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The Book Club

Abhijit V. Banerjee And Esther Duflo’s “Poor Economics”

Taken from https://images-na.ssl-images-amazon.com/images/I/51z0IqRY1tL._SX324_BO1,204,203,200_.jpg.This is part of my “A Book A Week” endeavour, an extension of The Book Club I started on this blog when I was completing my National Service.

The thesis is a straightforward one: That “quiet revolutions” – through which “the kind of lazy, formulaic thinking that reduces every problem to the same set of general principles” is resisted, in favour of incremental progress and the accumulation of small changes – matter when policies are designed to reduce poverty. Abhijit V. Banerjee and Esther Duflo’s “Poor Economics”, however, weaves evidence from randomised controlled trials or quasi-experiments with anecdotes or observations on the ground, prompting the reader to first challenge conventional assumptions about the poor and to evaluate their circumstances and their institutions, while thinking about the grand narratives oftentimes mooted to lift individuals above the poverty line.

With nutrition, for instance, the quality and the availability of micronutrients – not just the quantity of food – are critical. There may be access to healthcare options, yet the poor may not have the desire or the knowledge to use them. And “expectations (or misperceptions) about what education is supposed to deliver” distort demand, supply, and ultimately the achievement of students. Throughout these analyses, the authors stress that “we need to shift perspectives, leave the large questions aside, and focus on the lives and choices of poor people”, and I think through this framework seemingly-insurmountable problems are broken down into more manageable sub-questions (or “tractable sub-problems“), the reader looks past headlines of “grand” solutions, and both government agencies and non-profit organisations are compelled to evaluate their programmes with greater rigour.

These agencies and organisations, nonetheless – as it is with the micro-finance institutions detailed in the book – have been “reluctant to gather rigorous evidence to prove their impact”, and the quoted quip that “why do we need to be evaluated any more than an apple seller” should be familiar to most evaluators working in the non-profit and philanthropy sector, especially in Singapore and in Asia. And the astute observation by Banerjee and Duflo that the implementation of a policy is as important as its design is neatly summarised by their “three Is problem”: that of ideology, of ignorance, and of inertia.

Some will criticise “Poor Economics” for not proposing more productive policies beyond the general tropes of paying keener attention to the context and the circumstances of countries, or beyond the five general maxims about the poor: the lack of information, that the poor “bear responsibility for too many aspects of their lives”, missing markets, that poor countries are not doomed to be poor forever, and that expectations of the poor “often end up turning into self-fulfilling prophecies”. Or that the thesis on the quality and primacy of political and economic institutions do not depart too far from that in Daron Acemoglu and James A. Robinson’s “Why Nations Fail: The Origins of Power, Prosperity, and Poverty”. But what is worth repeating – and what guides my personal research aspirations for the future – is the emphasis on changes at the margin. “Attend to the details, understand how people decide, and be willing to experiment” are useful ideals that will go a long way in our country and in our region, to design better and more effective policies.

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About guanyinmiao

A man of knowledge lives by acting, not by thinking about acting. Carlos Castaneda.

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