devising policies to specifically address the root of problems, they have helped make possible real contributions to alleviating poverty in these countries.
Banerjee, Duflo and Kremer also took significant steps towards applying specific findings to different contexts. This brought economic theories of incentives closer to direct application, fundamentally transforming the practice of development economics, by using practical, verifiable and quantitative knowledge to isolate causes of poverty and to devise adequate policy based on behavioural responses.
The impact of these developments upon real world development outcomes are immensely significant. Their work, and substantial amounts of research that followed it, established evidence on fighting poverty in many developing countries. And they are continuously expanding their horizon of contributions, which now also includes climate and environmental policy, social networks and cognitive science.
The 2019 Nobel Prize for Economics is also significant for reasons of inclusivity. The impact generated by Banerjee, Duflo and Kremer’s approach has come about very quickly – actually, in less than two decades. This explains why, at the age of 47, Duflo is the youngest-ever recipient of the economics Nobel. She is also only the second woman to be awarded the prize (after Elinor Ostrom in 2009). Banerjee, who is also her husband, is the third ever non-white recipient (after Arthur Lewis in 1979 and Amartya Sen in 1998).
In a recent issue of the journal Nature, Göran Hansson, head of the Royal Swedish Academy of Sciences that awards the Nobel, highlighted measures to address the imbalance in gender and ethnicity among winners. He said “we are making sure to elect women to the academy” from which the prize-awarding committees for the chemistry, physics and economics Nobels are drawn.
The pipeline to this achievement is important. The first woman to win the John Bates Clark Medal for top economists under 40, an important indicator of who will be awarded the economics Nobel in the future, Susan Athey, only did so in 2007. Esther Duflo was the second winner in 2010. Since then, women winners of the Clark medal have been more frequent. Of course, award decisions are made strictly on significance of contributions. But, based on this evidence, perhaps Athey, Amy Finkelstein (who won the medal in 2012) and Emi Nakamura (who won it in 2019) will not be far behind.
Over the last two decades, Venezuela has entered a deep socioeconomic and political crisis. Once recognised as a regional leader for public health and disease control, Venezuela’s healthcare and health research infrastructure has fallen into a state of collapse, creating a severe humanitarian crisis and a major outbreak of infectious disease.
This week, we published the first comprehensive assessment of the vector-borne disease outbreak that is assailing the country. Vector-borne diseases are those spread by insects – mosquitos, sand flies, kissing bugs and others. The “we” is a global consortium of authors, many of whom are Venezuelan doctors and academics working in the country under exceptionally difficult conditions. Others include Colombian, Brazilian and Ecuadorian academics who are witnessing the crisis unfold: Venezuelan refugees on the streets of their cities, diseases (malaria, Chagas disease, measles, diphtheria) spreading through porous land borders, and regional disease outbreaks of unprecedented proportions.
I first travelled to Venezuela in the early 2000s to study Chagas disease, a single-celled parasite spread by the kissing bug, a blood-sucking insect that infests the walls of adobe houses. Chagas disease is a silent killer. Once infected, the parasite can lie dormant for decades in its human host before causing fatal heart disease in middle age.
You can’t travel to Venezuela, including to the communities where I worked in the Llanos (plains) of the west, without being entranced by the beauty of the landscape and the friendliness of its people. From the laboratory in the Institute of Tropical Medicine in Caracas, where I was taken under the wing of Professor Hernan Carrasco and his team, dancing salsa between the benches on a Friday night, to the villages where we slept under the stars in hammocks while the inhabitants sang joropo music, it is a thoroughly welcoming place.
Venezuela is also a place of extreme inequality. You only have to look up from the glitzy streets of downtown Caracas to the mud and brick ranchos clustered on the hillsides above to appreciate that. It is this inequality that drove the socialist revolution, and while times were good – and oil prices high – much of Venezuela’s wealth found its way into the hands of those who needed it most. Declining oil prices, corruption and mismanagement have changed all that. Alongside economic collapse has come a collapse in basic healthcare, an exodus of medical professionals, and a massive upsurge in disease.
At the core of the infectious disease crisis in Venezuela is the lack of reliable data. Either through denial, a lack of resource, or both, the Venezuelan state is reneging on its responsibility to report on the extent of current outbreaks. The purpose of our recent review was to draw together fragmented information from Venezuelan civil societies, researchers, international organisations and neighbouring countries to get the best estimate of what is actually going on. Over 400,000 cases of malaria in 2017, 15% of the rural population infected with Chagas disease, surging dengue, Chikungunya and Zika infections. The picture is grim.
