[Epub] ➝ Poor Economics : A Radical Rethinking of the Way to Fight Global Poverty By Abhijit V. Banerjee – Uroturk.info

Poor Economics : A Radical Rethinking of the Way to Fight Global Poverty . This kind of book can be annoying, as popular social science tends to fall into one of two camps The first are those that just repeat a single idea over an over again e.g The Tipping Point The second are those that simply rehash 101 textbooks, adding a few kooky examples or anecdotes e.g The Undercover Economist.To some extent, this book is vulnerable to both those criticisms The authors make a big push on the importance of empirical evidence in designing interventions using randomized controlled tests rather than taking bigger, ideological positions like so many development authors e.g Sachs, Easterly The book also seems a repeat of DEV409 from my Masters Of course, the second of these criticisms is a bit unfair, as DEV409 is clearly not a 101 course Also, it s a bit snobby, as there s nothing wrong with popularising the basics anyway.I m glad I read this book, for four reasons First, the central idea is a good one Given the design of most development work, it s clear that we still need reminded of the need to move away from large, abstract and unproven best practice programmes and towards targeted, measureable and adaptable interventions The parts of the book that touch upon political economy which is really all of the second half, and especially chapter 10 were also fairly open ended, which encouraged me as there s clearly a lot that we can still do I hope I have the time and brains to contribute.On that note, the book is positive and encouraging That big ideas don t work shouldn t discourage us from trying, just to refocus our efforts My pessimism about development is usually the result of my own mistaken expectations that big ideas might deliver results Banerjee and Dufflo grant us permission to move away from this by seeking out niche opportunities at the margins.Third, many of the policy interventions and results in the book are of interest in themselves I was especially keen on the microfinance bits, as there seems so much potential and of interest to me microfinance displays an especially strong link between economic development and institutions.Finally, the book serves as a reminder that the poor have to work their way through decision processes just as complicated as the rest of us, and often so Working in development, it s easy to despair at people making the wrong decisions, without understanding why they do so.Banerjee and Dufflo say all this eloquently than me, so here s a quotation from their conclusion This book is, in a sense, just an invitation to look closely If we resist the kind of lazy, formulaic thinking that reduces every problem to the same set of general principles if we listen to poor people themselves and force ourselves to understand the logic of their choices if we accept the possibility of error and subject every idea, including the most apparently commonsensical ones, to rigorous empirical testing, then we will be able not only to construct a toolbox of effective policies but also to better understand why the poor live the way they do. Poor Economics doesn t simply offer a unilateral view of how to fight global poverty rather, this book offers views from both sides of the foreign aid debate e.g Sachs v Easterly and provides examples of different organizations that have dealt with attacking poverty on both small and large scales There are five key takeaways from Poor Economics, with regard to any localized campaigns attempting to improve the lives of the poor 1 Individuals communities inherently believe that outside organizations companies claiming to help their economic health statuses do not make true claims Info campaigns must educate the poor on critical facts information, and this information must come from a legitimate reliable source i.e the press AND must be attractive e.g presented in a TV drama 2 The poor bear responsibility for most all aspects of their lives Unlike individuals in the First World or people in the middle and upper classes, the poor do not have direct access to proper banking or credit institutions, government aid, etc Certain institutional Institutional changes must be made to give the poor better access to these resources e.g ease access to banks or offer savings accounts as default options.3 There are good and legitimate reasons that some markets are missing for the poor or face unfavorable prices in certain markets This provides the opportunity for technology or institutional organizations to develop a market such as the case for microcredit lending Local and national governments need to create conditions to allow such markets to emerge, of course.4 It should not be assumed that poor countries are destined to fail because they are or have been poor, or that it s because of a long running history with failure The failure can be solved through an overhaul of public policy, greater monitoring of workers and politicians, and greater education involvement of the people themselves within this public sphere.5 Expectations matter If we expect people to fail, then they will fail based on the low expectations expected of them and consequently low expectations they expect for themselves In order to create changes in the lives of the poor, expectations must be changed. 