Esther Duflo

TALKING POLITICS

Catherine Carr

News, News & Politics

4.7 • 2.5K Ratings

🗓️ 7 November 2019

⏱️ 47 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

David and Helen talk to Nobel Prize-winning economist (the youngest ever!) Esther Duflo about how to do economics better. From investing in left-behind places to helping people adapt to change, we discuss good and bad economic ideas about some of the biggest challenges we face, and how it all connects back to politics. Plus we talk about what some of the world's richest countries can learn from some of the poorest. Esther's new book, with Abhijit Bannerjee, is Good Economics for Hard Times https://bit.ly/33q6uOm

Talking Points:

Why do economists believe “Invest in People not Places?” And why are they wrong?

The idea is that it’s better to target interventions at individual people than places, in part because people will move.
But research shows that people are remarkably sticky. They don’t really move.
Even faced with really high costs, and the complete freedom to move to another place, people don’t. During the Greek financial crisis, very few people left.
Mobility is easier at younger ages.

Why do people stick?

In the U.S., one of the biggest factors is real estate. Wages may be higher on the coast, but housing is much more expensive.
People are not driven only, or even primarily by financial incentives

The U.S. has not treated people who were left behind by manufacturing very well.

There is an implosion of economic activity in one place because people don’t move.

The class and place categories are marred. The people who can afford to live in the big cities tend to be relatively well off.

This was at the root of the Yellow Vests movement in France.
Although there is also a lot of poverty in big cities.
Class is no longer defining political lines in the same way.

How, as a society, can we prepare better for transitions?

It starts at birth: an excellent preschool education, followed by an excellent primary and secondary school education, and finally equal access to University.
When shocks happen, being willing to spend.
Some people will never move and we should make their lives honorable where they are.

Mentioned in this Episode:

Further Learning:

And as ever, recommended reading curated by our friends at the LRB can be found here: lrb.co.uk/talking

Transcript

Click on a timestamp to play from that location

0:00.0	Hello my name is David Runceman and this is Talking Politics. Helen Thompson and I are in London today and we're delighted to be talking to Esther Dufloh, who is, as I'm sure many people know, the youngest person ever to win, the Nobel Prize for Economics, the second woman to win it, and she's also the author with her fellow laureate, Object Banerjee of the New Book Good Economics for Hard Times, which is about how to do Economics better, but it's also in a pretty profound way about politics as well.
0:28.0	And then we're going to talk about the connection between the two.
0:35.0	Talking Politics is brought to you in partnership with the London Review of Books, which is celebrating its 40th anniversary for the next few months with an unimprovable offer.
0:45.0	Get a year's subscription and a limited edition LRB tote bag for just £40 by using the URL lrb.me forward slash birthday.
0:58.0	Can we start with something that you cite in the book as a kind of soft mantra of conventional economics, which is invest in people not places.
1:15.0	Can you just tell us a bit about why economists believe that and why they're wrong, because quite a lot of your argument is about how that misses a lot of the human condition out.
1:24.0	And yet it does seem to be quite a powerful conventional wisdom.
1:28.0	Yes, so the idea is that you wouldn't want to do, for example, what's called place-based policies,
1:34.0	so putting a lot of investment in one particular area.
1:37.0	So policymakers are often tempted to do that. There is a distraiced area that puts some money into it, keep money into it.
1:44.0	For example, social security offices moved from London to Newcastle. That's a form of place-based policy.
1:50.0	It's quite popular with policymakers, many economists don't like them, because they're thinking, well, you know, if you're putting the money in one place, maybe that's going to help this one place.
2:00.0	But it's at the expense of some other place where you could have put the money instead or where people would have chosen to come.
2:08.0	So what we should really target any help on is individual people, not the place where they live.
2:14.0	And the underlying assumption is that people will move. I mean, that seems to be a big basis of quite a lot of conventional economic thinking,
2:22.0	that as it were, if you build it, they will come, that the people will move. And you use the phrase, which a lot of people will know, that comes up in economics about stickiness.
2:31.0	And people are sticky, too, right? They often don't move.
2:35.0	So the discount of reluctance for place-based policy is just one manifestation of this very deep belief that economists have that people will be sensitive to financial incentives,
2:48.0	and in particular, if opportunities disappear where they are, but there are more opportunities elsewhere, they will move.
2:56.0	Likewise, if the sectors where they used to be working, vanishes, there is no shipbuilding anymore, then people will move and do something else instead.
3:05.0	But in fact, all of the research shows that people are remarkably sticky.
3:11.0	Everything is sticky, but people in particular, they're just stuck in place.
	...

Please login to see the full transcript.

Previous episode | Next episode

Disclaimer: The podcast and artwork embedded on this page are from Catherine Carr, and are the property of its owner and not affiliated with or endorsed by Tapesearch.

Generated transcripts are the property of Catherine Carr and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.