INSIDE THE CLASSROOM

The power of economics to explain and shape the world

In 14.009, a first-year class taught by Nobel laureates, MIT students discover how economics helps solve major societal problems.
 


Students in an MIT Economics classroom

“We want students to get excited about economics so they want to know more, because this is a field that can help us address some of the biggest problems society faces.”

— Abhijit Banerjee, Nobel laureate, Ford Foundation International Professor of Economics



Nobel Prize-winning economist Esther Duflo sympathizes with students who have no interest in her field. She was such a student herself — until an undergraduate research post gave her the chance to learn first-hand that economists address many of the major issues facing human and planetary well-being.

“Most people have a wrong view of what economics is. They just see economists on television discussing what’s going to happen to the stock market,” says Duflo, the Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics. “But what people do in the field is very broad. Economists grapple with the real world and with the complexity that goes with it.”

14.009: Discovering economics via global issues

That’s why this year Duflo has teamed up with Professor Abhijit Banerjee to offer 14.009 / Economics and Society’s Greatest Problems, a first-year discovery subject — a class type designed to give undergraduates a low-pressure, high-impact way to explore a field. In this case, they are exploring the range of issues that economists engage with every day: The economic dimensions of climate change, international trade, racism, justice, education, poverty, social preferences, and economic growth are just a few of the topics the class covers.

“We think it’s pretty important that the first exposure to economics is via issues,” Duflo says. “If you first get exposed to economics via models, these models necessarily have to be very simplified, and then students get the idea that economics is a simplistic view of the world that can’t explain much.”

Arguably, Duflo and Banerjee have been disproving that view throughout their careers. In 2003, the pair founded MIT’s Abdul Latif Jameel Poverty Action Lab, a leading antipoverty research network that provides scientific evidence on what methods actually work to alleviate poverty — which enables governments and NGOs to implement truly effective programs and social policies. And, in 2019 they won the Nobel Prize for Economics (together with Michael Kremer of the University of Chicago) for their innovative work applying laboratory-style randomized, controlled trials to research a wide range of topics implicated in global poverty.
 



Nobel laureates Abhijit Banerjee, Ford Professor of Economics, and Esther Duflo, Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics

The economic dimensions of climate change, international trade, racism, justice, education, poverty, social preferences, and economic growth are just a few of the topics that Banerjee and Duflo cover in their class: Economics and Society's Greatest Problems.


"Super cool"

Jean Billa ’25, one of the students in 14.009, says, “Economics isn’t just about how money flows but about how people react to certain events. That was an interesting discovery for me.”

It’s also precisely the lesson Banerjee and Duflo hoped students would take away from 14.009, a class that centers on weekly in-person discussions of the professors’ recorded lectures — many of which align with chapters in Banerjee and Duflo’s book Good Economics for Hard Times (Public Affairs, 2019).

Classes typically start with a poll in which the roughly 100 enrolled students can register their views on that week’s topic. Then, students get to discuss the issue, says Dina Atia ’22, teaching assistant for the class. Noting that she finds it “super cool” that Nobelists are teaching MIT’s first-year students, Atia points out that both Duflo and Banerjee have also made themselves available to chat with students after class. “They’re definitely extending themselves,” she says.

“We want the students to get excited about economics so they want to know more,” says Banerjee, the Ford Foundation International Professor of Economics, “because this is a field that can help us address some of the biggest problems society faces.”
 



Research suggests that migration is beneficial both to the receiving and sending countries.

Find the facts in data: In one lecture, Duflo points out that migration policies have often been impacted by the fear that unskilled migrants will overwhelm a region, taking jobs from residents and demanding social services. Yet, migrant flows in normal years represent just 3% of the world population. "There is no flood. There is no vast movement of migrants," Duflo says.



Natural experiments can test theories

Early in the term, for example, the topic was migration. In the lecture, Duflo points out that migration policies are often impacted by the fear that unskilled migrants will overwhelm a region, taking jobs from residents and demanding social services. Yet, migrant flows in normal years represent just 3% of the world population. “There is no flood. There is no vast movement of migrants,” she says.

Duflo then explains that economists were able to learn a lot about migration thanks to a “natural experiment,” the Mariel boatlift. This 1980 event brought roughly 125,000 unskilled Cubans to Florida over a matter a months, enabling economists to study the impacts of a sudden wave of migration. Duflo says a look at real wages before and after the migration showed no significant impacts.

“It was interesting to see that most theories about immigrants were not justified,” Billa says. “That was a real-life situation, and the results showed that even a massive wave of immigration didn’t change work in the city [Miami].”
 


"Economics is about questioning everything questioning assumptions you don’t even know are assumptions and being sophisticated about looking at data to uncover the facts."

Esther Duflo, Nobel laureate, Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics.



Question assumptions, find the facts in data

Since this is a broad survey course, there is always more to unpack. The goal, faculty say, is simply to help students understand the power of economics to explain and shape the world. “We are going so fast from topic to topic, I don’t expect them to retain all the information,” Duflo says. Instead, students are expected to gain an appreciation for a way of thinking. “Economics is about questioning everything — questioning assumptions you don’t even know are assumptions and being sophisticated about looking at data to uncover the facts.”

To add impact, Duflo says she and Banerjee tie lessons to current events and dive more deeply into a few economic studies. One class, for example, focused on the unequal burden the Covid-19 pandemic has placed on different demographic groups and referenced research by Harvard professor Marcella Alsan, who won a MacArthur Fellowship this fall for her work studying the impact of racism on health disparities.

Duflo also revealed that at the beginning of the pandemic, she suspected that mistrust of the health care system could prevent Black Americans from taking certain measures to protect themselves from the virus. What she discovered when she researched the topic, however, was that political considerations outweighed racial influences as a predictor of behavior. “The lesson for you is, it’s good to question your assumptions,” she told the class.

“Students should ideally understand, by the end of class, why it’s important to ask questions and what they can teach us about the effectiveness of policy and economic theory,” Banerjee says. “We want people to discover the range of economics and to understand how economists look at problems.”

 

Suggested links

14.009 / Economics and Society’s Greatest Problems

Esther Duflo

Abhijit Banerjee

MIT Department of Economics

Centers | MIT Deptartment of Economics

Abdul Latif Jameel Poverty Action Lab

Video | Lighting the Path: The MIT Department of Economics

Story: MIT Economists Duflo and Banerjee win the 2019 Nobel Prize
The professors share the prize with Michael Kremer of the University of Chicago; are cited for breakthrough work to alleviate poverty.

 


Story by MIT SHASS Communications
Editorial and Design Director: Emily Hiestand
Senior Writer: Kathryn O'Neill
Published: 2 December 2021