Why doesn’t a farmer want to school his kids? Why does he have nine kids when he can hardly afford to care for one? Why does a poor lady in Africa not immunise her children? Why would a man in Morocco who doesn’t have enough to eat buy a television? Why is it so hard for children in poor areas to learn even when they attend school? Why do the poorest people in the Indian state of Maharashtra spend 7 percent of their food budget on sugar? Does having lots of children actually make you poorer?
We’ve all had our brush with poor people, sometime somewhere in out lifetime. Sometimes, we pay attention, often times we don’t. On our regular way to the school, college or work, we often come across one poor person on the roadside. However, we seldom find ourselves thinking about why they remain poor despite all the government and international efforts.
All these questions have very simple answers provided we look directly at the problem without the filter of our political alignment or economic perspective. More often than not, poor are reduced to a set of clichés. Broad and often simplistic formulas that, in reality, mean nothing – “Free market for the poor”, “Give money to the poorest”, “Foreign aid kills development”, “Make Poverty History” etc. are used to define solutions poverty.
“These ideas all have important elements of truth, but they rarely have much space for an average poor women or men, with hopes and doubts, limitations and aspirations, beliefs and confusion.” A very dramatic – either a tragic episode or an uplifting anecdote, to be admired or to be pitied – approach has failed us. We should treat them as “source of knowledge” and as “people to be consulted about what they think or want to do.”
“Because poor possess very little, it is assumed that there is nothing interesting about their existence. Unfortunately, this misunderstanding severely undermines the fight against global poverty”, write Abhijit Banerjee and Esther Duflo in Poor Economics. It is very easy for us to sit in the comfort of our homes and offices and discuss what would work for the poor and what won’t. But in those conversations, we often impose our own biased points of view rather than see the world through the poor eyes.
Aid budgets run into billions, yet very little work had been done to analyse their outcomes. He and Duflo, both economists at the Massachusetts Institute of Technology, thought a better approach would be to appropriate the methodology of the pharmaceutical industry, and subject different types of aid to randomised controlled trials. In 2003 they established a Poverty Action Lab, and by 2010 its researchers had conducted more than 240 experiments in 40 countries, in a Herculean attempt to find out what actually works.
This book will not tell you whether aid is good or bad,” its authors write, “but it will say whether particular instances of aid did some good or not.” Their overwhelming message is that there is no Big Idea or golden bullet, so we should stop thinking about “Aid”, and start thinking about “aid”.
Through their work, Banerjee and Duflo look at some of the most surprising facets of poverty: why the poor need to borrow in order to save, why they miss out on free life-saving immunizations but pay for drugs that they do not need, why they start many businesses but do not grow any of them, and many other puzzling facts about living with less than 99 cents per day.
POOR ECONOMICS argues that so much of anti-poverty policy has failed over the years because of an inadequate understanding of poverty. The battle against poverty can be won, but it will take patience, careful thinking and a willingness to learn from evidence.
This meticulous work offers transformative potential for poor people anywhere, and is a vital guide to policy makers, philanthropists, activists and anyone else who cares about building a world without poverty.
Read review by The Guardian here.