Health is highly politicised in Venezuela and working as a researcher is not without risk. My collaborators have been threatened with jail and having their medical licenses suspended simply for reporting outbreaks in the scientific literature. The Institute of Tropical Medicine where I worked has been raided by colectivos (community organisations that supports the Venezuelan government), microscopes smashed, medical records destroyed, hard drives ripped out of computers.
The centre of the current malaria epidemic in southeastern Bolivar state is also the centre of state-sponsored illegal gold mining in Venezuela. The tonnes of gold recently shipped by the Maduro regime to Russia and Turkey is soaked in the sweat and blood of poor Venezuelans, sleeping with their families beside mosquito-infested mining pits. Drawing attention to this malaria epidemic is drawing attention to the ecological and humanitarian disaster in this region where mercury is polluting pristine rivers and thousands are dying for want of antimalarial drugs that the government will not or, more likely, cannot supply.
Venezuelans are resilient and resourceful people. The Venezuelan researchers still living and working in the country are a testament to that, as is the support they receive from the diaspora of Venezuelans forced to live abroad. In recognising the regional aspect to the crisis, the spillover of disease in the region and the millions of refugees, we hope our review will galvanise international organisations to act. I’m optimistic that we are reaching a turning point in a crisis ten years in the making. I fervently hope the spirit of Venezuelans will break through. I hope that scientists will dance salsa again – and soon.
This article is republished from The Conversation under a Creative Commons license.
By now, most of us have heard that the use of plastics is a big issue for the environment. Partly fuelled by the success of the BBC’s Blue Planet II series, people are more aware than ever before about the dangers to wildlife caused by plastic pollution – as well as the impact it can have on human health – with industries promising money to tackle the issue.
Single use plastics are now high on the agenda – with many people trying to do their bit to reduce usage. But what if all of this just provides a convenient distraction from some of the more serious environmental issues? In our new article in the journal Marine Policy we argue plastic pollution – or more accurately the response of governments and industry to addressing plastic pollution – provides a “convenient truth” that distracts from addressing the real environmental threats such as climate change.
Yes, we know plastic can entangle birds, fish and marine mammals – which can starve after filling their stomachs with plastics, and yet there are no conclusive studies on population level effects of plastic pollution. Studies on the toxicity effects, especially to humans are often overplayed. Research shows for example, that plastic is not as great a threat to oceans as climate change or over-fishing.
Taking a stand against plastic – by carrying reusable coffee cups, or eating in restaurant chains where only paper straws are provided – is the classic neoliberal response. Consumers drive markets, and consumer choices will therefore create change in the industry.
Alternative products can often have different, but equally severe environmental problems. And the benefits of these small-scale consumer driven changes are often minor. Take, for example, energy-efficient light bulbs – in practice, using these has been shown to have very little effect on a person’s overall carbon footprint.
But by making these small changes, plastic still appears to be an issue we can address. The Ocean Cleanup of plastic pollution – which aims to sieve plastic out of the sea – is a classic example. Despite many scientists’ misgivings about the project and its recent failed attempts to collect plastic the project is still attractive to many as it allows us to tackle the issue without having to make any major lifestyle changes.
That’s not to say plastic pollution isn’t a problem, rather there are much bigger problems facing the world we live in – specifically climate change.
In October last year the Intergovernmental Panel on Climate Change (IPCC) produced a report detailing drastic action needed to limit global warming to 1.5˚C. Much of the news focused on what individuals could do to reduce their carbon footprint – although some articles did also indicate the need for collective action.
Despite the importance of this message, environmental news has been dominated by the issues of plastic pollution. So it’s not surprising that so many people think ocean plastics are the most serious environmental threat to the planet. But this is not the case. In 2009 the concept of planetary boundaries was introduced to indicate safe operating limits for the Earth from a number of environmental threats.
Three boundaries were shown to be exceeded: biodiversity loss, nitrogen flows and climate change. Climate change and biodiversity loss are also considered core planetary boundaries meaning if they are exceeded for a prolonged time, they can shift the planet into new, less hospitable, stable states.
These “clear and present dangers” of climate change and biodiversity loss could undermine the capacity of our planet to support over seven billion people – with the loss of homes, food sources and livelihoods. It could lead to major disruptions of our ways of life – by making many areas uninhabitable due increased temperatures and rising sea levels. These changes could start to happen within the current century.
This is not to distract from the fact that some significant steps have been taken to help the planet environmentally by reducing plastic waste. But it is important not to forget the need for large-scale systemic changes needed internationally to tackle all environmental concerns. This includes longer-term and more effective solutions to the plastic problem – but also extending to more radical large-scale initiatives to reduce consumption, decarbonise economies and move beyond materialism as the basis for our well-being.
