. The book could be viewed as an introduction of sorts to the two main sides in development economic debates: the "supply wallahs," like Jeffrey Sachs, who focus on increasing the supply or access to healthcare, education, or agricultural inputs; and the "demand wallahs," like William Easterly, who focus on the need for demand first, which will stimulate increased supply. The authors of Poor Economics, Abhijit Banerjee and Esther Duflo, come down somewhere in the middle of this argument. Actually, they agree in some cases with the demand wallahs and in others with the supply wallahs. More often than not, they think each specific situation requires a nuanced and case-specific answer.The lack of a grand universal answer might sound vaguely disappointing, but in fact it is exactly what a policy maker should want to know-not that there are a million ways that the poor are trapped but that there are a few key factors that create the trap, and alleviating those particular problems could set them free and point them toward a virtuous cycle of increasing wealth and investment.So Banerjee and Duflo went in search of these particular problems, utilizing a "new" tool: behold the power of the Randomized Control Trial! If you are interested in development studies, you probably know that RCTs have been a big fad for a while now (and in fact there is now backlash to the fad). Other commentators can better debate the specific merits of RCTs as diagnostic tools, but those referenced in this book do reveal some interesting (and sometimes counter-intuitive) community dynamics. Some of the questions addressed:
-Why are Indians eating less as their economic situation improves?
-"If people do not take advantage of cheap preventive technologies to improve their health, could it be precisely because the cheap technologies are cheap?"
-People in the developed world have many healthful amenities provided for them: clean water piped to homes, sewage systems, mandatory immunization... "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."
-What should come first, increased access to quality education (when there may be no jobs for the eventual graduates emphasizing these skills), or increased investment in businesses and industries that require educated labor (when there may not be an existing supply at the time of investment)?
-The success of telenovelas in reducing family size in Brazil
-Risk diversification strategies of poor farmers
-"Finding ways to finance medium-scale enterprises is the next big challenge for finance in developing countries." Ok, this one is not so much of a case or a surprise, just an issue I am particularly interested in!
-The difference between INSTITUTIONS and local institutions
Sometimes the authors' humor is more cheesy than clever, but in general the book is very readable and interesting. And if nothing else, I would recommend it based on one of its basic principles: "The natural place to start to unravel the mystery is to assume that the poor must know what they are doing." I believe most people have logical reasons for what they do, and to assume otherwise can lead to paternalistic development practice. Look for the reasons and you will find them.
Wait, wait... Banerjee and Duflo would scold me for that thinking as well! In regards to subsidizing and enforcing good health behavior, they say:
All this sounds paternalistic, and in a way, it certainly is. But then it is easy, too easy, to sermonize about the dangers of paternalism and the need to take responsibility for our own lives, from the comfort of our couch in our safe and sanitary home. Aren't we, those who live in the rich world, the constant beneficiaries of a paternalism now so thoroughly embedded into the system that we hardly notice it?
So, then, maybe what I like most is that the last chapter is entitled "In Place of a Sweeping Conclusion."
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