30/10/2019 : The Hindu Editorials Notes- Mains Sure Shot
Question – What is RCT and how is it related to developmental economics?(250 words)
Context – The Nobel prize in economics 2019.
What is ‘Developmental Economics’?
- It is a branch of economics that focuses on the social, economic and fiscal conditions of developing countries.
What are Randomised Controlled Trials (RCT) and who are ‘Randomistas’?
- By definition RCT is a trial in which subjects/ people are randomly assigned to one of two groups: one (the experimental group) receiving the intervention that is being tested, and the other (the comparison group or control) receiving an alternative (conventional) treatment. The two groups are then followed up to see if there are any differences between them in outcome. The results and subsequent analysis of the trial are used to assess the effectiveness of the intervention, which is the extent to which a treatment, procedure, or service does patients more good than harm. RCTs are the most stringent way of determining whether a cause-effect relation exists between the intervention and the outcome.
- Simply to understand, in RCT is an experiment to understand the cause and effect of something. Under RCT two groups are made. In each group certain people are selected for an experiment. For example, if the effectiveness of a new medicine needs to be tested, then two groups are made comprising of people who eho are suffering from the disease for which the new medicine is being experimented. Then in one group, out of these people, some are randomly selected and are given the new medicine. In this group neither the patient nor the doctor knows to which group a particular person belongs to. While in the controlled group the same old medicine that was being used to treat the medical condition earlier is continued. Then after some time the results are compared to reach a more realistic figure.
- Randomistas are the people who are proponents of RCT i.e. those who support the RCT method in experiments.
- Abhijeet Banerjee, Esther Duflo, and Michael Kremer belong to the category of randomistas who were awarded the Nobel Prize in Economics for their RCT-based studies on poverty worldwide.
- But just for information, the concept of RCT is not new, instances of RCT can be traced back to the 16th century. However, the statistical foundation of RCT was developed by British statistician Sir Ronald Fisher, about 100 years ago.
Why is RCT method being discussed now?
- As seen developmental economics focuses on the social, economic and fiscal development of developing economies.
- Now developmental economics has changed a lot during the last two decades and it is mostly due to the use of RCTs.
- Early application of RCTs were mostly within the agricultural field. Sir Ronald Fisher himself was very reluctant to apply to apply statistics (which are a part of experiments done by the method RCT) to social sciences, due to their ‘non-experimental’ nature. Then RCT became important in the field of medicine where it was used for clinical trials since 1960, so much so that any clinical trial without RCT is considered almost useless.
- Gradually RCT method started being used beyond the agricultural and medical field. The social scientists started doing RCTs too for their research and in the process the nature of social science gradually converted from ‘non-experimental’ to ‘experimental’ (i.e. from just studying what is there in books and analysing to actually doing experiments).
- Numerous applications of RCTs took place in social policy-making during the 1960-90s, and the ‘randomistas’ took control of development economics since the mid-1990s. About 1,000 RCTs were conducted by Prof. Kremer, Prof. Banerjee and Prof. Duflo and their colleagues in 83 countries such as India, Kenya and Indonesia. These were to study various dimensions of poverty, including microfinance, access to credit, behaviour, health care, immunisation programmes, and gender inequality.
- Similarly, There was tremendous international attention on Finland’s Basic Income experiment (2017-18), where 2,000 unemployed Finns between ages 25-58 were randomly selected across the country, and were paid €560 a month instead of basic unemployment benefits. Results from the first year data didn’t have any significant effect on the subjects’ employment, in comparison with the control group comprising individuals who were not selected for the experimental group. This was also an RCT.
Benefits of RCT or randomisation:
- To understand in case of clinical trials using RCT ensures that allocation to any particular treatment remains unknown to both patient and doctor. Such kind of ‘blinding’ is central to the philosophy of clinical trials and it helps to reduce certain kinds of bias in the trial. It is believed that the ‘outcome’ or the ‘treatment-response’ might be influenced if the patient and/or the physician are aware of the treatment given to the patient.
- But it is to be noted that in economics such kind of blindness in randomisation is not possible because participants will definitely know whether they are getting any financial aid or training. Thus, randomisation must have a much less impact in economic or social field but still unless randomisation is done, most of the standard statistical analyses and inference procedures become meaningless.
- At present economists are divided on whether to use RCTs or not for their study but it is dominating development economics to a large extent now. So a proper agreement must be used on how and where to use it.
Note: There is another article today called ‘Deep traps’. It doesn’t have much content but here are the important points:
- The article mainly argues about the increasing number of child deaths due to falling in uncovered and unused abandoned borewells and wells.
- It says that the responsibility of closure of abandoned wells should be given to the local body and not to the owner.
- It gives the argument in the context of the Supreme Court order that was delivered in 2010, which said that the responsibility of filling up an abandoned well to the owner. They fail to do it mainly because these unused and uncovered wells are in the farmlands and are owned by poor farmers.
- But there are deep hole accidents in the cities as well and it should be the responsibility of the authority to fill them up and take responsibility for any mishap.
- There can also be a census of well structures and they can be regularly checked to prevent any loss of innocent lives.
- This will also save the cost incurred on high-costing rescue operations.