Esther Duflo won the John Bates Clark medal last year for her work on development economics, so I was excited to read her new book with Abhijit Banerjee Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. It’s a good book. It doesn’t really contain a radical rethinking of the way to fight global poverty, but it does try to cut past lame debates over whether or not foreign aid “works” to instead attempt to find ways to actually assess which programs are working, which aren’t, and how to improve those that don’t. The book is structured around a set of questions, which are answered with a mix of illustrative anecdotes and randomized control trials of different anti-poverty interventions.
I suppose the RCT methodology is, itself, supposed to be the radical new way to fight poverty, but of course it’s not. It’s a way of assessing anti-poverty interventions. It doesn’t actually fight poverty. And even though bringing additional rigor to the subject is welcome, it hardly makes all difficulties melt away. For one thing, it’s very difficult to know how generalizable the results of any given RCT are. Is a really good experiment in Kenyan farming villages telling us something about Kenya? Something about a particular set of crops? Something about Africa? Something about a specific set of climactic conditions? It’s difficult to know. But this passage near the end about the importance of patient diligent work struck me as convincing:
We also have no lever guaranteed to eradicate poverty, but once we accept that, time is on our side. Poverty has been with us for many thousands of years; if we have to wait another fifty or hundred years for the end of poverty, so be it. At least we can stop pretending that there is some solution at hand and instead join hands with millions of well-intentioned people across the world—elected officials and bureaucrats, teachers and NGO workers, academics and entrepreneurs—in the quest for the many ideas, big and small, that will eventually take us to that world where no one has to live on 99 cents per day.
And the book is just full of striking factoids, for example this:
We have started including the question “What are your ambitions for your children?” in surveys given to poor people around the world. The results are striking. Everywhere we have asked, the most common dream of the poor is that their children become government workers. Among very poor households in Udaipur, for example, 34 percent of the parents would like to see their son become a government teacher and another 41 percent want him to have a nonteaching government job; 18 percent more want him to be a salaried employee in a private firm. For girls, 31 percent would like her to be a teacher, 31 percent would want her to have another kind of government job, and 19 percent want her to be a nurse. The poor don’t see becoming an entrepreneur as something to aspire to.
What the very poor want, overwhelmingly, is a job where you show up, do as you’re told, and get a guaranteed paycheck at the end. Given the fact that the prospects for government employment are always limited, I assume this explains a lot of the appeal of super low wage sweatshop work when it becomes available in poor countries. Evidently agricultural labor and informal work, even if “entrepreneurial,” is something most of the global poor really hate doing.