A Radical (and Hopeful) Approach to the Fight Against Global Poverty

Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty By Abhijit Banerjee and Esther Duflo PublicAffairs Hardcover : 320 pages English Release Date: April 26, 2011

In Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty, Abhijit Banerjee and Esther Duflo set out to convince their readers that we need not feel overwhelmed when approaching the daunting reality of global poverty. They urge us to realize that, in fact, significant progress in this ongoing battle is actually within our reach.

This agenda arose when the two authors attempted to sort through and make sense of fifteen years of research in dozens of countries. They had embarked upon this fieldwork as development economists, theoretical tool kits in hand, to collect concrete evidence about the world’s poorest populations. Yet, what they repeatedly and unexpectedly found was that the lives and decisions of the poor did not actually fit into the prevailing theories surrounding poverty. Struck by the failures of these dominant understandings, they decided not to develop yet another shiny new sweeping solution to suit their findings. Instead, they felt that they could be more productive by investigating why such dominant approaches have been failing and how they could be adapted to better understand the world. They urge us to join them in letting go of the ongoing pursuit of magical large-scale solutions to poverty. Instead, we should attempt to better understand the lives of the poor and together figure out what interventions could provide the assistance they actually want and need. In doing so, Banerjee and Duflo arrive at a set of grounded, accessible, pragmatic and relatively small solutions, which they believe could have surprisingly large effects. They propose that we begin to understand global poverty as this conglomeration of “concrete problems that, once properly identified and understood, can be solved one at a time” (3). This proposed approach is in fact radical, in that it is actually quite unradical.

Indeed, rather than writing a book offering yet another radical universal plan for escape from the poverty trap, Banerjee and Duflo find hope in the large impact that small changes can have. They arrive at such small solutions through careful investigation, mostly in the form of Random Controlled Trials (RCTs). These trials attempt to hold certain factors constant in order to test the efficacy of particular interventions. The tests are meant to serve as proper scientific experiments, which can be measured and repeated. RCTs are very commonly used in medicine, but have yet to become largely incorporated into social policy research and design. Banerjee and Duflo feel that RCTs could be an invaluable tool for social scientists, by providing real and clear answers about whether or not a program works, and why.

This approach formed the basis of their Poverty Action Lab (J-Pal), founded in 2003. The lab has supported over 240 large-scale RCTs in forty countries (14), many of which directly informed their book. Tests were carefully designed to evaluate common interventions and ask what impact they are actually having on the lives of the poor. For example: if prenatal vitamins are provided free of charge, will women actually value them? If aid agencies subsidize bed nets and sell them at low cost, will the communities refuse to buy them in the future if the price rises? If iron supplements are provided to a highly anemic population, will families take them? The research supported by Banerjee and Duflo seeks to answer such often-overlooked questions, and understand why these interventions do or do not deliver their intended benefits. Surprising answers are often found, and by digging deeper into the lives of the poor, Banerjee and Duflo arrive at a set of alternative approaches. By combining their on-the-ground qualitative research with reliable RCT quantitative data, they determine that many small interventions which, if judiciously implemented, could have a major impact on the lives of the poor.

The book is nicely organized into two major sections: Private Lives, and Institutions. Each section is about 100 readable pages, and is further broken down into topical chapters. In each of the four chapters comprising Private Lives, the authors do their best to situate themselves alongside the actual lives and decisions of the poor as their starting point for understanding the continuation of poverty. Attempting to leave behind any assumptions about what interventions do and do not make sense, they approach dozens of case studies of impoverished individuals, families, and communities with no predetermined formula explaining what has kept these populations in poverty. Further, they refrain from categorizing the decisions of the poor as irrational, illogical, or foolish. In fact, the authors note that what is striking and often ignored is that even the abjectly poor are just like the rest of us in almost every way: “we have the same desires and weaknesses; the poor are no less rational than anyone else” (ix). Actually, we should realize that the poor have to be sophisticated economists just to survive. Therefore, if a family is not sending their children to school, immunizing their newborns, buying nutritious food, or taking advantage of subsidized health care, there must be a good reason; a reason which, if understood by scholars and policy-makers, could inform new and effective interventions to the perpetuation of poverty.