The focus needs to be on making the way we live more sustainable by questioning our overly consumerist lifestyles that are at the root of major challenges such as climate change, rather than a narrower focus on sustainable consumer choices – such as buying our takeaway coffee in a reusable cup. We must reform the way we live rather than tweak the choices we make.
There is a narrow window of opportunity to address the critical challenge of, in particular, climate change. And failure to do so could lead to massive systemic impacts to the Earth’s capacity to support life – particularly the human race. Now is not the time to be distracted by the convenient truth of plastic pollution, as the relatively minor threats this poses are eclipsed by the global systemic threats of climate change.
This article is republished from The Conversation under a Creative Commons license.
“Please drink responsibly” is a familiar plea to those who might be inclined to consume alcohol, and we are also reminded to “gamble responsibly”, a timely reminder during a busy period for Premier League football, full of fixtures and plenty of casual fans with time on their hands.
You can make a reasonable judgement about responsible drinking by using the percentage alcohol by volume (ABV) information on the label of whichever bottle has been opened. But how can we determine the strength of a football bet?
In fact, “gambling harm” can also be approximated by a percentage. The “gamblers’ losses” percentage is a measure of the money bet that a gambler will lose in the long term. Short term randomness around this percentage is what makes gambling interesting – but over longer time periods, gamblers will lose this percentage of all the money they bet.
We think most people probably have no idea of what percentage of all money bet is lost across different football bets. So we looked at eight seasons of Premier League betting odds and results using machine learning.
Machine learning allowed us to simulate three potential human betting strategies over long periods of time. One “random” strategy effectively simulated the risks of throwing darts at a set of betting odds. By comparison, a “most-skilled” strategy carefully studied the betting odds and results for three whole seasons before judiciously selecting the best bet it could find for each match.
We also looked at the returns of a strategy that deliberately tried to be as unskilled as possible. The “least-skilled” strategy chose what might be thought of as the worst case scenario for each match. This mirrors the returns of someone who is not merely unlucky, but is unskilled (and who may benefit from more help and advice). Any differences between these three strategies reflect the role of skill in Premier League football betting.
The risks varied based on both the type of bet chosen and the specific betting strategy used. When simulating the returns of a given bet of, say £1, we found that the gamblers’ losses percentage varied by a factor of 54. Using the drinking comparison, this is like the difference between a 1% reduced strength lager and a strong bottle of whisky.
Some of the highest risks came from betting on the correct score, a bet with pretty high odds, which you might have seen the actor Ray Winstone offering on British television over Christmas. For example, Manchester City to win 3-1, might have odds of 9/1, meaning every £1 bet wins £9 if Manchester City win by that score line.
We found that that just randomly selecting correct score bets would hit you with a strong average loss of 34.3%. But the worse case scenario was a whopping average loss of 58.9%, which came when the least skilled strategy picked very high correct scores (such as the away team winning by four goals to nil). Of course, sometimes bets at high odds pay off. But overall, these figures mean that for every £100 bet, on average the gambler lost £34.30 and £58.90 for their betting strategies.
Luckily there are two tips that gamblers can do to keep their losses within reasonable limits.
The first tip is to select types of bets with relatively low odds. The bookmakers love advertising correct score bets, for example, because these bets offer high odds if gamblers guess the correct score.
But one bet with lower odds is what we call a “home-draw-away” bet, either betting on Manchester City to win, a draw, or the away team to win. Here the random strategy returned average percentage losses of 8.7%, so nearly four times less than randomly choosing correct score bets.
The second tip is to select bets with relatively low odds within a given bet type. Manchester City are usually expected to win by the bookmakers, and at the time of writing, betting £1 on them to win their recent match against Southampton gave a potential win of £1.27 if successful. By comparison, a £1 bet on Southampton to triumph would return £11 if successful.
Many gamblers might get excited by those higher odds on Southampton winning. But across each bet type, bets at low odds had the lowest average losses for gamblers. If a bet has odds that seem too high to be true, it probably is a bad bet on average.
The gambling industry recently announced that it will stop showing gambling advertising pre-watershed, starting from summer 2019. So promoting betting odds on TV during the football will soon become a thing of the past.
But the industry is currently spending five times as much on online marketing (£1.2 billion) as on its total TV advertising spend. This online marketing is largely hidden to anyone who is not targeted to receive these messages.
We believe that the very high differences in product risk across football bets should at least be communicated in some way to consumers. While further research should investigate how best to educate football fans about these different risks, reminders to just “gamble responsibly” won’t cut it.
Consumers need to be told about the risks of football bets with high odds.