Poor Economics: Rethinking Poverty & the Ways to End it

by Abhijit V. Banerjee

the fact that older men are more likely to be infected with HIV than younger ones.

there are important policy consequences from ignoring the complicated dynamics within the family.

or within a startup

We already saw, for example, that giving women access to a formal property title is important for fertility choices, not because it changes her view on how many children she wants but because it makes her views count more.

It is likely that the contract has to be socially enforced, because children cannot negotiate with parents, or wives with husbands, on an equal basis,

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.45

For the poor, every year feels like being in the middle of a colossal financial crisis.

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Usually, some members—mostly men and teenage boys in India or Mexico, but older daughters in China, the Philippines, and Thailand—migrate, while the rest stay behind.

gender roles vary across neighbouring countries

Farming households tend to marry off their daughters in villages that are close enough to maintain a relationship, but far enough away to have a slightly different weather pattern.

In order to be able to collect on the loan, the lender needs to know many things about the borrower. Some are things the lender would like to find out before deciding to lend, such as whether the borrower is trustworthy.

The cost to the bank of managing small amounts of savings has to go down a lot before savings accounts for the poor can be economically viable.

When there is money in the house, things always happen, he said, and the money disappears.

differently. In essence, we seem to have a vision of how we should act in the future that is often inconsistent with the way we act today and will act in the future.

In other words, we hope that our “tomorrow’s self” will be more patient than “today’s self” is prepared to be.

This asymmetry between managing to stay free of debt and not managing to get out of debt shows the role of discouragement in making it harder to impose self-discipline.

It is too hard to stay motivated when everything you want looks impossibly far away. Moving the goalposts closer may be just what the poor need to start running toward them.

valuable for startups

Everywhere we have asked, the most common dream of the poor is that their children become government workers.

The poor don’t see becoming an entrepreneur as something to aspire to.

is possible that people who don’t envision substantial improvements in their future quality of life opt to stop trying and therefore end up staying where they are.

Those who have power under the current political institutions get to make sure that the economic institutions work toward making them rich, and once they are rich enough they can usually use their wealth to forestall any attempts to move them out of power.

It might therefore be better for the decentralization to be designed by a centralized authority, with the interest of the less advantaged or less powerful in mind. Power to the people, but not all the power.

Very bad policies are sometimes born out of the best of intentions, because of a misreading of what the real problem

The rules were (obviously) not designed with the objective of undermining the effectiveness of the entire health-care system in India. On the contrary, they were probably put on paper by a well-meaning bureaucrat, who had his own views of what the system should do and did not pay too much attention to what that demanded on the ground.

What these two examples (the nurses and the school committees) illustrate is that large-scale waste and policy failure often happen not because of any deep structural problem but because of lazy thinking at the stage of policy design.

very true

In a context where all too many electoral promises are made and broken, tangible achievements provide useful information to voters about what the candidates may do in the future.

whenever that spark occurs, it is more likely to catch fire if women and men are properly educated, well fed, and healthy, and if citizens feel secure and confident enough to invest in their children, and to let them leave home to get the new jobs in the city.

First, the poor often lack critical pieces of information and believe things that are not true.

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