Putting Our Assumptions to the Test

Do you ever stop to wonder if the way you see the world is how the world really is?  Economist Abhijit Banerjee has spent a lifetime asking himself this question. His answer: Our world views often don't reflect reality. The only way to get more accurate is to think like a scientist — even when you're not looking through a microscope.

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Putting Our Assumptions to the Test

By Hidden Brain Staff

/ March 7, 2022

Do you ever stop to wonder if the way you see the world is how the world really is? Economist Abhijit Banerjee has spent a lifetime asking himself this question. His answer: Our world views often don’t reflect reality. The only way to get more accurate is to think like a scientist — even when you’re not looking through a microscope.

Additional Resources

BOOKS:

Good Economics for Hard Times, by Abhijit Banerjee and Esther Duflo, 2019.

Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty, by Abhijit V. Banerjee and Esther Duflo, 2012.

RESEARCH:

Long-Term Effects of the Targeting the Ultra Poor Program in India, by Abhijit Banerjee, Esther Duflo, and Garima Sharma, American Economic Review Insights, 2021.

The Long-term Impacts of a “Graduation” Program: Evidence from West Bengal, by Abhijit Banerjee, et. al, 2016.

A Multifaceted Program Causes Lasting Progress for the Very Poor: Evidence From Six Countries, by Abhijit Banerjee, et. al, Science, 2015.

Inequality at Work: The Effect of Peer Salaries on Job Satisfaction, by David Card, et. al, American Economic Review, 2010.

Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment, by Jessica Cohen and Pascaline Dupas, Quarterly Journal of Economics, vol. 125, no. 1, Feb. 2010, pp. 1–45.

Free Distribution or Cost Sharing? Evidence from a Malaria Prevention Experiment in Kenya, The Abdul Latif Jameel Poverty Action Lab (J-PAL), 2022.

GRAB BAG:

Abhijit Banerjee’s 2019 Nobel Prize Official interview

Transcript

*The transcript below may be for an earlier version of this episode.
Our transcripts are provided by various partners and may contain errors or deviate slightly from the audio.*

Shankar Vedantam: This is Hidden Brain, I'm Shankar Vedantam. Human beings are always trying to make sense of the world. When things happen to us or to our communities or in our nations, we understand those events through the lens of culture, through ideology or through the prism of our own perspectives. You see a homeless man on the street or a tycoon getting on a yacht, why is one so poor and the other so rich? Many of us have ready answers to these questions because we've spent years or decades perfecting our preferred stories, but what would happen if we just stopped? If we told ourselves, I might not actually have a very good handle on the world. My theories are just that... Theories. This week on Hidden Brain, the story of a kid from Calcutta who became a Nobel Prize winner by asking a deceptively simple question, "How do you know that's true?"-music break-In 1937 Abhijit Banerjee's grandfather struck a real estate deal in Calcutta, it turned out to be a very bad deal.Abhijit Banerjee: Oh, my grandfather thought he was being very clever when he built his house. He thought, well, I'm getting this plot cheap, not quite getting the idea that there might be a reason why he was getting it cheap.Shankar Vedantam: The plot of land turned out to be right on the edge of a slum. But as we will see throughout this episode, things that sound like bad ideas can sometimes turn out well, and seemingly good ideas can turn out poorly. Often, the only way to really find out how things will unfold is to watch and see what happens.Abhijit Banerjee: Yeah. I think my grandfather, he loved the idea of doing something dramatic and with a flourish. And this was one of his flourishes and it turned out, in many ways it was a great idea, but not for the reasons he thought.Shankar Vedantam: Now, I can't say for sure that Abhijit Banerjee would not have won the 2019 Nobel Prize in Economics, if his grandfather had not bought that plot of land next to a slum, but it definitely helped. Here's why, when he was a child, Abhijit would go out onto the flat roof of the house, he discovered two things. One, it was the perfect place to launch a kite.Abhijit Banerjee: Because we literally were the last house. And the sidelines were for a mile. There was nothing blocking us. For flying a kite, it was the best place in the world. It was open, there was no place your kite would get stuck.Shankar Vedantam: The second gift of the house was that precisely, because it was an ideal location to launch a kite. It became the neighborhood hangout for kids. And not just the kids who lived in the houses up the street, but the kids who lived in the tenements, down in the slum.Abhijit Banerjee: They were better at flying kites. We would fly kites together on our terrace and they were better at it. And since flying kites is something that is very competitive and you would really want a strong team, it was nice to know them.Shankar Vedantam: To the middle class families who lived in the houses, the people who lived in the slum might have sparked sympathy or perhaps judgment, but Abhijit, he regularly found himself in awe of his poorer playmates.Abhijit Banerjee: I was scared of playing marbles with them. I love playing marbles. In front of our house, actually, you would dig a little hole in the ground and then you would play marbles. And they were so much better at it than me. For me, it was always a little bit, like I was half admiring of their savvy. They were more savvy than me. And they would use swear words much more. I mean, I have a very developed vocabulary in that domain, as it turns out, being coached by experts. But these kids, they would use words that I wouldn't dare use.Shankar Vedantam: Seeing that cool, that bravado, Abhijit experienced a strange emotion.Abhijit Banerjee: This was the Huckleberry Finn moment for me. I mean, absolutely, there is a wisdom that, for me, was very clear that I didn't have. I was also, for me, I played cricket with them and they were better at cricket than me. In fact, it was very interesting, they had somehow the idea that as someone from a middle class family, I should be better at cricket and I was clearly palpably worse and they found that a little baffling, in fact.Shankar Vedantam: It's not like Abhijit was unaware that friends from the slum struggled with hardship, the contrast between his life and theirs was obvious.Abhijit Banerjee: And it was very clear to me and my brother that there was this other life where the kids didn't go to school, where you might, were wearing a pant where it was kind of tied together with a rope and a shirt that was stitched together with safety pins. And, it sort of created a sense of somehow there was another world out there. And it's not that we were 10 year old social scientists, we weren't. I think we took it as a given that poor people lived that way.Shankar Vedantam: But his close ties with these kids meant he did not see them as objects of pity or scorn. In the years that followed, these experiences as a child would help shape the work that led up to his Nobel Prize. Another early insight that shaped his perspective on the world came from an incident that unfolded at his school. And what will surely be heartening news to any student with less than stellar grades, our future Nobel Laureate turns out to have been a really bad student.Abhijit Banerjee

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