POOR ECONOMICS- A RADICAL RETHINKING OF THE WAY TO FIGHT GLOBAL POVERTY.
ABHIJITH BANARJEE AND ESTHER DUFLO
BOOK REVIEW BY,
SUBIN.K
Poverty is the most painful emotion in every state which takes out the happiness of sapiens and postulates a volcanic explosion in the human surroundings. Based on this observation, I would like to narrate or describe the book “ POOR ECONOMICS-A RADICAL RETHINKING OF THE WAY TO FIGHT GLOBAL POVERTY written by Abhijith banarjee , Indian economist and co-founder of J-PAL and ford foundation international professor of economics at the Massachusetts institute of technology and ESTHER DUFLO, French economist and co-founder and director of Abdul latif jameed poverty action lab and also the recipient of 2010 john bates Clark medal for economists under the age of forty for significant contribution to economic thought and knowledge. The book poor economics says a big picture about the trajectory version of human helplessness and policy implications and in short deals with an icon of the independent thoughts and conclusions with a strong and valid proofs and methodology of randomized controlled trials (RCTS), means an experimental study under which treatment and control groups are formed based on randomized selection. The treatment group intervened by policy or programs then the impact of intervention is assessed based on econometric techniques and compared with the results of the control group in the rhythm of economic knowledge. The book Marvelously insightful on the real nature of poverty quoted by amartya sen the world famous economist and Nobel prize winner and book shortly awarded the Nobel memorial prize in economic sciences for their experimentating approach to alleviating global poverty.at the time of my reading there is a stricken fact which continuously alerted my normal cognitivism that’s not only limited on the sphere of social awareness and prism of economical judgments. It is completely serious with the definitions of poverty. As we all know the conventional approach of poverty the righteous version of poverty and its estimations are limited on the structural nature of academic overview and justiciable critical pedagogy and social objectification. Then after reading the entire pages of the book gaved a strong conceptual imaginary about the nature of poverty which deep rooted on the Indian society and also in the global society, paved the way opening up a wave to the art of economics. Sometimes I thought that, the rhythmic beauty of poverty structurally posted on the black days of the bangal and Indians how they managed their living creatures which is essential or parabolic mandate with a limited entity of identities.
Therefore, am also made a beautiful definition for poverty, derived as a product of reading,” poverty is not a situation of absence of poverty, it is a situation of what a magic has to visible in the field of yesterday , that doesn’t work or seen in the existing social sphere termed as poverty”. This quite different from the man-holed term or thing, what we actually heard about the academic way of poverty definitions, which means the condition what, a society or which a person or a community lacks the financial resources and essentials for the minimum standard of living. Absolutely, that is clear; it is a situation of income level from employment so low that basic human needs can’t be met. But in a stance of literic point of view, the definition turned to the concept of sustainable development and it paves a seed for the future dedication.
At the time of reading, one of my beautiful enquiry is that, why poor economics? The title of the book is more and more attractive in the real paradigm of the umbrella concept of economics. Poor economics- a radical rethinking of the way to fight global poverty. The titles double meaning perfectly captures Michael’s problem. While the entire phase of reading not only mine and every one, the book instills a curiosity among the readers who thrust in the field of economics with a positive externality. I think, authors are tried to analyses the failings of conventional wisdom regarding poverty and also in order to break the conventional myths and misconceptions along with the poverty and also examine the economic lives and what are the choices of poor and also identity poverty traps and enable the poor to rid out from the traps. I think there is a strong deep rooted gunshot visible in the book that, they shoted or focused policy makers and administrators and development and welfare economists, and also anyone who cared about world poverty.
The book is about the economic life of the poor the title’s double meaning perfectly captures Michael’s problem. First, this is a book about the economic life of the poor. Secondly, the economy described functions quite poorly. The poor are paying high prices for everything from food to healthcare to credit. They frequently have to make tough choices without adequate access to information. Compare those conditions to the western economy where not only are incomes higher, but the “right” decisions - such as chlorinated water piped into your home or automatic deductions to your savings account - are the default. The result, “For the poor, every year feels like being in the middle of a colossal financial crisis”.
The book is efficiently structured with 10 chapters including PART 1 and PART 2 widely discusses from poverty traps to political economy and policies and politics. The book is about the kinds of theories that help us make a sense of what the poor are able to achieve and where and for what reason they need a push. Each chapter in this book describe a search to discover what these sticking points are and how they can be overcome, we open with essentials aspects of peoples family lives what they buy, what they do about their children’s schooling, their own health, or that of their children’s or parents: how many children’s they choose to have to; and so on.
How the poor make careful decisions based upon their perceived realities and priorities. Their decisions might not however be the ones that westerners think are best for them. One excellent example Duflo delves into is the problem of early pregnancy and school dropout. When girls don’t have enough money for uniforms or school fees it is possible to turn to an older, wealthier man who can pay for those expenses in exchange for sex.However, if the girl ends up pregnant, she will probably have to drop out of school. What is perhaps not taken into account is the idea that for a girl who is unable to pay for a uniform, becoming pregnant by somebody with the means to take care of her and her baby is an acceptable risk, perhaps even a good outcome. It was especially upsetting to me when the older man was in fact a teacher at the girl’s school. It is frustrating and terrible that turning to a “sugar daddy” is perceived to be – or in fact might be – their best choice.
