Q&A: Questions for Nobel laureate Michael Kremer

WASHINGTON — Improving links between researchers and development practitioners can be key to improving effectiveness and outcomes, according to Michael Kremer, a recipient of the 2019 Nobel Memorial Prize in economic sciences.

Currently a professor of developing societies at Harvard University, Kremer was recently awarded the prize along with Abhijit Banerjee and Esther Duflo "for their experimental approach to alleviating global poverty."

Kremer — who helped pioneer the use of randomized control trials to test the efficacy of programs that help address critical issues affecting poverty, including health and education — also helped to create the U.S. Agency for International Development’s Development Innovation Ventures program, and serves as its scientific director.

The DIV method of providing tiered, evidence-based funding for proof of concept, testing for scale, and scaling is a great model and one of the programs that he’s quite excited about, Kremer told Devex in an interview.

He discussed DIV, results-based financing, and his advice for millionaire donors with Devex.

This conversation has been edited for length and clarity.

If you were the chief economist at USAID, what’s one key action you would take?

There is a sincere effort by a lot of people at USAID to try to do as much to address poverty and to address other problems in the developing world that are important for the people in developing world, they are important for people in the U.S. and to do so to try and do as much as possible with the resources available.

So there's been a lot of effort to do that, a lot of progress on that. But I think there's always more to do, and deepening and furthering those efforts is very important.

One of the roles of a chief economist is to facilitate discussion between researchers and practitioners. I think that that discussion can be incredibly valuable. One thing [I would do is] try to facilitate more of that interaction. It’s not easy, but it can be enormously productive.

You were involved in creating the DIV program. How do you think it’s changed and what do you think its role is in the agency today?

I've emphasized today how things are iterative and you don't get it right the first time. And, you know, that's the whole idea of innovation — you don't get it right the first time, but you keep working on it. And, you know, one of the areas that I think DIV has improved over time is … working with missions and bureaus. We've seen increasing examples over time, including some very big wins on working with the rest of the agency, so the things we do just go straight to scale.

We can be effective by connecting with the rest of the agency and I think we're getting much better at that over time.

You have helped pioneer new research methods and have been involved in pushing for evidence-based poverty-reduction efforts. Most donor funding still is not structured in a results-based framework. What do you think needs to happen to change that?

Advance market commitments are obviously an example of those. That was a ton of work and … there were people in the U.S. government very interested in it, but it was hard to work out the legal mechanisms, how it would be scored in terms of the budget. So the institutional details definitely matter.

On results-based financing and development impact bonds, that's another area where [DIV has] done something and I think that helps the agency try it out. Maybe they'll conclude, no, this wasn't a good idea. Okay. Then DIV’s done a relatively small one. Maybe they decide they like it a lot and it was great. Well, then there's a lot of potential for impact. So that's sort of the idea of DIV — it’s to try things out and then give it a shot, and then the rest of the agency can see and decide, and the rest of the world can see and decide.

If you were advising one of today’s billionaire donors on how to most effectively invest their money, what would you tell them to do?

I think innovation’s a very exciting area, but I think it's important to think about innovation very broadly. DIV thinks about innovation as gadgets, as software, but also as new business models, as using behavioral economics to design new ways to improve government programs, to reduce corruption or fraud, or just make them more efficient and effective. A very comprehensive, very inclusive definition of innovation is really important.

I think there's a lot of scope for this open, evidence-based, tiered funding approach to supporting innovation. We now have evidence that approach … can have tremendously tremendous payoffs and then really leverage a tremendous amount of extra funds. When you get the successes and they're adopted by other organizations, you know, the impact can be huge.

Update, Nov. 4, 2019: This article has been updated to clarify that Kremer is the scientific director of USAID’s Development Innovation Ventures program.