Born in West Virginia and raised in Bowling Green, Ohio, Easterly received his BA from Bowling Green State University in 1979 and his Ph.D. in Economics from MIT in 1985. He spent sixteen years as a Research Economist at the World Bank and was adjunct professor at the Paul H. Nitze School of Advanced International Studies.

From 1985 to 2001 he worked at the World Bank as an economist and Senior Adviser at the Macroeconomics and Growth Division. He then worked at the Institute for International Economics and the Center for Global Development until 2003, when he began teaching at NYU. He has worked in many areas of the developing world and some transition economies, most heavily in Africa, Latin America, and Russia.

He is the author of The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics (MIT, 2001), The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good (Penguin, 2006), 3 other co-edited books, and 46 articles in refereed economics journals.

His work has been discussed in media outlets such as National Public Radio, the BBC, the New York Times, Wall Street Journal, Washington Post, The Economist, The New Yorker, Forbes, Business Week, the Financial Times, and the Christian Science Monitor.

In his papers he introduced the notions of Factor world and Productivity world.

Easterly is skeptical toward many of the trends that are common in the field of foreign aid. In The Elusive Quest for Growth he analyzes the reasons why foreign aid to many third world countries has failed to produce sustainable growth. He reviews the many “panaceas” that have been tried since World War II but had little to show for their efforts. Among them is one that has recently come back into fashion: debt relief. That remedy has been tried many times before, he argues, with negative results more often than positive, and calls for a more scrutinizing process.

In The White Man's Burden (The title referring to the famous The White Man's Burden by Rudyard Kipling), Easterly elaborates on his views about the meaning of foreign aid. Released in the wake of Live8, the book is very critical of people like Bob Geldoff and Bono (“The white band's burden”) and especially of fellow economist Jeffrey Sachs and his bestselling book The End of Poverty. Easterly suspects that such messianic do-good missions are ultimately modern reincarnations of the infamous colonial conceit of yore. He distinguishes two types of foreign aid donors: “Planners”, who believe in imposing top-down big plans on poor countries, and “Searchers”, who look for bottom-up solutions to specific needs. Planners are portrayed as utopian while Searchers are more realistic as they focus ... following Karl Popper ... on piecemeal interventions. Searchers, according to Easterly, have a much better chance to succeed.

Criticism

Sachs responded to Easterly's arguments, leading to an ongoing debate. Sachs accused Easterly of excessive pessimism, overestimating costs, and overlooking past successes.Nobel Laureate Amartya Sen has praised Easterly for analysis of the problems of foreign aid, but criticized his sweeping debarment of all plans, lacking the due distinctions between different types of problems, and not giving the aid institutions credit for understanding the points he's making.

In February 2010, a parody called "A Highly Deplorable, Imaginary Conversation Between Famous Economists" appeared on the SPIN.com site, suggesting that the "debate" between Easterly, Sachs and Moyo was at least partly a function of careerism.