Nobel Price 2019: Winners in Economics

Michael Kremer, Abhijit Banerjee and Esther Duflo are awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2019. They have significant contributions to the improvement of world poverty through their new field experiment-baed approach in the last two decades. Although the world economy has achieved great improvements nowadays mostly in those developed countries or the large developing countries like China and India, the poverty in those small developing countries is still severe. Many more serious issues have been emerged as a result of extreme poverty in those countries, like the low-level education, increasing crime rates and poor health care.

These are all big issues and the three price-winners have tried to narrow it down and look for more specific solutions for some particular questions. And they are targets are those who are most in need.

Among the three great economists, I am particularly interested in Michael Kremer’s contribution in the development of vaccination in the African developing countries.

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Michael Kremer was born in 1964 in a Jewish family. He got his Ph. D in Economics in Harvard University in 1992 and has been a professor at Harvard since 1999. He has focused on health economics these years and devoted in the market commitment, trying to build up incentive mechanisms to promote the development of new vaccines among the poor. Lots of diseases like tuberculosis and malaria kill many people in Africa. However, little research on the vaccines to cure these diseases have been done by the private medical companies. And the reason behind that stagnant development is that when the private developers release a new vaccine in a developing country and set the price that has some premiums above the costs, the government would take action to lower the price which is under the cost.

Besides the non-willingness of the supply side, the demand of these expensive but effective vaccines of the developing countries is also extremely low. To improve the incentive of the companies and to enlarge the market size of the vaccines, government would play the most important role. For example, the government would purchase large amount of newly developed vaccines from these private companies and even compensate for their research process. Obtaining the vaccines, the government could resale those vaccines to the local hospitals in the developing countries at a lower price. The producers and customers both largely benefit from this method. Also, the producers may have the opportunity to choose what they think are most developable from a list of vaccines, which largely raises their morality to make successful vaccines since only viable ones would be subsidized.