2016. Note to Self to include this when writing a full blown review for this book.I recently read an article published in NY Times on how women economists are NOT recognized for their work when they co author it with another a male economist The article goes on to explain how the bias is deep entrenched in the field of economics Recently, I was having a conversation with a friend, working in the field of finance, on the Indian economy and particularly about the drought which has hit most states check the second link , and I made a reference to this book on how Indian institutions are going weak He instantly recognized the book and told me the name of the author as Abhijit When I told him that the book has another author named Esther, he just quipped almost spontaneously that perhaps the co author would have just helped the other author in finishing up the main work, and perhaps that s why her name almost never shows up Even good reads shows the author only as Abhijit V Banerjee if you find it changed, have it done by me This has nothing to do with this book, but says a lot about the field of finance and economics.If people can make cliches and sweeping assumptions on the work of an author just on the basis of their gender, just consider how grave and ignorant their assumptions would be on the topic of poverty, which most of us just read, see and empathize about, but never have underwent it ourselves, or have studied about it from the ground This books helps one to break all such cliches, rhetoric and generalizations, and provides an honest account and solutions to what goes on in the ground reality.Very Highly Recommended NY Times article About the drought on India So This is an economics book A rumbling sound is heard as ninety percent of the people reading this review frantically jiggle their mice in an effort to click another link on this page Any link Even an ad for laundry detergent Ok, hello to the two remaining readers out there Thank you for sticking around I know economics is one of the least sexy words in reading, right up there with tax law and that economics books are as enticing to most readers as a fat stack of local council permit applications.Hell, I m with you on this I had to study the dismal science that is economics at school, and again in first year university I can tell you from experience that there is no stimulant on earth short of mainlined honey badger adrenaline that can keep me awake in a lecture on supply demand graphs.Poor Economics however is that rare unicorn of reading an interesting economics book Like Loretta Napoleoni s works Terror Incorporated and Rogue Economics and Adam Tooze s Wages of Destruction, Duflo and Banerjee s work mixes hard economic fact with fascinating examples of real world problems.If you ve ever despaired at the seemingly intractable nature of poverty around the world this is a book that will give you hope Duflo and Banerjee D B stress the importance of information gathering, of speaking to the poor, of exploring what it is that makes it hard for them to increase their incomes, and in the process they explore some fascinating case studies and trials of attempt to help the poor, and the many success and failures they have witnessed.A number of my assumptions were overturned, for example while I thought starvation and malnutrition were first order issues in addressing poverty, hunger is not the problem it was Getting enough calories is not an intractable problem for many of the world s poor, and in some places declines in manual labor have slightly reduced the calorie needs of communities.Microfinance is also unlikely to be the panacea it has sometimes been claimed to be While small loans can help the poor expand their small businesses, the nature of these businesses makes expanding them beyond subsistence level difficult D B do stress that microfinance can help the poor, just that the stories of poor people founding business empires on a loan of a few hundred bucks are very much outliers most businesses hit constraints on their expansion quite early on, while others with promise can rarely access loans of the size they need.Further some well intentioned interventions such as a programs in Kenya that promoted marriage in order to reduce teen pregnancy, keep kids in school and limit HIV transmission can perversely end up increasing to the problems they are trying to solve Horrifyingly, this focus on marriage saw young female students getting involved with older, financially stable men who were likely to be carriers of HIV and expected their young wives to drop out of school to care for their children.There are however, many interventions that can help, from focusing schools on basic skills like reading and mathematics, to subsiding treatments like de worming tablets that pay big dividends in keeping children healthy and able to attend school for longer D B caution the importance of avoiding what they call the three I s Ideology, ignorance and inertia, all of which can be overcome with programs carefully designed for the reality on the ground, not the imagined reality that so often seems to underpin aid projects.While global poverty is crushingly resistant to being eradicated D B offer an optimistic take on improving the lives of the poor, arguing that while there may not be easy big fixes for this problem, there are nonetheless many ways to make people s lives better while slowly changing the