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Duflo addresses India's gap between good intentions and good policies

Please note that prior to September 2017, the Center on Global Poverty and Development was known as the Stanford Center for International Development (SCID).

Esther Duflo gestures next to the Stanford Center for International Development banner

<p>Esther Duflo gives a keynote address at the "Firms, Trade, and Development" conference</p>

Rod Searcey
Dec 2 2015

Posted In:

In the News, SCID News

Many of the world’s most polluted cities are in India. Despite national and state rules to regulate emissions and punish offenders, Indian factories continue to pollute well above permitted levels. That’s often because bureaucratic constraints get in the way of even the best-intentioned policies, says Esther Duflo.

The MIT economist stressed how important it is for policymakers to consider and understand those constraints during a keynote address she delivered during the “Firms, Trade, and Development” conference co-hosted by SCID and the International Growth Centre.

She pointed to Gujarat, where limited resources have led the state to rely on third-party auditors to submit pollution readings of industrial plants to the state-level pollution control board. However, most third-party auditors are hired and paid by the businesses that they audit. That gives them an incentive to report a lower-than-actual pollution level in exchange for repeat business.

Duflo says changing the incentive structure to reduce conflicts of interest by randomly assigning auditors, paying them from a central pool, and monitoring their performance resulted in significantly more accurate pollution level readings and reduced plant emissions.

Duflo’s work on environmental regulation enforcement in India highlights the role academics play in working with governments to understand and bridge the gap between policy design and implementation results. “Esther’s work resonates strongly with the work being done at SCID,” says Grant Miller, SCID’s director. “We have a particular emphasis on using academic research to make policies more effective, and work closely with policymakers to figure out what works and what doesn’t.”