MIT’s Banerjee, Duflo Win $48,000 FT/Goldman Sachs Award

Esther Duflo
Esther Duflo, co-author of "Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty." Photographer: L. Barry Hetherington/Katrina Power PR via Bloomberg

Abhijit V. Banerjee and Esther Duflo’s “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty” won the Financial Times and Goldman Sachs Business Book of the Year Award.

Banerjee and Duflo, MIT economists and co-founders of the Abdul Latif Jameel Poverty Action Lab, overcame competition from Barry Eichengreen’s “Exorbitant Privilege,” Daniel Yergin’s “The Quest” and other finalists to claim the award of 30,000 pounds ($48,000) during a dinner last night at the Wallace Collection in London.

In “Poor Economics” (PublicAffairs), Banerjee and Duflo use randomized control trials of the type used to assess new drugs to study the behavior of poor people and the best ways to alleviate poverty.

Addressing topics from health to education, the authors build a shrewd yet sympathetic portrait of a problem as complex as those individuals who make up the all-too-often stereotyped poor. They shed light on seemingly irrational behavior, such as the Moroccan farmer who finds money to buy a television when he can’t afford food.

Ultimately, they argue that aid can work, as long as what they call “the three I’s: ignorance, ideology, and inertia” are banished from policy making.

The authors didn’t think they were writing a business book, Banerjee said.

Crossing Boundaries

“What’s particularly wonderful about winning this award is that these ideas, that in some ways come from a very different world -- the world we live in, which is a world of poverty and policy -- resonate with people who are from the world of business,” Banerjee said after the ceremony. “That these ideas have managed to cross that boundary -- it’s really very rewarding.”

Notably absent from the award’s shortlist were titles addressing the financial crisis. Last year, books on the subject were so prevalent that Lloyd C. Blankfein, the chief executive of Goldman Sachs Group Inc., recused himself from judging.

Each of the five other finalists received a prize of 10,000 pounds ($16,000). They included Eichengreen’s primer on the dollar’s role as the dominant international currency (from Oxford University Press) and Yergin’s epic study of the evolving energy business (Penguin Press/Allen Lane).

Other Finalists

The other finalists were “Triumph of the City” by Edward Glaeser (Penguin Press/Macmillan), the Harvard professor’s affirmation of the enduring economic and environmental benefits of urban living; Margaret Heffernan’s “Willful Blindness” (Walker/Simon & Schuster), an examination of why humans are prone to ignoring the obvious and why that’s particularly dangerous in today’s world; and Richard Rumelt’s “Good Strategy/Bad Strategy” (Crown Business/Profile), which debunks buzzwords, visions and motivational slogans in favor of specific and coherent responses to challenges.

This year’s judges were Lionel Barber, editor of the Financial Times; Vindi Banga, a partner at Clayton, Dubilier & Rice; Arthur Levitt, former chairman of the U.S. Securities and Exchange Commission; Lynda Gratton, a professor at London Business School; Mario Monti, president of Bocconi University, Milan; Jorma Ollila, chairman of Nokia Oyj and Royal Dutch Shell Plc; and Shriti Vadera, director of Shriti Vadera Ltd.

Goldman Sachs and the Financial Times inaugurated the prize in 2005 to highlight books that provide “the most compelling and enjoyable insight into modern business issues.” Previous winners include Thomas Friedman’s “The World Is Flat”; Mohamed El-Erian’s “When Markets Collide”; and Raghuram G. Rajan’s “Fault Lines.”

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