Human Development through an Economist’s Eyes

September 9th, 2015

When Bryce Millett Steinberg ’09 was an undergraduate at Brown, she was 100 percent sure she was going to be a lawyer. “I was very practical,” she says, “and law seemed like a good, solid profession.”

That same practicality drove her to seek a CV-enhancing research gig before graduating. She approached economics professor David Weil and became his research assistant for the summer. “I completely fell in love with econ,” she recalls, “and I completely changed my plans.”

She went on to work with University of Chicago economist Emily Oster (who joined the Watson faculty last year), and together they wrote a paper showing that in India, when an IT–enabled service firm (such as a call center) opens, the number of kids going to school nearby goes up – even though most of them won’t end up working in the local firm. In other words, simply knowing the jobs are there serves as a signal, albeit very localized, of the importance of certain skills, particularly English, and therefore of the benefits of education. “From a policy standpoint,” they wrote, “the results provide support for interventions which inform students about returns to schooling.”

Later, pursuing her PhD at Harvard, Steinberg, who had always been interested in development, kept her focus on India and education. What became central to her dissertation was understanding how families make decisions about investing in human capital – more specifically, how do market forces and government programs determine whether parents send their child to school or to work? 

To find out, Steinberg and UCLA public policy professor Manisha Shah looked at several years’ worth of wages and test-score data across India. What they found runs counter to the assumption that parents pull their children out of school and put them to work when rainfall is low to insure themselves against financial shock. On the contrary: for kids 9 and up, more rainfall meant lower test scores – that is, good crops meant that kids go to school less and even drop out. But in a particularly bad year, Steinberg says, kids stay in school “because there’s nothing better to do.”

Poverty alleviation programs can have a similar – and unintended – consequence of lowering human capital investment, Steinberg says. In India, the National Rural Employment Guarantee Act (NREGA) of 2005 guaranteed 100 days of wage employment per year to every household. But the effects were countercyclical: as the system rolled out, test scores for older kids went down. Why? Teenagers were going to work instead of to school. Families’ income increased but kids’ schooling decreased or even stopped.

Such research should inform public policy, says Steinberg, “given that the two biggest things the Indian government does for poor people are [NREGA] and building schools, and the two seem to be in conflict.” 

Making numbers mean

While she is a self-declared “data nerd,” Steinberg is motivated by the potential for economics to advance human development. 

“What’s appealing is that we’ve seen this transition many times now, where people get more productive, they educate their children, their fertility goes down. We’ve seen it with the Industrial Revolution in Europe and the US, and more recently in China….

“It’s hard to focus on, say, finance in the US when you can see how [economics] can affect mass human suffering.”

“In a place like India or sub-Saharan Africa,” she continues, “you know the steps along the way, but you don’t exactly know how to push it. And economists have been surprisingly bad at pushing it in the right direction. So development economists in the past 15 or 20 years have gotten really ‘micro’ and tried to figure out what small changes you can make in a particular context to push [development] a little bit further. We tend to focus a lot on health and schooling because they make people more productive. They also make their lives better.”

A case in point, Steinberg says, is hookworm eradication in Kenya, a low-cost program that effectively boosted school participation among young children.

“[Hookworm] was a big problem, and now people are healthier and smarter and richer because they did a good experiment. They figured out this was a real issue and scaled it up and actually solved it,” she says. “It’s hard to focus on, say, finance in the US when you can see how [economics] can affect mass human suffering.”

If the animating drive behind Steinberg’s work is broad – improving the human condition – her tactics are specific and concrete: conduct research that will inform public policy.

“We know that increased education is the key to growth, but people aren't educating their children at anywhere near the rates we think they should be. The question,” Steinberg says, “is why. For a long time, we thought people just didn't have enough money. But in a country where schooling is free, we still don't see anywhere near 100 percent enrollment rates. We have to figure out what is behind those decisions so that when we make policy, we can effect the most possible change.”

-- Sarah C. Baldwin