Kellogg Magazine  |  Spring/Summer 2018



Poverty Kellogg has a new focus on the field of
development economics, using cutting-edge
research to tackle an age-old problem
written by: Linda Pixley Illustrations by: Heather Gatley
More than 767 million people worldwide live in extreme poverty. The Global Poverty Research Lab at Northwestern's Buffett Institute for Global Studies wants to provide evidence-based answers to two simple but pivotal questions: Why? And what can be done? Led by a fast-growing, dynamic group of faculty members, the research lab integrates leading-edge theory and first-rate empirical work.

Dean Karlan, professor of economics and finance
One of the lab's co-directors, Dean Karlan, professor of finance, is a new addition to the Kellogg faculty. A globally respected expert in the field, he brings a wealth of knowledge and a passion for finding solutions to global poverty.

"Around the world, trillions of dollars have been spent on programs designed to reduce global poverty," Karlan explains. "But clear evidence on which programs succeed is rare. And when evidence does exist, decision-makers often aren't aware of it. The goal of development economics is to better understand why economic growth occurs in some places and not others – and what can be done to promote growth."

Karlan is also founder of Innovations for Poverty Action, a nonprofit organization dedicated to discovering and promoting solutions to global poverty. IPA brings together researchers and decision-makers to design, rigorously evaluate and refine these solutions. Since the organization was founded in 2002, IPA has worked with more than 575 leading academics to conduct over 650 evaluations in 51 countries.

Nancy Qian,
professor of
managerial economics
and decision sciences.
Development economics isn't a new field. Other universities dedicate resources to the fight against poverty. According to Nancy Qian, professor of managerial economics and decision sciences, what sets Kellogg apart is its emphasis on development economics in a business-school setting.

To Qian, that makes perfect sense. "One major way for economic growth to happen is through entrepreneurship and better governance of businesses, as well as the necessary regulatory and political environments," she says. "All of these issues are core to the mission of a business school." To that end, she and Karlan have worked steadily with Professors Ameet Mojaria and Erika Desserano of the MEDS department, Jacopo Ponticelli of the finance department and Ben Jones of the strategy department, among others.

"Also, a lot of our nation's future business opportunities will come from emerging markets: Latin America, China, India, etc.," Qian continues. "These areas are going from very poor to having median incomes. So it's a first-order question for a business school to understand how these countries operate."

Kellogg's focused approach will help to advance knowledge in the field significantly through research and teaching. Hiring multiple scholars who focus on the topic "will have a big impact," Qian says. "It allows us to achieve synergies we wouldn't have elsewhere."

Theories of Development Economics

What are common roadblocks to overcoming poverty?
Current development economics theories point to a variety of factors, including:

Because climate affects agriculture, natural resources and health, certain climates are believed to promote economic growth better than others.
Human capital
When people are healthier and stronger, they become better educated. When they're better educated, they can get higher-paying jobs or be more productive at their current jobs.
Are the right institutions in place for growth? These can include banks for obtaining funding, legal support for contract enforcement and much more.
A society's culture can do a lot to help economic growth. Culture can also hinder growth – even if other cornerstones of development are in place.