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To: Bill and Melinda Gates, Founders of the Bill and Melinda Gates Foundation,
The book “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty” written in by Abhijit V. Banerjee and Esther Duflo, provides a view of the poorest of the world from hundreds of different stories that help us to understand how we can fight global development.
How it works
Banerjee and Duflo’s Arguments
The lives and choices of those who live in poverty provide a view point that those who in the developed world often will not ever fully understand. This book also provides many arguments for its viewpoint of the way in which we look at poverty. The first argument is that “the poor often lack critical pieces of information and believe things that are not true (Banerjee & Duflo, 2011, p. 268)”. The poor first, lack the ability to pay for food that will benefit both them and their families, and moreover, they lack the education and knowledge of knowing what is nutritious. Another aspect of this is that they do not have the same faith in solutions as we do and their beliefs lead them to spend their money on things that they find more important (Banerjee & Duflo, 2011, p. 35). For example, a man named Oucha Mbarbk from Morocco thought that his family did not have enough to eat, yet spent money that he did have on a television because he felt “television is more important than food” (Banerjee & Duflo, 2011, p. 36). The idea of having enough food for his family was important to him but being “bored” seemed to take precedence. What Oucha doesn’t understand, is the importance of receiving a certain number of calories in order to live. In many cultures, the idea of entertainment is more appealing and further understood than caloric and nutritional value.
The second argument presented is the health poverty trap. This trap is also lead by a lack of understanding and trust in the developed world of the importance of preventative health care and the lack of responsibility put on those by governmental entities to provide it. An outstanding example of this is that a town in India, Udaipur, has common cases of diarrhea and because nurses are not fully trained and educated on health issues, oral rehydration solutions are a common “fix” to the problem. What is known in developed countries, is that chlorination of water can tackle most if not all cases (Banerjee & Duflo, 2011, p. 42). By purifying water supplies in poor communities, the occurrence of the disease is tailored, but the cost to do so is viewed as too expensive (Banerjee & Duflo, 2011, p. 46). A success story of this is with Joe Madiath, CEO of Gram Vikas an NGO in India. A village that agreed to work with him to build a tap and toilet system, the number of cases of diarrhea fell by 50% (Banerjee & Duflo, 2011, p. 47).
The third argument the book provides is education. Those in poverty have the lowest levels of education which can only correlate to the lack of development. When children are born into families who lack proper or “high” education they are more likely to drop out of school early and never finish. Another aspect is that according to information from India, teachers commonly lack the drive to even teach children when they do attend school, leading to the assumption by the children that education is last on their priorities (Banerjee & Duflo, 2011, p. 74). Pratham (an Indian NGO) conducted research showing that at a first-grade level those aged seven to fourteen could not read a paragraph that that of a first grader would be able to read (Banerjee & Duflo, 2011, p. 75). Banerjee and Duflo argue, “schools have to serve the students they do have, rather than the ones they perhaps would like to have”, is one that I contend to find powerful. A study in Kenya split two models of first graders, half of one model into a random classroom, and the other into groups based on their education level. These students were tracked and at the end of the study proved to have done better. This guides the argument that when the effort is shown on the instructor’s side, the children find more pleasure in learning (Banerjee & Duflo, 2011, p. 99).
The fourth argument is family planning. Many believe that the poor are poor because they have such big families (6.12 children per family), compared to the average American with 2.05 (Banerjee & Duflo, 2011, p. 106). This belief though, is not entirely true. For example, a study in Israel found no correlation between family size and poverty (Banerjee & Duflo, 2011, p. 109). To test this theory came Profamilia, which provided contraceptives and family-planning care in Columbia. This program found that women only had five percent fewer children (Banerjee & Duflo, 2011, p. 112). Another angle of this is from Indonesia where Pak Sudarno had nine children to ensure that as he aged at least one or a few of his children would be able to take care of him if the others had failed to do so (Banerjee & Duflo, 2011, p. 119). The premises of this argument is that the poor do not have more children than those in developed nations simply because they are poor, but because of choice and tradition in how families are laid out and defined.
