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.
