ABHIJIT BANERJEE
Poor Economics by Abhijit Banerjee and Esther Duflo ; Published by Random House ; Pages 303 ; Price Rs.399/-
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Abhijit Banerjee, wife and fellow economist Esther Duflo, and Michael Kremer were awarded last week the Nobel Prize in Economics for their efforts to alleviate global poverty.
Banerjee is an MIT professor and co-founder of the Abdul Latif Jameel Poverty Action Lab. He is the author of five books and the co-editor of two. His most well-known work is the book under review “Poor Economics”, co-written with Duflo.
The book bagged the 2011 Financial Times and Goldman Sachs Business Book of the Year Award.The two economists teach at the Massachusetts Institute of Technology.
Banerjee has written and edited numerous works with other notables including Raghuram Rajan, and Gita Gopinath.
"Poor Economics" postulates an area that is found between purely market-based solutions to global poverty and "grand development plans." It avoids generalizations and formulaic thinking.
The couple attempt to comprehend the thinking of the poor and how they arrive at conclusions on subjects like education, healthcare, savings, entrepreneurship, and other important issues. They recommend methods of observation, resorting to rigorous randomized controlled testing on five continents, and above all lending a ear to what the poor have to say. We encounter astonishing stands but based on a solid base of commonsense,when viewed in the right perspective.
The authors set forth their moral purpose succinctly: "To the extent that we know how to remedy poverty, there is no reason to tolerate the waste of lives and talent that poverty brings with it."
What sets them apart is the way they look at poverty. The authors write that the ‘urge to reduce the poor to a set of clichés has been with us for as long as there has been poverty: The poor appear, in social theory as much as in literature, by turns lazy or enterprising, noble or thievish, angry or passive, helpless or self-sufficient. It is no surprise that the policy stances that correspond to these views of the poor also tend to be captured in simple formulas: “Free markets for the poor,” “Make human rights substantial,” “Deal with conflict first,” “Give more money to the poorest,” “Foreign aid kills development,” and the like.
To go beyond such ordinariness, Banerjee and Duflo engaged directly in field work among the poor in order to understand how they live, the choices they make and why they made them and how policies could be tweaked in little ways that made a difference.Instead of grand theories, their methods were local field work and experiments. Their preferred tool was Randomized Control Trials, a method modelled on clinical trials in medicine. In field experiments, people are randomly assigned to control groups and treatment groups. For example, to study the impact of a particular policy intervention the experiment would look at its impact on a group that has been exposed to the policy change, against another that hasn’t been so exposed.
An important part of their work has been ensuring that the agency of the “beneficiaries” — usually, in developing countries like India, poorer individuals — is put at the centre of any policy design. This is a crucial way in which experimental results are often better than large scale data-based inference. The latter is run through with assumptions about individual and group behaviour that may be how economists assume the poor act, not how they actually do. For example, Duflo and Banerjee often point out that even income-constrained people who may not appear to be getting enough to eat will, if they are given more money, spend it on televisions or mobile phones rather than better-quality or more food. This is, they argue, not in fact that surprising: it merely shows that the desire for an escape from boredom is as much of a motivator as hunger. For well-off economists who have never truly been either bored or hungry, figuring out how people who are regularly both may be difficult in the abstract; but an RCT examining how extra money is spent helps solve that conundrum.
The Nobel Laureate in Economics Dr.Robert Solow wrote :
"Abhijit Banerjee and Esther Duflo are allergic to grand generalizations about the secret of economic development. Instead they appeal to many local observations and experiments to explore how poor people in poor countries actually cope with their poverty: what they know, what they seem (or don't seem) to want, what they expect of themselves and others, and how they make the choices that they can make. Apparently there are plenty of small but meaningful victories to be won, some through private and some through public action, that together could add up to a large gains for the world's poor, and might even start a ball rolling. I was fascinated and convinced.”
The Nobel Committee highlighted how their “experiment-based approach has transformed development economics” over the past decades. They mentioned specifically how, as a result of one such study, “more than 5 million Indian children have benefited from programmes of remedial tutoring in schools”.
Duflo, born in 1972, is the second woman and the youngest person to be awarded the Prize in Economic Sciences.
It is impossible to disagree with another Nobel Laureate Dr.Amartya Sen when he declared," A marvellously insightful book by two outstanding researchers on the real nature of poverty"
PPR
20/10/2019.
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Tit--Bits.
It is a matter of joy that the two authors have given lectures in RBI's College of Agricultural Banking in Pune.
An affectionate memoir has been penned and published by Dr.G.Sreekumar,who resigned as R D of Jaipur Office of RBI.
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