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CHARACTERS Poor EconomicsA Radical Rethinking of the Way to Fight Global Poverty

Mized 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 15 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 live 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 eg The Tipping Point The second are those that simply rehash 101 textbooks adding a few kooky examples or anecdotes eg The Undercover EconomistTo 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 eg 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 anywayI m glad I read this book for four reasonsFirst 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 contributeOn 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 marginsThird 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 institutionsFinally 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 soBanerjee and Dufflo say all this elouently than me so here s a uotation 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

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Poor EconomicsA Radical Rethinking of the Way to Fight Global Poverty

Winner of the 2011 Financial TimesGoldman 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 rando 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 ie 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 poor1 Individualscommunities inherently believe that outside organizationscompanies claiming to help their economichealth statuses do not make true claims Info campaigns must educate the poor on critical factsinformation and this information must come from a legitimate reliable source ie the press AND must be attractive eg presented in a TV drama 2 The poor bear responsibility for mostall 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 institutionalInstitutional changes must be made to give the poor better access to these resources eg ease access to banks or offer savings accounts as default options3 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 course4 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 sphere5 Expectations matter If we expect people to fail then they will fail based on the low expectations expected of them and conseuently low expectations they expect for themselves In order to create changes in the lives of the poor expectations must be changed

Abhijit V. Banerjee ñ 6 READ

S Their work defies certain presumptions that microfinance is a cure all that schooling euals learning that poverty at the level of 99 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 wwwpooreconomicscom Disappointing I was very eager to read about rigorous studies that determine what works for fighting poverty But the authors somehow kept getting off track from this desperately important concept I still think the work of the Poverty Action Lab is very interesting but this is just not an exciting book about a radical rethinking of the way to fight global povertyThe big five lessons from the authors are1 The poor lack information so tell them the truth artfully2 The poor lack control and day to day life is difficult for them so make good behaviors as easy as possible3 The poor get poorer free market institutions like banks don t work well for people with no money so make necessary things and opportunities cheap or free4 Poor countries are not doomed so do things that are proven to work5 Expectations can be self fulfilling so start positive feedback loopsThis doesn t sound new to me This sounds like basic public health The book delivers some valuable information about very specific uestions like whether it s effective to give away bed nets to prevent malaria The answer is yes But even this message is muddled with much back and forth about political theory and academic hedging Much of the book is about economic theories and debates between the left and right A lot of it is anecdotal Much of what is data based comes from their 18 country data set but all those 18 countries are poor This violates the basic logic of epidemiological studies or randomized trials RCTs ie a 2X2 table with input and outcome None of these countries has the relevant outcome of Rich It is hard to learn from a data set like this what makes countries Rich vs Poor For that it is much worthwhile to read the works of Ha Joon Chang who writes about how South Korea went from starving mess to high tech powerhouse The phrase purchasing power parity is repeated every time a dollar amount is converted from another currency This is insanely irritating That sort of thing can be said once at the beginning of the book Such a high degree of precision in language is unnecessary or even misleading because often these dollar amounts are referring to GIGO calculations


10 thoughts on “Poor EconomicsA Radical Rethinking of the Way to Fight Global Poverty

  1. says:

    Poor Economics doesn't simply offer a unilateral view of how to fight global poverty; rather this book offers vi

  2. says:

    Poor Economics was one of the most enlightening books I had the pleasure of devouring this year I'm neither an economics student nor do I pro

  3. says:

    So This is an economics bookA 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 detergentOk hello to the two

  4. says:

    Note to Self to include this when writing a full blown review for this bookI 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 havi

  5. says:

    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 offforg

  6. says:

    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 eg The Tipping Point The second are those that simply rehash 101

  7. says:

    Disappointing I was very eager to read about rigorous studies that determine what works for fighting poverty But the authors somehow kept getting off track from this desperately important concept I still think the work of the Poverty Action Lab is very interesting but this is just not an exciting book about a radical rethinking of the way to fight global povertyThe big five lessons from the authors are1 The po

  8. says:

    This book is not what I thought it was or what it promised it would be in the intro It is not an economic analysis of poverty I was thinking it would be in line with books like scarcity that explain the decisionmaking of poor people

  9. says:

    Radical Through my ratings reviews and edits I'm providing intellectual property and labor to com Inc listed on Nasda which fully owns Goodreadscom and in 2013 posted revenues for 74 billion and 274 million profits Intellectual property and labor reuire compensation com Inc is also reuested to provide assurance that its employees and contractors' work conditions meet the highest health and safety standards at all the company's s

  10. says:

    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 he

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