deprived situations that so many of our fellow humans have been stuck with Overall, Poor Economics brings a hopeful message to an area of global policy and justice that sorely needs it. I mentioned this book on my blog here, and now I finally read it I ll admit I was a little disappointed that the book wasn t as detailed as her lecture on the actual experiments the Poverty Action Lab has been involved in There was much on larger picture topics and brief summaries of experiments and how they contributed to the dialogue on how to address that particular topic within development circles.That said, it was still a fascinating read and I felt like it s been the best thing I ve read to help me catch a vision of what life is like for the international poor those living on less than.99 per day If you want to shed some light on what life is like for the poor in America, I d suggest Nickle and Dimed by Barbara Ehrenreich or Promises I Can Keep Why Poor Women Put Motherhood Before Marriage by Kathryn Edin and Maria Kefalas Here s the thing that just drives me crazy when I read about think about the poor the little inconveniences and set backs they face I mean, the little things that can ruin MY day, like not being able to get in to see the doctor that day, or a fee I wasn t expecting, or a price hike on my favorite yogurt, are the kinds of things that determine whether or not the poor get to EAT that day, or whether they ll be able to keep their business open And those inconveniences are in addition to all the work the poor have to do to make the right choices for their welfare that we take for granted For instance, they have to chlorinate their own water every time they want to drink it or cook with it if you forget, you can get water borne diseases which can give you diarrhea which kills millions of children every year They have to make an effort to buy iodized salt They can t eat fortified cereals every morning, so getting adequate micronutrients is a chore There s no social welfare program like social security to back you up, and banks are essentially inaccessible to the poor When they can manage to save money, they have to use their now very limited supply of self discipline to not spend it It s so unfair that it makes my insides wriggle.However, this book was full of relatively easy, simple, and inexpensive ways to ameliorate those inconveniences Like putting cheap chlorine dispensers next to the public water source, or subsidizing iodized and iron rich salt, or simple information campaigns with usable information Sex with older men is likely to give you HIV decreased the number of high school girls who had sex, got pregnant, dropped out of school, and contracted HIV compared with the control group Deworming children, at the cost of about 1.50 per child per year, increased their average yearly wage by the 10 s of percents.Banajerjee and Duflo propose focusing on these small forms of assistance and little nudges towards making the right decision rather than trying to find some large scale magic bullet to eradicate poverty Let s get this generation a little healthier and a little educated, and get some simple policies in place and then we ll be a little step higher for the next generation I found it hard to disagree They often mention Jeffrey Sachs and his book The End of Poverty which is currently on my bookshelf as an opposing view I m curious to see what Sachs has to say.Also, here s the word on microcredit, according to Banjerjee and Duflo It s great for giving small loans to the poor to run small businesses However, many of these businesses fail because so many of their neighbors go into the same business and there s not enough demand Microcredit loans do not encourage risk taking and bigger businesses mean bigger risks since most loans have to start to be repaid only a week after taking out the loan, and the other debtors in your lending group don t want you to do anything to jeopardize their ability to make a payment Microcredit loans aren t usually practical for educational purposes like a tuition payment since you may or may not have the money to start paying it back a week later In studies they did, they found microcredit users purchased consumer goods, but didn t spend much on education or health Essentially, they say, microcredit loans are a way for the poor to ensure they have a job, which is no small thing, and is a useful service, but it s not a cure all for poverty. Banerjee and Duflo have written a great book that aims to see poverty as a set of concrete problems that, once properly identifed and understood, can be solved one at a time Using the best economic and observational evidence often taken from randomised trials they build a case for what actually works in helping overcome poverty, taking up the fight against what they argue are the biggest barriers ignorance, ideology and inertia.It is thoughtful and rigorous, though possibly slightly too technocratic at times Occasionally I thought they needed a little sociologist than economist in them for example when considering the way people internalise and conform to social expectations to toughen up their analysis, but over all this is a very welcome addition to development literature.They draw 5 broad conclusions about poverty and ways to address it 1 The poor often lack critical pieces of information and believe things that are not true.2 The poor bear responsibility