The second section, Institutions, is broken down into five chapters that further investigate the shortcomings of previous policies that sought to aid the poor. With each discussion, the authors are careful to provide some forms of realistic and pragmatic solutions, however small, to the often-bleak reality following a failed program. Their point in doing this is simple: “Talking about the problems of the world without talking about some accessible solutions is the way to paralysis rather than the way to progress” (6). Throughout the book, they provide such attainable solutions in response to their best understandings of what impoverished populations actually need and want in their pursuit of better lives. When they encounter a situation that at first glance does not seem to make sense, they ask, “What could be going on here? Why are the poor making this decision, and what can be done to help them?” Their findings are delivered in extremely readable, and at times, even entertaining ways. Multiple case studies and anecdotes abound in each chapter, keeping the reading informal and approachable, yet all the while, extremely informative and well researched.

The first chapter, “A Billion Hungry People?” notes that among the world’s most poor, the priority is often not getting more calories, but getting better-tasting ones. With a few extra rupees, one might buy a sweet tea rather than another portion of rice. If they know that they are going to be hungry again the next day, maybe they would rather do with their usual insufficient rice portion and spend that extra money on a delicious tea enjoyed with a good friend. Much policy remains steadfast, however, on providing cheaper and more plentiful grains to impoverished populations. Banerjee and Duflo explain how that may not be what they need or want, and is doing little good in alleviating hunger and malnutrition. The chapter attempts to rethink this approach, and suggest other nutritive interventions that could be more productive. They point to a new salt, fortified with iron and iodine, which is now becoming readily available in several countries. This is one solution that could affordably and sustainably supplement diets in a way that meets people where they are, and does not ask them to sacrifice their desire for a pleasant life in order to meet their basic nutrition needs.

The second chapter, “Low-Hanging Fruit for Better (Global) Health” begins to cover the spectrum of debates surrounding the question of why so many families remain in poverty despite many attempted interventions. The fact that so often, readily available “low-hanging fruits” such as oral rehydration salts to cure diarrhea, simple vaccines, and bed nets are not used by those who need them most is called into question. There must be a reason why families are not taking advantage of such interventions, and rather than criticize the poor for being irrational, we should understand their reasons and tweak the ways in which such aid is offered. The fact that five million children die before their fifth birthday (42) reminds the readers of the urgency and extreme scope of this situation. From here, the authors provide a few viable solutions to this tragic reality. They discuss Udaipur villagers who believed deeply that bringing an infant out of the home within their first year of life would expose them to “the evil eye,” which could cause death. So, of course, parents would not bring their babies out to a clinic for immunization shots, even if they were offered completely free of cost. Therefore, the authors conclude, rather than blindly offering such a service, the government or aid organization must first understand the context into which they are intervening. We should spend resources to share awareness and coordinate mutual understanding between medical solutions and indigenous knowledge. A little well-targeted and respectful explanation can go a long way to change a community’s acceptance and incorporation of a proposed intervention. But so often, aid is delivered without paying any mind to such contextualized awareness, and consequently, they very often fail. It is also important to remember that such basic amenities are usually provided to citizens of development countries by default, and free of cost. Babies are legally required to be immunized before they leave hospitals. Tap water is required to meet certain levels of chlorination before it reaches people’s homes. Children are legally required to attend school (which is publicly provided) until 16 years of age. We take these normalized practices completely for granted, and need to understand that the for the world’s poorest, they themselves face the burden of seeking out, understanding, and paying to attain such services.

In regard to education, Chapter three, “Top of The Class,” Banerjee and Duflo attempt to work out why students are continuing to perform extremely low in so many developing countries. The UN’s Millennium Development Goals (MDGs) have made much headway in regard to encouraging developing countries to focus more on widespread and affordable universal primary education. They have not, however, paid much mind to the quality of that education. The chapter explains how so often, expectations are too high and curriculums too complicated for the majority of classrooms to succeed. School systems should recognize and accept the level at which their students are performing, and work to get each student to a basic level of proficiency. So often, complicated learning agendas and highly ambitious teachers set a classroom expectation that is unrealistic and perhaps even counter-productive. Policies should reorient each school’s agenda towards meetings the needs of the children that they have, instead of the ones they would hope to have. This is a radical simplification of the current paradigm of education provisioning, and could indeed have profound effects on learning outcomes.

