I just finished reading “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty” by Abhijit Banerjee and Esther Duflo. I have to admit that at the beginning I was skeptical because I knew that the two MIT economists are huge fans of randomized control trials (RCTs). I do not share their enthusiasm for RCTs and I believe that it is a methodology that belongs to pharmaceutical trials, not development work. I am a practitioner, more at ease in the field than behind a desk. My understanding of the sector comes from years of experience in the field, traveling from country to country, talking to people and comparing projects. I prefer a holistic approach to methodological silver bullets. However, I gave it a try and I was really surprised to find out that the authors are not methodological purists and in many cases we get to the same conclusions.
I was very impressed by their honest analysis of microcredit, a sector that has been either eulogized or vilified in the last 10 years. Their perspective is that most of the loans do not make people rich nor they send them burst. In the great majority of cases, microlending allows people to just get by. Which is already a great result in my opinion, but certainly not what the big actors in the field want to hear.
Another development myth debunked by “Poor Economics” is that we are all entrepreneurs. Or actually, that the poor are all entrepreneurs. In reality, poor people want secure jobs in the public sector, like most people do, everywhere. But since they understand all too well that their next meal is not guaranteed, the poor are also more risk-adverse than their wealthier counterparts. The less you have, the smaller the margin of error in your actions. But entrepreneurs have to take risks and be bold. It is difficult to find both characteristics in the same individual, let alone in the whole poor population.
Banerjee and Duflo will not make many friends among right-wingers with their pragmatic analysis of the limits of a private sector approach. But their views on education will not improve their reputation in left-wing circles either. In a nutshell, they say that school programs for the poor are too ambitious. Much better results could be achieved by focusing on the basics: reading and writing. As a son and brother of dedicated teachers, I am not completely comfortable with this idea. There are all kinds of students in one class, smart and dumb, interested and bored. Lowering the educational goals to get everyone at the same basic level at the end of the few years of schooling that the poor can afford seems to be unfair to the kids who could really get much more out of their school days. On the other hand, I perfectly understand their point, having witnessed college graduates that could not read fluently a simple text.
But the part that I like the best is the final chapter where they present 5 key lessons that can help improve the lives of the poor, and therefore the effectiveness of development work:
1. The poor often lack critical pieces of information and believe things that are not true
2. The poor bear responsibility for too many aspects of their lives
3. There are good reasons that some markets are missing for the poor, or that the poor face unfavorable prices in them
4. Poor countries are not doomed to failure because they are poor, or because they have had an unfortunate history
5. Expectations about what people are able or unable to do all too often end up turning into self-fulfilling prophecies
And finally, the two suggestions that we, development workers, should always bear in mind when designing strategies, programs or projects:
I. Understand how people decide. Too often we let deep-rooted convictions and ideology guide our work.
II. Devote attention to small changes in the way institutions work, because small tweaks in the vision and practice of institutions can have a huge impact (This is pure outcome mapping! I love it.)
Reading this book was quite an experience. I started with a heavy bias against the methodological approach and I tossed it aside for a few days after disagreeing with some of the earlier analysis. But I went back to it because it is also engaging and rich and full of interesting insights. Eventually, I saw that Poor Economics says things that are not that different from what I hear people say in the field. For the price of two caramel lattes (9 USD for the kindle edition), I think it is a must-read for both development workers and people who are interested in understanding poverty.