Nobel Economics Laureate Professor Duflo: "Disaster Relief Funds Should Be Selectively Distributed" (Comprehensive)

Conference on Sharing Achievements of the 2020 Economic Development Experience Sharing Project (KSP) Held on the 24th

[Asia Economy Reporter Jang Sehee] Esther Duflo, a Nobel laureate in economics and professor at the Massachusetts Institute of Technology (MIT), argued that conditional cash transfers are necessary in response to the novel coronavirus infection (COVID-19).

On the 24th, at the '2020 Knowledge Sharing Program (KSP) Performance Sharing Conference' held at the Millennium Hilton Hotel in Seoul, Professor Duflo was asked which is more appropriate between universal and selective cash support. She stated, "I think countries with large and highly developed economies like South Korea would be better off choosing conditional cash transfer programs."

Professor Duflo explained, "This is because they have information to judge who and when to support, and can provide more assistance to those who truly need help." She added that many countries felt the need to provide cash to their citizens through the COVID-19 crisis and actually implemented various policies.

She then pointed out that basic income has financial limitations. Professor Duflo said, "Universal basic income costs a lot because it does not exclude anyone from the beneficiaries." She also emphasized that low-income households should feel that they can maintain their existing lives even when facing major crises like COVID-19.

She stressed that government spending is necessary in addition to cash support. She said, "Funds must be secured to provide programs that serve as good resources for people."

Additionally, Professor Duflo pointed out that keeping interest rates low for a long time is undesirable. She said, "Low interest rates lead to asset price increases and cause inequality to rise." She added, "It is important to impose taxes on assets for economic stabilization."

Meanwhile, Professor Duflo was jointly awarded this year's Nobel Prize in Economics along with her husband and fellow MIT professor Abhijit Banerjee and Harvard University professor Michael Kremer, in recognition of their experimental research and efforts to eradicate poverty.

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