for too many aspects of their lives The richer you are, the the right decisions are made for you.3 Some markets are missing for the poor, or the poor face unfavourable prices for critical goods.4 Most program failures are not inevitable, but the result of a flaw, and one or of ignorance, ideology and inertia.5 Expectations of what people can and cannot do often end up turning into self fulfilling prophecies.Building on 2 above, their take down of the self congratulation of the wealthy and concomitant stigmatisation of poor people is outstanding Our real advantage comes from many things that we take as given We live in houses where clean water gets piped in we do not need to remember to add Chlorin to the water supply every morning The sewage goes away on its own we do not actually know how We can mostly trust our doctors to do the best they can and can trust the public health system to figure out what we should and should not do We have no choice but to get our children immunized public schools will not take them if they aren t and even if we somehow manage to fail to do it, our children will probably be safe because everyone else is immunized Our health insurers reward us for joining the gym, because they are concerned that we will not do it otherwise And perhaps most important, we do not have to worry where our next meal will come from In other words, we rarely need to draw upon our limited endowment of self control and decisiveness, while the poor are constantly being required to do so 68 They bring their analysis down to specific recommendations about concrete programs that will make a difference in the lives of poor people, such as improving the nutritional yields of foods that people like to eat, increasing access to immunisation, giving away bednets and giving cash transfers conditional or otherwise.It s a great read, skewering inappropriate poverty diagnoses and poorly designed interventions, but offering powerful examples of hope and transformation I read it in the same fortnight as Getting Better by Charles Kenney earlier this year and it really works as a great micro economic companion piece to his macro economic take on global development and the fight against poverty. Winner Of The Financial Times Goldman Sachs Best Business Book Of The Year AwardBillions Of Government Dollars, And Thousands Of Charitable Organizations And NGOs, Are Dedicated To Helping The World S Poor But Much Of Their Work Is Based On Assumptions That Are Untested Generalizations At Best, Harmful Misperceptions At WorstAbhijit Banerjee And Esther Duflo Have Pioneered The Use Of Randomized Control Trials In Development Economics Work Based On These Principles, Supervised By The Poverty Action Lab, Is Being Carried Out In Dozens Of Countries Drawing On This And Their Years Of Research From Chile To India, Kenya To Indonesia, They Have Identified Wholly New Aspects Of The Behavior Of Poor People, Their Needs, And The Way That Aid Or Financial Investment Can Affect Their Lives Their Work Defies Certain Presumptions That Microfinance Is A Cure All, That Schooling Equals Learning, That Poverty At The Level Of Cents A Day Is Just A Extreme Version Of The Experience Any Of Us Have When Our Income Falls Uncomfortably LowThis Important Book Illuminates How The Poor Live, And Offers All Of Us An Opportunity To Think Of A World Beyond PovertyLearn At Pooreconomics This is one of the best pop economics books I have read in a very long time Such books typically follow the same recipe top academic seeks recognition outside the profession and writes the book propounding the theory, enlisting in support loads of evidence consistent with the theory, and curiously brushing off forgetting to mention most of any evidence even vaguely incompatible with the main argument of the book The book tends to go on forever repeating the same score in all possible tonalities, and in spite of most attempt to either humour or literary effects is generally rather boring to read Length seems to be necessary to establish the authors credential with the layman This book is very different Duflo and Banerjee do not try and shovel down the readers troats the ultimate theory of poverty They present the evidence, explain how to think about it, and show where a remedy works and where the same approach to the same problem fails miserably But in all this, they suggest to the reader how to go about thinking of poverty, of its causes and of its consequences and how to approach the evaluation of policies to alleviate it Yes, the double handed economists approach will be unsatisfactory for anyone looking for the silver bullet, but as we all know in most situation in life silver bullets do not exist, and ther is no one universal solution to problems that have plagued us for centuries.Above all, this book is interesting and engaging, a very good read, recommended to anyone with even a passing interest in poverty.


About the Author: Abhijit V. Banerjee

Abhijit Vinayak Banerjee is an Indian economist He is currently the Ford Foundation International Professor of Economics at the Massachusetts Institute of Technology Banerjee is a co founder of the Abdul Latif Jameel Poverty Action Lab along with economists Esther Duflo and Sendhil Mullainathan and a Research Affiliate of Innovations for Poverty Action, a New Haven, Connecticut based research


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