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Journalism of Courage
Abhijit V. Banerjee and Esther Duflos Poor Economics is an engaging book about how decades have been spent by scholars to understand the social,cultural and economic behaviour of the very poor about 865 million now,living on less than a dollar a day. It is about how billions of dollars are spent every year through governments and NGOs on aid programmes which the poor fail to receive,even after knowing it is for their good. Finally it attempts a radical rethinking of ways to fight global poverty.
The book is rightly titled Poor Economics. For,it suggests that much of the top-down economic theory that we have received,largely from the Western academia,in tackling poverty in the East has not really worked because they failed to grasp culture-specific realities in countries where the poor largely live.
Banerjee and Duflo,both development economists at MIT,held extensive interactions with the very poor in Asian,African and Latin American countries. And on the basis of these,they have come up with some general observations. The authors have used randomised control trials in development economics through their specially designed Poverty Action Lab. They are convinced that by paying careful attention to evidence gathered through such a mechanism,it is possible to assess what really impacts the poor and what doesnt.
The book is full of interesting examples of cultural behaviour,which the authors document in their focused interaction with poverty-stricken families. This is a welcome shift in methodology as it implicitly concedes the need to combine social science with hard economics.
Banerjee has been questioning the old system of assessing poverty and delivering palliatives for quite some time. In a presentation some years ago,he had pointed a simple flaw in a World Bank programme to instal computers in village schools in Madhya Pradesh the schools hardly received electricity supply. It nullified the primary objective of the programme.
The book cites many examples which would make us rethink the nature of poverty and develop a more nuanced understanding of it. In Zambia,for instance,poor families are known to spend lavishly at funerals to feed the village community,and then go without adequate food for themselves for months after. This behaviour may not fit into any framework of rational expectations taught in modern economics. Similarly,poor Indian families are known to spend reasonably big money,relative to their incomes,on weddings and even borrow at usurious rates for the purpose. It takes years for them to recover from that. Why do they inflict such hardships on themselves?
Simple and cheap technologies may provide health solutions,but the poor somehow dont use them even when governments give it virtually free of cost. Of the nine million children who die before the age of five every year,the vast majority comes from South Asia and Sub-Saharan Africa. Simple remedies have been tried like chlorine bleach to purify water so that cases of diarrhoea are minimised,and oral rehydration solution for those who are suffering from such diseases but have not made much impact. The question the authors raise is: Why are some 1.5 million children dying every year of diarrhoea,a disease which can be treated with boiled water,sugar and salt? And,more importantly,why do the poor resist simple scientific solutions offered by the more knowledgeable and better off in society?
One possibility,according to the authors,is that people may not realise the value of feeding themselves and their children better. Probably there is a big gap in communication between the poor and those individuals and institutions who are trying to help them. The importance of micro nutrients,for instance,is not fully understood. Although micro nutrients are cheap,it is necessary to know exactly what to take.
The poor often resist the wonderful plans we think up for them because they do not share our faith that those plans work is the running theme of this book. At a more philosophical level,understanding the poor better also requires understanding oneself more honestly. A better understanding of Us will improve an understanding of the Other. In that sense,the gap between the rich and the poor is not just that of income.
The book also takes a critical look at Indias micro-finance sector. Though anecdotal data is being used to show improved economic and social conditions of the poor due to access to micro finance,there is the worry that micro credit might be the new usury.
The one flaw in the book is that while it raises a thousand questions that are valid,no creative solution is offered. At best,the books suggests different ways of looking at the same problem. That is a good beginning,though.
