Poor Economics: Rethinking Poverty & the Ways to End it

by Abhijit V. Banerjee

The lucky boy’s mother explained to us that he was the only intelligent child in the family. The willingness to use words like “stupid” and “intelligent” to refer to one’s own children, often in their presence, is entirely consistent with a worldview that puts a large premium on picking a winner (and in getting everyone else in the family to back the winner). This belief creates a strange form of sibling rivalry. In Burkina Faso, a study found that adolescents were more likely to be enrolled in school when they scored high on a test of intelligence, but they were less likely to be enrolled in school when their siblings had scored high.

The disturbing finding was that in families that entered two or more children and one won, the child who lost the lottery was less likely to be enrolled in school than children in families where both lost. This is despite the increase in family income, which should have helped the other child. A winner was picked, and resources were concentrated on him (or her).

It should now be clear why private schools do not do better at educating the average child—their entire point is to prepare the best-performing children for some difficult public exam that is the stepping- stone toward greater things, which requires powering ahead and covering a broad syllabus.

The constraints imposed by the official pedagogy and the particular focus on covering the syllabus seem to be too much of a barrier. We cannot just blame the teachers for this. Under India’s new Right to Education Act, finishing the curriculum is required by law.

The children of the rich go to schools that not only teach more and teach better, but where they are treated with compassion and helped to reach their true potential. The poor end up in schools that make it very clear quite early that they are not wanted unless they show some exceptional gifts, and they are in effect expected to suffer in silence until they drop out.

A first factor is a focus on basic skills, and a commitment to the idea that every child can master them as long as she, and her teacher, expends enough effort on it. This is the fundamental principle behind the Pratham program, but it is also an attitude that is encapsulated by the “no excuse” charter schools in the United States.37 These schools, such as the Knowledge Is Power Program (KIPP) schools, the Harlem Children’s Zone, and others, mainly cater to students from poor families (particularly black children), with a curriculum that focuses on the solid acquisition of basic skills and continuous measurements of what children actually know: Without such diagnosis, it is impossible to evaluate their progress.

there are large potential gains to be had by reorganizing the curriculum and the classrooms to allow children to learn at their own pace, and in particular to make sure the children who are lagging behind can focus on the basics. Tracking children is a way to do that.

one could find other ways to tailor the teaching to the needs of individual students. One possibility is to make the boundaries between the grades more fluid, so that a child whose age puts him in fifth grade but who needs to take second-grade classes in some subjects can do so without additional stigma.

A program in Madagascar that simply told parents about the average income gains from spending one more year in school for children from backgrounds similar to theirs had a sizable positive effect on test scores, and, in the case of parents who found out that they had underestimated the benefits of education, the gains were twice as large.40 An earlier study in the Dominican Republic produced similar results with high school students.41 Since it is essentially free to have teachers simply pass on information to parents, this is so far the cheapest known way to improve test scores, among all the interventions that have been evaluated.

we seem to be suggesting a two-tier education system—one for the children of the rich, who will no doubt get taught to the highest standards in expensive private schools, and one for the rest. This objection is not entirely unwarranted but unfortunately, the division exists already, with the difference that the current system delivers essentially nothing to a very large fraction of children. If the curriculum were radically simplified, if the teacher’s mission were squarely defined as making everyone master every bit of it, and if children were allowed to learn it at their own pace, by repeating if necessary, the vast majority of children would get something from the years they spend in school. Moreover, the gifted would actually get a chance to discover their own gifts. It is true that it would take some work to put them on the same footing as those who went to elite schools, but if they had learned to believe in themselves, they might have a chance, especially if there is a willingness in the system to help them get there.45 Recognizing that schools have to serve the students they do have, rather than the ones they perhaps would like to have, may be the first step to having a school system that gives a chance to every child.

Every government employee, down to the village level, and not excluding railway inspectors and school teachers, was supposed to know the local target. Parents of schoolchildren were visited by teachers, who told them that in the future, their children may be denied enrollment in school if they did not agree to get sterilized. People traveling by train without a ticket—a widely accepted practice among the poor until then—were handed heavy fines unless they chose sterilization. Not surprisingly, the pressure occasionally went much further. In Uttawar, a Muslim village near the capital city of Delhi, all male villagers were rounded up one night by the police, sent to the police stations on bogus charges, and sent from there to be sterilized.

In 1976–1977, 8.25 million people were reportedly sterilized, 6.5 million of them during just the period July–December 1976. By the end of 1976, 21 percent of Indian couples were sterilized. But the violations of civil liberties that were an integral part of the implementation of the program were widely resented, and when in 1977, India finally held elections, discussions of the sterilization policy were a key part of the debate, as captured most memorably by the slogan “Indira hatao, indiri bachao (Get rid of Indira and save your penis).” It is widely believed that Indira Gandhi’s defeat in the 1977 elections was in part driven by popular hatred for this program. The new government immediately reversed the policy.

