Summary of the book 'POOR ECONOMICS' (from what I remember)...
I read the book almost a year ago, but I wanted to recollect and see how much of the book has been internalised by me.
1) The book starts with the image Esther (one of the authors) used to view India when she was very young. This image was formed in her mind from the various sources that described the city of Kolkata being crowded and having very less space (something like less than a foot for every person staying there). But, when she happened to visit India the story was of course quite different.
2) Very often, we typecast/ generalize when it comes to poor people from what we hear about them or the theories built upon them e.g. there are a lot of opportunities, but they are not very enterprising which is why they are poor OR they always act in the most rational way e.g. if eating something less tasty is going to give them utmost nutrition and is the most economical, they are going to choose that eatable over tastier but less economical alternatives. But, this is not always true. Poor people are just human beings like most of us. But, they lack the most basic privileges/facilities that often the fortunate ones take for granted e.g. People living in the urban area have access to treated/chlorinated drinking water (because the municipality etc. chlorinates it for us). But, for the people in the remote villages, water is not purified like this automatically, which makes them more vulnerable to diseases unless they pro-actively take steps to purify it.
3) One of the first few chapters of the book clarifies the approach used by the book: The purpose of the book is mostly to just highlight that the world of the poor is often not as simple as most economists put it. Solutions to problems are very complicated in the sense that even if a viable solution is found, people may not actually accept and implement it due to various (social, cultural, knowledge related, inertial, institutional) difficulties and factors.
4) The chapter also talks about the two different views generally used by economists to paint a picture of poverty and progress -
'the L shaped curve' - that suggests if appropriate resources are made available to the poor, they will be able to lift themselves out of poverty (without these resources they would only become poorer and wear out eventually) and,
'the S shaped curve' - that suggests - - - - [Sorry forgot what it suggests exactly, but some part of it says that resources are only goign to spoil them/stifle their progress]
The above two theories mainly relate to International grants/aids economics, but the authors however argue that throughout the book they are going to show that both the above theories are true in some situation and false in others, hence, we can't generalize.
5) the book contains umpteen examples/stories to prove their point. Some of them are:
a) About microfinance:
Loans help people to develop and become less poorer, but not as radically as some put it. For example there are people who take loan and open very small/micro shops with less than 25 SKUs (e.g. 1 pack of incense sticks, a few packets of biscuits, beedis etc.). This is just not good enough to make enough money for the shopkeeper to survive. In fact, in some cases due to bad business calculations the shop makes their situation worse. However, this is not to tell that microfinance is useless, because without their availability, situation is going to be unimaginably worse (moneylenders charging usurious rates). If implemented properly and plugged holes, microfinance helps people come out of poverty. We go to website of any microfinance institution and we would find a lot of such (true) stories.
b) About lazy thinking at the institutional design level and undertsanding people's needs:
There is a village where there are a good number of medical institutions, but still people do not benefit out of it because e.g. most of the nurses and other paramedics are not there in the hospital. So, can we blame the nurses for absence. the answer seems to be No, because they have their own problems like travelling so many kilometres (the person who designed the institution didn't think of difficulties like this). Another bottleneck, many parents do nto trust the hospital staff e.g. for diarrhoea, a simple solution could be giving ORS to the patient. But, the solutions looks too simplistic to the patients' caretakers that they would instead perfer visiting a quack who would give an injection to the patient promising instant relief. The problem here seems to be a lack of awareness among the common people. Such issues have to be addressed by people innovatively (a lot of perspective given in the book on these kind of issues).
c) The book also talks about the spread of diseases like aids, malaria in african countries, various (simple) measures that entities have implemented to fight these diseases, the result, people’s reactions and simple innovations that help people big time.
d) The book talks about how people produce more children thinking each of them can work and earn for the family but it backfires instead; how poor people take enormous risks in their everyday lives and a small adverse incident can prove life threatening (e.g. if a person falls sick (esp. the earning member), then the source of income is gone and all the savings and potential income spent in the treatment, leave alone the stress the whole family has to go through. In such situations the authors suggest it would help if people in the community help out each other just like an insurance scheme).
After all these instances, the book closes saying there is thus no one-stop quick fix solution to poverty, but there are numerous simple measures that would have a huge impact if implemente well and it is very heartening to see that a lot of such work is going on in the world.
Amazing book, very enlightening and thought provoking. Thanks for it – Esther and Abhijit.
