Marks54's Reviews > Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty

Poor Economics by Abhijit V. Banerjee
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's review
Aug 21, 2011

it was amazing
Read from August 21 to November 20, 2011

This one took a while to work through, since it is not what I am generally focused on. The topic is how economic decisions are generally made around the world by individuals who are really poor - defined as living on $.99 a day. The book reviews the current state of economic research on topics related to global poor populations. Its authors have contributed many of the key studies and are very accomplished economists.

The book is marvelously written and very accessible, although the ideas are not watered down and the discussion of some of the ideas is quite involved. Careful reading is required, but you won't be plagued by much of the quantitative analysis/statistics at all. Cites are provided in case you wish to look up the original studies.

The content/page or insight/chapter ratios are quite high with this botheok, so I cannot really summarize it and do it justice. Among some of the more general takeaways are:

-Poor people make economic decisions all the time, sometimes quite sophisticated ones. Most of the problems that Western observers have with developmental economics stems from not understanding the context in which these decisions are made and the factors that motivate the people involved.
-Rather than blame the poor for their plight, it might be more constructive to compare the decisions they have to make with those we take for granted. It really stinks to be poor and without prospects, especially when your next illness or family/personal crisis can be catastrophic.
-Economic development could be greatly enhanced if more women were given the standing and opportunity to make their own decisions regarding them and their families.
-The poor engage in complex social networks to help each other and build economic capabilities. Most of these are quite foreign to Western observers.
-Micro-finance initiatives can help but they are not a cure for poverty. The biggest obstacle to lending by established banks is the cost of getting information about customers due to bureaucracy and needs to ensure that loans are repaid.
- There are multiple reasons why community members help each other (or fail to). Social exchange is part of it. General norms of helping others is also part. Limits stem from an unwillingness to get too involved in long-term problems, such as health problems.
- The poor engage in lots of activities to constrain their wasteful consumption that most of us are never concerned with -- for example, drinking a cup of tea in the morning.
- Development programs often fail out of poor design and implementation, caused by not understanding the social situation of the really poor. There is much to be said for limited initiatives that are well planned and well implemented.

There is lots more to this book and I will need to go back to it, but it is a terrific book and I heartily recommend it.
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