In one of those ironic twists in which historians delight, it is not inconceivable that in the longer term, Sanjay Gandhi actually contributed to the faster growth of India’s population. Tainted by the emergency, family-planning policies in India retreated into the shadows and in the shadows they have remained

generalized suspicion of the motivations of the state seems to be one of the most durable residues of the Emergency; for example, one still routinely hears of people in slums and villages refusing pulse polio drops because they believe it is a way to secretly sterilize children.

squeamish

scourge

After all, there are many times more people on the planet today than when Malthus first formulated his hypothesis and most of us are richer than Malthus’s contemporaries. Technological progress, which did not figure in Malthus’s theories, has a way of making resources appear from nowhere; when there are more people around, there are more people looking for new ideas, and so perhaps technological breakthroughs are more likely. Indeed, for most of human history (starting in 1 million BC), regions or countries that had more people were growing faster than the rest.8 The case is therefore unlikely to be settled on purely theoretical grounds. And the fact that today, countries with higher fertility rates are poorer, doesn’t tell us that they are poorer because of high fertility: It could instead be that they have high fertility because they are poor, or some third factor could cause both high fertility and poverty. Even the “fact” that periods of rapid economic growth often coincide with sharp declines in fertility, as in Korea and Brazil in the 1960s, is ambiguous at best. Did families start having fewer children when growth accelerated, perhaps because they had less time to take care of them? Or did the reduction in fertility free up resources for other investments?

Nancy Qian found an even more provocative result when she looked at the effect of the one-child policy in China. In some areas, the policy was relaxed to allow a family whose first child was a girl to have a second child. She found that girls who, because of this policy, got a sibling they would not otherwise have had received more education, not less,15 in apparent defiance of Becker’s theorem.

the Bangladeshi women who benefited from the program in Matlab were heavier and taller than those in the comparison group and also earned more. The availability of contraception gives women more control over their reproductive lives—they can decide not just how many babies to have but also when to have them. And there is clear evidence that getting pregnant too early in life is very bad for the health of the mother.18 Moreover, early pregnancy, or even getting married, often results in dropping out of school.19 But to locate the case for family planning in society’s desire to protect the mother raises an obvious question: If getting pregnant at the wrong time is not in her interest, why does it happen? More generally, how do families make fertility decisions, and how much control do women have over these decisions?

One reason the poor may not be able to control their fertility is that they may not have access to modern contraception methods. According to the official UN report on progress toward the Millennium Development Goals, filling “unmet demand” for modern contraceptives could “result in a 27 percent drop in maternal deaths each year by reducing the annual number of unintended pregnancies from 75 million to 22 million.”20 Poor and uneducated women are much less likely to use contraception than richer and more educated women. Moreover, in the last decade, there has been no increase in the use of modern contraception among poor women.

the data seem to squarely hand victory to the demand wallahs: Contraceptive access may make people happy by giving them a much more convenient way to control their fertility than the available alternative. But it appears to do, in itself, little to reduce fertility.

A striking feature of HIV is that women from the ages of fifteen to nineteen are five times more likely to be infected than young men in the same cohort. This seems to be because young women have sex with older men, who have comparably high infection rates. The “sugar daddies” program simply informed students about what kind of people are more likely to be infected. Its effect was to sharply cut down sex with older men (the “sugar daddies”) but, also interestingly, to promote protected sex with boys their own age.

The HIV/AIDS education curriculum, instead of reducing sexual activity among adolescents, actually undid the positive effect of the uniform distribution.

Putting these different results together, a coherent story starts to emerge. Girls in Kenya know perfectly well that unprotected sex leads to pregnancy. But if they think that the prospective father will feel obliged to take care of them once they give birth to his child, getting pregnant may not be such a bad thing after all. In fact, for the girls who cannot afford a school uniform and therefore cannot stay in school, having a child and starting a family of her own may be a relatively attractive option, compared to just staying at home and becoming the general “Hey, you” for the whole family, the usual outcome for unmarried out-of-school teenage girls. This makes older men more attractive partners than young boys who cannot yet afford to get married (at least when the girls don’t know that they are more likely to have HIV). Uniforms reduce fertility by giving girls the ability to stay in school, and thus a reason not to be pregnant. But the sex-education program, because it discourages extramarital sex and promotes marriage, focuses the girls on finding a husband (who more or less has to be a sugar daddy), undoing the effect of the uniforms.