Chapter four, “Pak Sundarno’s Big Family” evaluates the ever-controversial issue of family planning. The authors consider the multitude of common explanations for large-family sizes in developing countries: are the poor unable to control their own fertility? Is it a problem of the lack of available contraception? Or is it a conscious choice? They are careful to remind us that having a large family does not necessarily mean poverty, and poverty does not necessarily mean a large family. The positive correlation between the two is not necessarily casual in either direction. Rather than continue the debate surrounding this huge question, instead, Banerjee and Duflo put their energy into collecting and evaluating a number of case studies. Here, they can deduct relevant conclusions in the hope of making real progress on the issue. They find that some of the best interventions may be much less direct than most programs have considered. Rather than supplying unwanted contraception, the government could perhaps focus on providing better elder care. That way, adults would find it less necessary to want more children (especially male) in order to increase their chances of being cared for later in life. Again, we are reminded to understand that in a country like the United States, all citizens are provided with some form of medicare or social security. No such program exists in developing countries, and many families may aptly continue to stay large in order to fill this gap in provisioning.

Here, the book moves onto the second of two sections, Institutions. Five chapters, each with a catchy title, evaluate the larger-scale programs in place that intersect with and address poverty reduction. These institutions include microfinance, savings, entrepreneurship, and politics. We are continually reminded that the poor are forced to take huge amounts of risk and receive little to no form of security or insurance. They have no access to affordable savings accounts or financial assistance. Their outlook on their futures is often (rightfully) bleak and delayed gratification in the form of small savings may not actually make much sense for them. Banerjee and Duflo work to provide an unbiased account of how and why different financial interventions attempting to mitigate these realities have worked and failed to various degrees. We can find hope in the large-scale proliferation of microfinance, but must learn from its failures and deficiencies. There will likely be no “magic bullet” out of global poverty, but there are undoubtedly many small realistic interventions that could spur great changes. Supported by sound and thorough research, Banerjee and Duflo demonstrate throughout these chapters that if policies administered by NGOs, governments, and aid agencies were to be reevaluated and reconstituted based on the actual needs of the poor in more realistic ways, the fight against global poverty could begin to make sustainable headway. The case studies they provide suggest that such careful understanding can lead to “polices and institutions that are better designed, and less likely to be perverted by corruption…these changes will be incremental, but they will sustain and build on themselves. They can be the start of quiet revolutions” (266).

While the book does not conclude with some magical cure-all solution to poverty, it does offer key lessons and insightful suggestions for reform. Their methods are refreshing and productive, and their findings informative and hopeful. The book invites readers to look more closely at global poverty, and consider the lives of the poor at the forefront of understanding. If we realize and accept that there is no immediate magical solution, and instead take the radical approach of seeking contextualized and sustainable interventions, we can construct a toolbox of effective policies to chip away at global poverty. The authors conclude their well-researched and beautifully written book with the inspiring call to “join hands with the millions of well-intentioned people across the world…and quest for the ideas that will eventually take us to a world where no one has to live on 99 cents a day” (273).

Abhijit Vinayak Banerjee was educated at the University of Calcutta, Jawaharlal Nehru University and Harvard University. Ester Duflo was educated at L’Ecole Normale Supérieure and DELTA in Paris, and the Massachusetts Institute of Technology (MIT). Both authors have received a number of extremely prestigious academic honors and prizes. In addition to their numerous additional academic posts and contributions, both still maintain directorship of their Abdul Fatif Jameel Poverty Action Lab (J-Pal). Further biographies and updated research can be found at the book’s web companion: www.pooreconomics.com.■

Ali Horton is an instructor and PhD student in the geography department at Rutgers University. Her research focuses on poverty reduction policies in Bangladesh.