Context: 

• • The Nobel Prize for economics this year has been awarded to Abhijit Banerjee, Esther Duflo and Michael Kremer for “their experimental approach to alleviating global poverty“.
  • The economists advocated the use of randomized control trials (RCTs) to understand the impact of micro-interventions on poverty alleviation. 

• This has reignited the debate on the use of evidence in policymaking.

What is a randomized controlled trial?

• Randomized controlled trials are the most reliable method available for testing new treatments.
• Researchers set up a trial to test the effects of a drug on a specific group of people while measuring another for reference.

Critical analysis on the use of RCT: as a micro-interventions to support policymaking

The debate on the use of RCTs to eliminate poverty revolves largely around three aspects: their approach, methodology, and impact on policy. 

The approach followed: unlikely to provide solutions to some of the aggravated issues of poverty. 

Reasons

• • The approach of using RCTs to address pressing development problems is perhaps the most contested. 
  • This involves “treating” a section of the population with some micro-interventions and then examining the impact against a control group, which is similar in all aspects, except treatment. 
  • By design, these experiments are only as good as the nature of the interventions, and they typically examine micro aspects of behaviour although not all aspects. 
  • Such interventions may be a useful tool for policymakers to understand the efficacy of a particular step but are unlikely to provide solutions to some of the vexed issues of poverty, which is caused by multiple factors rooted in social, political and economic structures. 
  • Any claim, therefore, that these can solve global poverty not only exaggerates but also shows an inaccurate understanding of why poverty persists and how societies that manage to reduce it do so. 

• The approach holds though not so explicitly individuals or households responsible for their poverty, rather than the socio-economic and political context.

The methodology followed: unlikely to provide solutions to some of the aggravated issues of poverty. 

Reasons:

• • The methodological superiority of the evidence collected is limited to drawing inference on the benefits of the treatment.
  • Further, the control groups are rarely similar on social, political and institutional aspects, despite the best possible design and implementation. 
  • It also isn’t possible to assess the impact of such interventions on parameters of individual welfare, since some of these may not be quantifiable. 

• In addition, replication of an experiment in another context may produce completely different results, limiting their generalization.

The RCTs impact on policy: RCTs may have some relevance in improving the design of some schemes:

Reasons:

• RCTs have relevance in improving the design of some schemes. 
• RCTs have helped start debates on some policy interventions. 
• The evidence generated through such experiments on micro-finance, the quality of education and access to health services does suggest the need for intervention methods like RCTs for making better-informed policies 

India and use of RCT for evidence-based policymaking:

• • Macroeconomic policies, which have contributed to large-scale poverty reduction in countries such as China and India, have hardly been influenced by any RCT.

• Even large-scale social protection interventions such as the National Rural Employment Guarantee programme or the Mid-Day Meal scheme have emerged from political struggles, rather than RCT-based evidence.

• Though, the influence of RCT as an intervention tool has been very minimal in India various instruments and methodologies has been adopted in India for evidence-based policymaking.

• There is a long history in India of using large-scale secondary data as well as micro studies such as village surveys conducted by agro-economic research centres to guide government policy.

•  A good example of this is the debate that led up to the passage of the National Food Security Act, in which large-scale National Sample Surveys were used together with micro experiments for a better design and approach to food security. 

• Also, some of the insights came from evidence based on the experience of state governments and grass-roots activists.

Conclusion:

The need for better information and evidence for the policy is regardless of which instrument is used. Perhaps multiple instruments and methodologies ought to be adopted.

At a time when India’s economy is slowing down and all evidence points to an increase in deprivation, unemployment and hunger, data and evidence are crucial in not just understanding the extent of poverty, but also finding the pathway to lift millions out of it.