Compared to cases where husbands were involved, women who were seen alone were 23 percent more likely to visit a family-planning nurse, 38 percent more likely to ask for a relatively concealable form of contraception (injectable contraceptives or contraceptive implants), and 57 percent less likely to report an unwanted birth nine to fourteen months later.29 One of the reasons the Matlab program changed fertility choices more than other family-planning programs is probably also that by visiting the women in their houses, presumably when the husbands were away, the female health worker may have enabled some of them to adopt family planning without his knowledge.

it matters what the community deems to be appropriate behavior. In the treatment areas in Matlab, this change was faster than elsewhere—the community health workers, who tended to be relatively well-educated and assertive women, were both the embodiment of the new norm and the carrier of news about the shifting norms in the rest of the world.

Whereas the average Brazilian woman had almost six children in 1970, in the soap operas most female characters under the age of fifty had none, and the rest had one. Right after soaps became available in an area, the number of births would drop sharply; moreover, women who had children in those areas named their children after the main characters in the soap.31 The novelas ended up projecting a very different vision of the good life than the one that Brazilians were used to, with historic consequences.

Affecting social norms may be more difficult, although the example of TV in Brazil shows it can be done.

If children are in part a way to save for the distant future, we would expect that when fertility drops, financial savings go up. China, with its government-enforced restriction on family size, provides us with the starkest example of this phenomenon.

(the household savings ratio increased from 5 percent in 1978 to 34 percent in 1994) can potentially be explained by the reduction in fertility induced by family-planning policies; the effect was particularly strong for households that had a daughter rather than a son at first birth, consistent with the view that sons are supposed to be the ones who take care of parents.

By 1996, families in villages where contraception had been made available had significantly more assets of all kinds (jewelry, land, animals, house improvements) than families in the comparable villages where it was not available. On average, a household in the treatment area had 55,000 takas’ more worth in assets ($3,600 USD PPP, more than twice the GDP per capita of Bangladesh) than those in control areas. There is also a link between fertility and the amount of money given to parents by their children: Those in the treatment areas received on average 2,146 takas less in transfers from their children every year.34

If parents who have fewer children expect lower money transfers in the future, they also need to save more in anticipation, and this cuts into the funds they have available for investing in the children they have. Indeed, if investing in children tends to have a much higher return than investing in financial assets (after all, feeding a child is not that expensive), families may actually be poorer in a lifetime sense when they have fewer children.

even before sex-selective abortion was an option, in environments where a whole range of childhood diseases can easily turn fatal if not properly dealt with, there was always neglect, deliberate or otherwise, which can be an effective way to get rid of any unwanted children.

when parents prefer boys, they may have children until they have the number of boys they want. This means that girls will tend to grow up in larger families, and many of the girls will be born in a family that really wanted boys. In India, girl babies stop getting breast-fed earlier than boys, which means that they start drinking water earlier and have accelerated exposure to waterborne life-threatening diseases like diarrhea.35 This is mostly the unintended consequence of the fact that breast-feeding acts as a contraceptive. After the birth of a girl (particularly if she has no brothers), parents are more likely to want to stop breast-feeding earlier in order to increase the wife’s chances of getting pregnant again.

Nancy Qian showed that when we compare children born in the post- and pre-reform periods, the number of girls in the tea plantation regions (hilly and rainy) increased, but it went down in the regions that were more suitable for orchards.39 In regions that were not particularly suitable to either tea or orchards, where agricultural income increased across the board without favoring either gender, the gender composition of children did not change. What all of this underscores is the violence, active and passive, subsumed within the functioning of the traditional family. This was, until fairly recently, ignored by most (though not all) economists, who preferred to leave that black box closed. Yet most societies rely on the goodwill of the parents to make sure that children get fed, schooled, socialized, and taken care of more generally. Given that these are the same parents who contrive to let their little girls die, how much faith should we place in their ability to get this done effectively?

Economics at play

In a study with Udry, Esther found that in good “male” years, more is spent on alcohol, tobacco, and personal luxury items for men (such as traditional items of clothing). In good “female” years, more resources are spent on little indulgences for women but also on food purchases for the household.

It is, for example, now widely recognized that public support programs that put money in the hands of women, like the Mexican program PROGRESA, for example, may be much more effective in directing resources toward children. In South Africa, at the end of apartheid, all men over sixty-five and women over sixty who did not have a private pension became eligible for a generous public pension. Many of these old people lived with their children and grandchildren, and the money was shared with the families. But it is only when a grandmother lived with a granddaughter that the granddaughter benefited:Those girls were significantly less likely to be stunted. Pensions received by a grandfather had no such effect. And there is more: Only if the pension was received by the girl’s maternal grandmother was this effect seen.

The most effective population policy might therefore be to make it unnecessary to have so many children (in particular, so many male children). Effective social safety nets (such as health insurance or old age pensions) or even the kind of financial development that enables people to profitably save for retirement could lead to a substantial reduction in fertility and perhaps also less discrimination against girls.

The most effective population control policy