Poor Economics

After spring break, my Sociology of Global Development class has taken up reading four books, one of them Poor Economics by Abhijit Banerjee and Esther Duflo. I'm embarrassed to say that I've only skimmed it prior to now. I assigned it because I wanted to take a deeper dive into the mechanics of the argument, and take my students along, as well. It's good, I have to say, and with a fairly basic point. This, an excerpt from a chapter on health, sums it up well: 

The poor seem to be trapped by the same kinds of problems that afflict the rest of us-lack of information, weak beliefs, and procrastination among them. It is true that we who are not poor are somewhat better educated and informed, but the difference is small because, in the end, we actually know very little, and almost surely less than we imagine.

Our real advantage comes from the many things that we take as given. We live in houses where clean water gets piped in-we do not need to remember to add Chlorin to the water supply every morning. The sewage goes away on its own-we do not actually know how. We can (mostly) trust our doctors to do the best they can and can trust the public health system to figure out what we should and should not do. We have no choice but to get our children immunized-public schools will not take them if they aren't-and even if we somehow manage to fail to do it, our children will probably be safe because everyone else is immunized. Our health insurers reward us for joining the gym, because they are concerned that we will not do it otherwise. And perhaps most important, most of us do not have to worry where our next meal will come from. In other words, we rarely need to draw upon our limited endowment of self-control and decisiveness, while the poor are constantly being required to do so.

We should recognize that no one is wise, patient, or knowledgeable enough to be fully responsible for making the right decisions for his or her own health. For the same reason that those who live in rich countries live a life surrounded by invisible nudges, the primary goal of health-care policy in poor countries should be to make it as easy as possible for the poor to obtain preventive care, while at the same time regulating the quality of treatment that people can get. An obvious place to start, given the high sensitivity to prices, is delivering preventive services for free or even rewarding households for getting them, and making getting them the natural default option when possible. Free Chlorin dispensers should be put next to water sources; parents should be rewarded for immunizing their children; children should be given free deworming medicines and nutritional supplements at school; and there should be public investment in water and sanitation infrastructure, at least in densely populated areas.

So, to review: poor people are people, it turns out, who require--as all people do--decency and respect along with firm bases of support in order to live meaningful lives. Simple, not simplistic, and something we can all appreciate, rich, poor, or otherwise. Whether we do or not, and whether this motivates action to alleviate poverty on a grand scale--these are other questions entirely. But the mystery of poverty is really no mystery at all. 

Also see Duflo's TED Talk, available here