Poor Economics: A book review by Bob Morris

Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty
Abhijit V. Banerjee and Esther Duflo
PublicAffairs/The Perseus Group (2011)

How and why ideology, ignorance, and inertia have so effectively undermined efforts to reduce/eliminate global poverty

I read this book when it was first published and recently re-read it because I was curious to know (a) what I had missed the first time and (b) to what extent (if any) the book has since lost relevance since it was written more than two years ago. My conclusions? I missed several key points, and, the book’s more relevant now than it was then.

As Abhijit Banerjee and Esther Duflo explain, they focus on “the very rich economics that emerges from understanding the economic lives of the poor. It is a book about the kinds of theories that help us make sense of both what the poor are able to achieve, and where and for what reason they need a push.” Frankly, the first time around, I did not pay sufficient attention to the material that focuses on the details of poor families’ daily lives: their dreams, their fears, their frustrations, and (yes) their noble qualities.

Banerjee and Duflo are correct to suggest that their book “is ultimately about what the lives and choices of the poor tell us about how to fight global poverty…And it reveals why so many magic bullets of yesterday have ended up as today’s failed ideas…Above all, it makes clear why hope is vital and knowledge is critical, why we have to keep on trying when the challenge looks overwhelming. Success isn’t always as far away as it looks.” I agree. But it is also true that success isn’t always as near as it looks.

They provide an abundance of information, insights, and counsel that can help their reader to do some “radical thinking of the way to fight global poverty.” Here are some of the several dozen passages that caught my eye:

o  The nature and extent of poverty’s impact on eating habits (Pages 22-28)
o  A “nutrition-based poverty trap” (38-40)
o  The “health trap” (43-48)
o  “Supply-Demand Wars” (72-76)
o  “The Curse of Expectations” (86-93)
o  “Why Schools [in Developing Countries] Fail” (93-97)
o  “Reengineering Education” (97-100)
o  “What Is Wrong with Large Families” (106-111)
o  “Children as Financial Instruments” (119-123)

Rather than add to the number of demonstrably ineffective “magic bullets,” Banerjee and Duflo suggest a few points to keep in mind when thinking about how to improve the lives of the poor: “First, the poor often lack c ritical pieces of information and believe things that are not true…Second, the poor bear responsibility for too many aspects of their lives…Third, there are good reasons that some markets are missing for the poor, or that the poor face unfavorable priccees in them…Fourth, poor countries are not doomed to failure because they are poor, or because they have had an unfortunate history…Finally, expectations about what people are able or unable to do all too often end up turning into self-fulfilling prophecies…Despite these five lessons, we are very far from knowing everything we can and need to know.” Be that as it may, Banerjee and Duflo are to be commended for how far, how deep, and how well thy have increased our understanding. Thank you.

According to a Chinese proverb, the best time to plant a tree was 100 years ago; the next best time is now. As Ashijit Banerjee and Esther Duflo explain so compelling in this book, the same can be said for reducing – if not eliminating – poverty in the world.

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