Beyond the harsh realities of the life of the poor, Duflo and Banerjee also describe an economy which is functioning poorly. The poor have developed many adaptations for coping with their poverty, but it is often these very strategies that then block them from advancing. For example, the poor tend to engage in temporary migration of some family members to access work in cities while still maintaining village ties. Unfortunately this practice will never build the skills or relationship with a steady employer that would lead to promotion or advancement to a better paid job. In addition, planning for all these contingencies and constantly worrying about your financial situation creates stress and depression. Stress makes it harder to focus, causes less productivity and interferes with making strong long-term decisions. We know that if a person coming from the poor family, he can’t afford to eat enough; this makes them less productive and keeps them poor. If the people is rich, they can find their basic metabolic needs of the body are taken care of all that extra food goes in to building strength, allowing people to produce much more than they need to eat merely stay alive. This simple philosophy quotes a relation with simple biological mechanism creates an S shaped relation between income today and income tomorrow. At the same time the book discusses on how the market and institutions are works for the poor. Can they borrow, save, insure against their risky they face? What the governments do for them and why they fail? Throughout the book returns some basic questions. And along with the questions the book widely discusses the way of vicious poverty circles. It is heart touching in the normative manner and significantly says that, is democracy is good for poor? Or what is the ultimate cause of poverty does the foreign have the role to play? When answer all the questions: poor countries are poor, because they are hot, infertile malaria, infested, often landlocked, this makes it hard for them to be productive without an initial large investment to help them deal with these end economic problems. Poverty leads to intolerable waste of talent. Amartya sen pointed that poverty leads to an intolerable waste of talent. It is not a lack of money, and not having the capability to realize ones full potential as a human being.
From chapter 3 onwards the stanza takes in to militant character to question the nature of poverty along with health traps and education traps and family traps and decisional problems and hazards of being poor.
Some of these technologies are so cheap that everyone, even the very poor, should be able to afford them. Breast-feeding, for example, costs nothing at all. And yet fewer than 40 percent of the world’s infants are breast-fed exclusively for six months. A bottle of Chlorine costs $0.18 US PPP and lasts a month. This can reduce diarrhea in children by up to 48 percent…Yet only 10 percent of the population actually uses bleach to treat their water…Demand is similarly low for bed nets.”
In the chapter 4 deals with a common problem still prevalent in the society that is failure of schools and imparting education to the student. Education and schools in the most developing countries is a targeted pedagogy which avoids the so called average students and reflects the wastage of talent and gradually students are limited in a minimum sphere of their daily surrounds and also they, are becomes to put in a center of question and authors are agreed with reengineering of education sector along with pratham’s work and agrees the voccationalisation and skill based education needed in the sector and also furnishes the criteria of approaches systematically planned and organized. I think this is an icon of big picture that all educationists and teacher educators and student teachers wanted to understand in the sphere of critical pedagogy. Therefore our students will stay and study more and automatically the revival is much more possible in the art of economical thought.
“Building schools and hiring teachers are useless if there is no strong underlying demand for education; conversely, if there is real demand for skill, a demand for education will naturally emerge and supply will follow.”
The authors’ research finds a large percentage of households with at least one member of the family owning their own business; however entrepreneurship is not a common aspiration of the poor. What they really want is for their children to land government jobs – such as teachers. Duflo recounts a very interesting anecdote about the correlation between Mexican maquiladoras (manufacturing centers) located in a mother’s village, and strongly increased nutrition of her children. The additional income the mother earned at the maquiladoras was not enough to explain the substantial increase in the children’s nutrition. Instead she proposes that “Perhaps the sense of control over the future that people get from knowing there will be an income coming in every month – and not just the income itself – is what allows these women to focus on building their own careers and those of their children”. A predictable, dependable income separates the poor from the middle class and alleviates the stress that was so additionally detrimental.
The unfortunate reality is that most villages don’t have maquiladoras where women can access work for a reliable paycheck. While they might prefer a steady income, people end up as entrepreneurs by default. Even if the absolute income earned by a small entrepreneur is minimal, profits used to send children to school hold out the hope of a generational shift to those promised government jobs through education. I wonder when people hope that their children will become government workers, do they hope that they will be the teachers and nurses who show up and do their jobs, thereby bringing health and education to their villages? Or do they envision their children ascending to the elite corrupt club where they can collect their salary and bestow favors on their network?
Duflo and Banerjee articulate their argument somewhere between the total aid ideology of Jeffery Sachs and the free market modal of William Easterly. They view microcredit as an innovation which allowed the market to develop. But when the market is not there for solutions to emerge on their own, they argue that the government may need to create the correct conditions or provide a service that nobody else is willing to provide, such as loan guarantees for SMEs. They also think that some interventions are simply the most cost effective when distributed for free, such as malaria nets, because they not only protect the person sleeping under the net but reduce the transmission of the disease and therefore bring tremendous value to a community. Duflo advocates the development of a robust toolkit – one that allows the free market to develop solutions and encourages the government to provide services that are not naturally emerging.
