Poor Economics：A Radical Rethinking of the Way to Fight Global Poverty

Thistitlecomesfromtheaward-winningfoundersoftheuniqueandremarkableAbdulLatfiJameelPovertyActionLaboratoryatMIT,atransformativereappraisaloftheworldoftheextremepoor,theirlives,desiresandfrustrations.Billionsofgovernmentdollars,andthousandsofcharitableorganizationsandNGOsarededicatedtohelpingtheworld'spoor.Butmuchoftheworktheydoisbasedonassumptionsthatareuntestedgeneralizationsatbest,flatoutharmfulmisperceptionsatworst.BanerjeeandDuflohavepioneeredtheuseofrandomizedcontroltrialsindevelopmenteconomics.Workbasedontheseprinciples,supervisedbythePovertyActionLabatMIT,isbeingcarriedoutindozensofcountries.Drawingonthisandtheir15yearsofresearchfromChiletoIndia,KenyatoIndonesia,theyhaveidentifiedwhollynewaspectsofthebehaviorofpoorpeople,theirneeds,andthewaythataidorfinancialinvestmentcanaffecttheirlives.Theirworktransformscertainpresumptions:thatmicrofinanceisacure-all,thatschoolingequalslearning,thatpovertyatthelevelof99centsadayisjustamoreextremeversionoftheexperienceanyofushavewhenourincomefallsuncomfortablylow.Throughout,theauthorsemphasizethatlifeforthepoorissimplynotlikelifeforeveryoneelse:itisamuchmoreperilousadventure,deniedmanyofthecushionsandadvantagesthatareroutinelyprovidedtothemoreaffluent:iftheydonothaveapipedwatersupplythepoorcannotbenefitfromchlorination;iftheycannotaffordready-madebreakfastcerealstheycannotgaintheenrichedvitaminsandothernutrients;theyareroutinelydeniedaccesstomarkets;and,theygetnegativeinterestratesontheirsavings,whileexorbitantratesarechargedontheirloans.Thedailystressofpovertydiscourageslong-termthinkingandoftenleadstobaddecision-making.Addtothatthefactthepoorareroutinelydeniedtheinformationthatmighthelpthemmanagethenightmarishpredicamentthatinmostcasestheyarebornintothroughnofaultoftheirown.BannerjeeandDufloarepracticalvisionarieswhosemeticulousworkoffersallofusanopportunitytothinkofaworldbeyondpoverty.