I read the book almost a year ago, but I wanted to recollect and see how much of the book has been internalised by me.
1) The book starts with the image Esther (one of the authors) used to view India when she was very young. This image was formed in her mind from the various sources that described the city of Kolkata being crowded and having very less space (something like less than a foot for every person staying there). But, when she happened to visit India the story was of course quite different.
2) Very often, we typecast/ generalize when it comes to poor people from what we hear about them or the theories built upon them e.g. there are a lot of opportunities, but they are not very enterprising which is why they are poor OR they always act in the most rational way e.g. if eating something less tasty is going to give them utmost nutrition and is the most economical, they are going to choose that eatable over tastier but less economical alternatives. But, this is not always true. Poor people are just human beings like most of us. But, they lack the most basic privileges/facilities that often the fortunate ones take for granted e.g. People living in the urban area have access to treated/chlorinated drinking water (because the municipality etc. chlorinates it for us). But, for the people in the remote villages, water is not purified like this automatically, which makes them more vulnerable to diseases unless they pro-actively take steps to purify it.
3) One of the first few chapters of the book clarifies the approach used by the book: The purpose of the book is mostly to just highlight that the world of the poor is often not as simple as most economists put it. Solutions to problems are very complicated in the sense that even if a viable solution is found, people may not actually accept and implement it due to various (social, cultural, knowledge related, inertial, institutional) difficulties and factors.
4) The chapter also talks about the two different views generally used by economists to paint a picture of poverty and progress -
'the L shaped curve' - that suggests if appropriate resources are made available to the poor, they will be able to lift themselves out of poverty (without these resources they would only become poorer and wear out eventually) and,
'the S shaped curve' - that suggests - - - - [Sorry forgot what it suggests exactly, but some part of it says that resources are only goign to spoil them/stifle their progress]
The above two theories mainly relate to International grants/aids economics, but the authors however argue that throughout the book they are going to show that both the above theories are true in some situation and false in others, hence, we can't generalize.
5) the book contains umpteen examples/stories to prove their point. Some of them are:
a) About microfinance:
Loans help people to develop and become less poorer, but not as radically as some put it. For example there are people who take loan and open very small/micro shops with less than 25 SKUs (e.g. 1 pack of incense sticks, a few packets of biscuits, beedis etc.). This is just not good enough to make enough money for the shopkeeper to survive. In fact, in some cases due to bad business calculations the shop makes their situation worse. However, this is not to tell that microfinance is useless, because without their availability, situation is going to be unimaginably worse (moneylenders charging usurious rates). If implemented properly and plugged holes, microfinance helps people come out of poverty. We go to website of any microfinance institution and we would find a lot of such (true) stories.
b) About lazy thinking at the institutional design level and undertsanding people's needs:
There is a village where there are a good number of medical institutions, but still people do not benefit out of it because e.g. most of the nurses and other paramedics are not there in the hospital. So, can we blame the nurses for absence. the answer seems to be No, because they have their own problems like travelling so many kilometres (the person who designed the institution didn't think of difficulties like this). Another bottleneck, many parents do nto trust the hospital staff e.g. for diarrhoea, a simple solution could be giving ORS to the patient. But, the solutions looks too simplistic to the patients' caretakers that they would instead perfer visiting a quack who would give an injection to the patient promising instant relief. The problem here seems to be a lack of awareness among the common people. Such issues have to be addressed by people innovatively (a lot of perspective given in the book on these kind of issues).
c) The book also talks about the spread of diseases like aids, malaria in african countries, various (simple) measures that entities have implemented to fight these diseases, the result, people’s reactions and simple innovations that help people big time.
d) The book talks about how people produce more children thinking each of them can work and earn for the family but it backfires instead; how poor people take enormous risks in their everyday lives and a small adverse incident can prove life threatening (e.g. if a person falls sick (esp. the earning member), then the source of income is gone and all the savings and potential income spent in the treatment, leave alone the stress the whole family has to go through. In such situations the authors suggest it would help if people in the community help out each other just like an insurance scheme).
After all these instances, the book closes saying there is thus no one-stop quick fix solution to poverty, but there are numerous simple measures that would have a huge impact if implemente well and it is very heartening to see that a lot of such work is going on in the world.
Amazing book, very enlightening and thought provoking. Thanks for it – Esther and Abhijit.
