Much coverage has been given to MIT researchers Esther Duflo and Abhijit Banerjee’s new book, Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. Banerjee and Duflo are well-known here at MIT for their use of randomized control experiments to test the means of poverty alleviation and their co-starting of the Jameel Poverty Action Lab (J-Pal).
The 273 pages of Poor Economics shares the results of their research – and starts to fill in the gap between economist Jeffrey Sachs’ (aid breaks the poverty trap!) and William Easterly’s (free markets and provide incentives, people will solve their own problems!) theories on development.
Banerjee and Duflo’s work raises oft-debated questions such as what really supports the use of bed nets in malaria infested areas, when is microfinance useful, and why, given the availability of education, are more individuals not receiving quality education? What is actually working?
There are many good intentions in development work (regardless of the location); being able to learn from and distinguish between good intentions and theories and the associated results will help us all push forward the next iterations on our work.
As writers Ramnath and Misra point out in Forbes India, “The approach is not without its critics [one example]. One relates to the danger of generalising [sic] the results (what social researchers call ‘external validity’; it questions whether what worked in one place will work in another). In an earlier interview, Banerjee said it was a serious concern. But some evidence is better than no evidence. Also, many such trials will lead to better policies.”
While we are all not able to commit to (or have the luxury to) conduct randomized control trials, we can learn from Duflo and Banerjee’s work. They offer five key lessons when working on poverty alleviation (summarized here and can be found starting on page 268):
- A lack of information often contributes to untrue beliefs.
- The poor bear responsibility for too many important decisions (such as whether to spend money on vaccinations).
- Markets are not always friendly to the poor.
- Many policies meant to help fall short because of the three Is: ignorance, ideology, and inertia.
- People live up to their expectations.
Duflo and Banerjee end on a practical note, inviting readers to use the book as an invitation (almost a challenge) to dig deeper. As they say,
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. Armed with this patient understanding, we can identify the poverty traps where they really area and know which tools we need to give the poor to help them get out of them. (page 272)
You can find more about the book here: http://www.pooreconomics.com.