Mohan Guruswamy | Big ideas for change': What 2023 Eco Nobel is all about

When Amartya Sen was awarded the Nobel Prize in Economics in 1998, I was asked by Prime Minister Atal Behari Vajpayee for a briefing on him. I tried to explain about his ethical concerns about prolonged and increasing income inequality, to which Vajpayee tersely said: “Sankshipt mein batao!” He was happy with my next attempt which was “for being a good human being!” Just a few months before that, Lal Krishna Advani inquired from me whether I was familiar with his work? I gave him three books by Sen I had read till then, all of whom related to Inequality, Ethics and Economics. I could make out that Mr Advani, who is a keen reader of books -- all manner of books, was “impressioned” enough to ask me if I could arrange for him to meet Prof. Sen. I told him that I did not know him but would try to make a connection.

But Sen’s Nobel Prize took care of that. The Vajpayee government welcomed the award and honoured him with receptions and meetings. The finance ministry hosted a grand luncheon meeting at the Taj where he was awarded a “Golden Pass” for unlimited free flights by first-class on Air India. While giving it, the finance minister said it was to encourage him to visit India more frequently and advise the government.

But a few months later the Graham Staines incident took place and Amartya Sen commented critically about it. The government then lost its fascination with him and about his concerns for inequality.

Earlier this week my daughter asked me about why Claudia Goldin was awarded the 2023 Economics Nobel. I said it was as much for pointing out the obvious discriminations against women in all fields as it was for that in economics. Ever since the Sveriges Riksbank (Sweden’s central bank) instituted “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel”, and it has since been awarded by the Royal Swedish Academy of Sciences according to the same principles as for the other Nobel Prizes, the prize in economic sciences was awarded to 90 men and just three women. Prof. Claudia Goldin was the first woman to get it alone.

The first of the three women Nobel economics laurates was Elinor Ostrom, who won it in 2009 for postulating that “local communities are the best at managing their natural resources as they are the ones that use them and that all regulation on the use of resources should be done at the local level, as opposed to a higher, central authority that does not have direct interaction with the resources”. The next woman to win it was Esther Duflo, jointly with her husband Abhijit Banerjee and Michael Kremer for their “experimental approach to alleviating global poverty”.

Abhijit Banerjee and Esther Duflo won it ironically enough for their study in eastern Odisha of one the most spectacular development economic bombs of recent times. It was a scheme to replace open-fire cooking used by three billion of the world’s poorest people with more efficient, less polluting stoves. The $400 million project was backed by the United Nations and launched by former US secretary of state Hillary Clinton in 2010. It set out to reduce indoor air pollution, which kills two million people a year, while empowering women and helping the environment. After initial success, millions of stoves built in India were largely abandoned within four years. Banerjee and Duflo studied the reasons for it and told the world why such an altruistic and even rational project flopped. The reasons were quite mundane, something which the world’s finest development economics and policy-making minds did not anticipate. The new stoves needed more attention, were prone to break down and took longer to cook food. They couldn’t be moved because they were tethered to fixed chimneys, sending the smoke outside.

But Duflo did, to my mind, a more remarkable economics research in Russia as a graduate student in 1993 when she wrote a paper on how the Soviet Union “had used the big construction sites, like the Stalingrad tractor factory, for propaganda, and how propaganda requirements changed the actual shape of the projects”. This is exactly what Ratan Tata and Narendra Modi did with the Tata Nano car factory in Sanand, Gujarat. One wanted to refashion how the Indian middle class aspired and locally travelled and the other wanted to remake Gujarat as an industrial society, all based on an ill-designed low-cost car. Neither Duflo or Banerjee were accorded any honours by the Narendra Modi government, or even a meeting.

Economics, possibly because of its associations with politics, money and finance has for long been dominated by men. In the United States, only a fourth of the academics considered to be on tenure track are women. Even in economics, women generally tend to be drawn to the areas leaning on social issues like health, education, labour welfare, wage and gender parity. These are not attention-gathering fields. Claudia Goldin spent her professional lifetime as a labour economist and has been focused for over three decades on the gender pay gap.

The Royal Swedish Academy of Sciences said on Monday: “This year’s Laureate in the Economic Sciences, Claudia Goldin, provided the first comprehensive account of women’s earnings and labour market participation through the centuries. Her research reveals the causes of change, as well as the main sources of the remaining gender gap.” To us in India, this recognition of a gender gap in policy-making is also a tribute to Elinor Ostrom for empowering local communities, to Esther Duflo for empirically analysed development policies decision-making. Our political system has recently endorsed the need for a huge change in political decision-making and power-sharing by agreeing to reserve a third of places in Parliament and the state legislatures for women. This is in keeping with the national mood. Every politician worth his and less often her salt knows that the national mood and perceptions are decisive in determining national outcomes. Speaking to reporters at her home in Cambridge, Massachusetts, Dr Goldin hailed the decision to award her the Nobel Prize as a recognition of “big ideas and for a long-term change”.

Claudia Goldin, who in 1990 became the first woman to get tenure at Harvard University’s economics department, added: “There are still large differences between women and men in terms of what they do, how they’re remunerated and so on. And the question is: why is this the case? And that’s what the work is about.”