Duflo and Banerjee argue that previous poverty alleviation interventions have been blocked by the 3 I’s: ideology, ignorance and inertia. Poorly implemented programs have had poor results. She advocates careful research to identify the poverty traps that exist and thoughtful strategies for addressing them. Sometimes their solution is providing education – a more impactful response to early pregnancy was moving beyond the routine sex-education “ABC” mantra (Abstinence, be faithful, condom) to bringing to light the risk that an older man is more likely to be HIV positive and therefore a risky sexual partner.
I would caution against her assertion that all problems can be boiled down to the right randomized control trial and the proper ultra-specific intervention. RCTs – such as the iron fortified fish sauce trial in India which Duflo discusses in her lecture cost an enormous amount of money to properly administer. Is there any guarantee that the results are accurate or that the findings will be applicable in different communities or different countries? Could that money have been put to better use, perhaps through microfinance or SME investment, or even in an unconditional cash transfer?
The last issue that the authors stress is that the institutional environment shapes the beliefs of poor people and hence shapes the decisions regarding food consumption, health care and education. Their argument is that although there may be bad institutions which cause poor people to be poor, careful understanding of the motivations and the constraints of everyone can lead to better designed policies and institutions.
While most of this summary has focused on what is poor about poor economies, I want to share my favorite anecdote from the book because it points out what is rich about poor economies. Duflo and Banerjee describe a situation in Bangladesh involving neighboring Muslim and Hindu families. One family falls on hard times and steals some small items, such as fruit from their neighbor’s yard. The neighbor replies, if I were in her position, I would probably steal, too. When little things disappear, I try not to get angry. I think ‘The person who took this is hungrier than me. The village entity has a remarkable capacity to understand each other’s needs and accept them; the poor would be reluctant to sever ties with that support system in the hopes of a salaried job in the city. Positive, yet more difficult to measurable interventions happen in locally based organizations such as villages, religious groups and women’s groups. In those situations the fact that the hand-up in happening from within the community, not outside of it, builds a more confident and empowered group. I see that group / village being the place where the next generation leaders who actually want to lead, teachers who actually want to teach and health providers who provide real access to health would come from. It is important to focus poverty alleviation interventions around supporting and improving existing behaviors, networks and institutions.
By going through with the book I can find such points, they are, the urge to reduce the poor to a set of clichés as lazy or enterprising, noble or thievish, angry or passive, helpless or self-sufficient, no wonder policy stances also tend to be captured in simple formulae. And the second observation that the poor are just like the rest of us in almost every way. We have the same desires and weaknesses. And the third observation is that, even a small change can have big effects.
And the most paradox that the book does not implied or misses the causes of poverty and also if we want to make a small change needs to big will – that the institutions wants to matter and also the behavior of policy makers are not matched on the field of study. It strongly takes an absence about the structural aspect of poverty and some other aspects of dimensions of poverty such as the varied nature of feminization of poverty and tribal and environmental problems in the prism of sustainable developmental goals. When the book misses the all of that beautiful version of poverty wise fully gives a chance for the researchers and students to think and act in the manipulated nature of poverty and invites new thoughts for the structural updation on the base of this organism of poverty. And poverty estimates and poor as a monolithic group and no radical re thinking and some others are badly misses the book.it is quite natural as am think but in the nature of development, quite possible to happen and discuss the varied behaviors of possible accrues. One more beautiful feature of the book is that, organization and its presentation. It is a great lesson for all learners who are ready to enter in the field of research and going to write and publish articles and journals. Lucid presentation, simple language using’s effective usage of language without less of jargons and more of substance. It is largely anecdotal in nature. There is no doubt the book is a great lesson for all peoples in our world, because damnly sure it serve the administrators and policy makers and students and followers of economics and also the public administrators.
In general, the authors do not say that there are no poverty traps. They agree that there may be traps. Moreover, they do not say that no aid should be given to the poor as suggested by Easterly. The authors argue that both may be right. The problem is that both Sachs and Easterly are oversimplifying the problems in developing world.
In their own words, “The message of this book, however, goes well beyond poverty traps. As we will see, ideology, ignorance and inertia-the three is-on the part of the expert, the aid worker, or the local policy maker, often explain why policies fail and why aid does not have the effect it should.”
I like the way the authors write. They support their arguments with data sets, and they base their policy implications on solid empirical evidence. As the title of the book suggests, they force readers to rethink poverty problems. From this perspective, it goes far beyond Sachs-Easterly debate and provides a third dimension of the problem by focusing on the decisions of households on food consumption, health and education. They not only draw a sketch of the problem but also offer policy alternatives that may be effective in solving them. Their arguments are also supported by true stories and anecdotes of people they surveyed. In my view, some photographs of poor people’s lives might have been useful and illustrative in visualizing their lives for readers. And also note that this book is a great eye opener for the world. Because we need to eradicate the poverty from the grass root level. So that I suggest all policy makers and the public administrators should read this act based by the clear understanding of local governance, and enact policies by knowing the lives of poor and always we can eliminate the painful notion of poverty furthermore can attain the umbrella concept of sustainable development no longer.