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Dr Arun Advani on how economics can help improve people's lives and why he came to Warwick

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Dr Arun Advani on how economics can help improve people's lives and why he came to Warwick

What research projects are you currently involved with?

I work on various applied economics topics, looking at real world data and using it to understand what’s going on in different situations, and how things might be improved. My interest is mainly in developing countries, and I am working on a project investigating poverty traps in Bangladesh. I’m also interested in how Governments can help to alleviate poverty, both in developing and developed countries, and this starts with them being able to raise funds. This is what I’m looking at in my other main project at the moment – looking at tax compliance in the UK.

In Bangladesh, the data pose a dilemma. While Economics 101 says that over time people’s incomes in poor countries should grow, so that they `catch up' with those in richer countries, in rural Bangladesh we see that people are persistently poor from generation to generation. This is sometimes called a poverty trap. In principle there are a number of ways that this could come about, but none of them exactly square with what we see. My research looks at the possibility that we were looking in the wrong place: recently we've studied whether particular households were or weren't in the trap, but maybe the trap actually exists at the village level. This makes sense because we know that in developing countries people within a community support each other – your harvest fails and your neighbours give you some money – so maybe we should think about the whole community being inside or outside the trap. To study this I needed data about a large number of communities, and I got data from an NGO that was working in a large number of villages handing out cows to try and help people out of poverty.

I found that although the programme had a positive effect, by handing out the same number of cows in a different way there could have been an even bigger impact. Escaping the poverty trap doesn’t just require a programme that increases current income, but also an increased ability to invest in the future. By providing enough cows to each village, one could get to the point that some of the income from these cows could be used for further investment (like buying another cow), enabling the community to grow their future incomes and escape the poverty trap.

Why did you choose this as your research field?

I am interested in the ability that economics has to improve people's lives, and particularly the lives of those living in poverty. The ultimate goal of economic policy should be to give people the opportunity and independence to make their own choices. As a result I study how we can make policy that helps people to increase their income, so they have better options to choose from while retaining the autonomy to make their own choices. This might be getting money to them directly, or making public investments such as health, education, and infrastructure, that can increase their earnings.

I don’t want to do research sitting in an ivory tower, getting published in a journal but where no-one ever actually does anything with it. That's why I work with real world data, and I hope that my applied research will ultimately have an impact on policy and the world. As part of my work, I therefore also think it’s important to talk to policymakers who can implement things, and to the public at large, because they need to understand what the issues are.

Why did you join the Economics department at Warwick?

As my research interests are pretty broad, Warwick is a particularly nice department for me. We have a lot of people in across a range of areas, so for any project I work on, there’s someone to talk to. Also people here value you for working on interesting questions rather than fitting into a box. If it’s interesting, if it will publish well and have an influence on policy, that’s enough.

What has been your most memorable experience during your time in the department?

Well, there was the joy of adversity recently when we had a power cut! Everything died, the Social Sciences building was shut down, and the next morning the Economics department had set itself up in the library, sitting together, chatting and working. The whole department was in one room – the admin team reorganised all the lectures and kept the students informed – and given that everything fell apart at 4 o’clock one evening, it was quite incredible that we had the show back on the road at 10 o’clock the next morning. And it was kind of fun!

The other thing I’ve really enjoyed was the Warwick Economics Summit. I was impressed by the students organising something of this scale: Four continents worth of people, amazing high-profile speakers including Nobel Prize winners and Prime Ministers – and me, as well. It’s completely run by the undergraduates, they really do the whole thing. It says a lot about the quality of the students we have here, and the international reputation of the department.

What is the next challenge for economics?

It’s always dangerous to predict these things!

Economics in general will always have things to study in a way that’s slightly different from the other sciences, because we’re a social science. Many results depend on the ways people interact with one another and the social and institutional environment. The answer to a question that we have today isn’t going to be the answer that we will have in ten or twenty years, because the means of interaction will change. If you think about how people used to get information about jobs, say in the 1970s, and you think about how people get access to information about jobs now, these kind of things change in a way that mean the answers to questions that we have studied before will be different over time.

The techniques we have access to are also changing rapidly. My tax data covers ten million people a year over 15 years, and a whole sequence of variables. Though ‘big data’ gets a bit too much hype, it is true that having access to better computing tools and more data does allow us to tackle questions that we haven’t tackled before.