The fifth argument involves insurance, where most often in poor countries people do not try to obtain insurance for health or weather disasters because they find that dealing with problems as they arise is more financially plausible as well as borrowing from neighbors and family members. Microcredit is an “extremely small loan given to impoverished people to help them become self-employed” (Investopedia). So why don’t the poor utilize this opportunity? Some do, in Ghana many took the opportunity for weather insurance when a large subsidy was provided and being deeply educated on its pros happened (Banerjee & Duflo, 2011, p. 155). Along with this argument, comes moneylenders versus microcredits. Moneylenders are more common amongst the poor one, because it is more flexible on the repayment schedule, and two, because many impoverished people rely on their community groups for savings and borrowing. For example, Jennifer Auma is part of 6 ROSCAs (Rotating Credit and Savings Association) where she contributes a fixed amount of money daily, weekly or monthly along with other members of her community and receives all of the contributions at some point (Banerjee & Duflo, 2011, p. 187). This is common in places like Kenya, because they believe that it provides more benefits more often than would a savings bank. This adds to my previous discussion that the poor tend to trust in their own traditions rather than the ideas given to them by developed nations.
The sixth argument is that the poor are inevitable entrepreneurs. For example, women in Bombay sit alongside traffic stops and collect dry sand that is created from hot tires on roads and sell it or use it to wash their dishes (Banerjee & Duflo, 2011, p. 205 & 206). Although this example seems small, these women created something out of nothing, and make a living for themselves. The lack of investment and loans, is clearly an effect of the fact that many self-run businesses in poor nations are not profitable enough, but this can be changed (even if only a small amount) through microcredit as discussed preciously as a way for them to simply survive.
The final argument comes from the three I’s, ideology, ignorance and inertia. This stems from institutions. The reluctance of government officials and their idea of what institutions should look like leads to the three I problem. There is an ideology of how things should be, followed by an ignorance of “what people want and how the village should be”, and is sustained by inertia (Banerjee & Duflo, 2011, p. 259).
Strengths and Weaknesses
The intent of the authors in writing this book was to provide “a radical rethinking of the way to fight global poverty”. In this sense, I find a combination of strengths and weaknesses to their approach. With the what seems like hundreds of stories and interviews conducted by the development economists, the view of poverty is opened wider than that of the average American would ever know or experience. Banerjee and Duflo don’t argue that each aspect of their arguments given are areas in which major political aid is necessary, but simply that by looking at the various aspects of their strengths and the reasons that poverty may or may not be so prevalent in other parts of the world and how simple changes can seemingly make large impacts.
The overwhelming evidence that was provided, is something I find to be a strength because it gives various outlooks and realities of those in poverty. For example, children in Kenya had to opportunity of being dewormed, this small change in their lives created a larger effect of allowing them the opportunity to continue through education and acquire jobs that inherently and/or slowly move them out of the life of extreme poverty (Banerjee & Duflo, 2011, p. 272). So why don’t we encourage governments of impoverished societies to require deworming of all children? The high political corruption, does have an impact, as well as the enforcement ability in poor nations, but the lack of education to those in developed nations prevents development as well. This is only succeeded through the arguments by Banerjee and Duflo I stated previously, and by the support of developed nations.
In contrast, a limitation I find in their approach is that even though all their research and evidence provides support to their various arguments, I believe that this book in some ways in one sided. Although the authors provide examples in which the poor would rather stray away from aid by developed nations, the overall premises of the book simply suggest that all poor nations desire our help. The book is titled “Poor Economics: A Radical Rethinking of the way to Fight Global Poverty”, so inevitably the book and their approach will consist of political policies to help the poor, but I also think that it is clear in many examples by which people deny preventative healthcare. As in the example where villagers in Udaipur do not take their kids outside until after the first year of life because they don’t want them catching the “evil eye”, so immunization is nearly impossible for those children because this would mean that their traditional belief system would first have to change (Banerjee & Duflo, 2011, p. 62). The poor often live by their traditional beliefs and with the developed world more commonly altering their traditions and beliefs it is difficult for undeveloped nations to expect to, when so much of their lives are shaped on them.
But this limitation is not one that takes precedence over the strengths of this book. A few examples of case studies of development work that support my point is first by PROGESA in Mexico improving the health of the poor. PROGRESA provides cash incentives to poor families who agree to improve the preventive and primary health care of their children to improve the attendance in schools (“Improving”, n.d.). The results showed that there was a 12 percent decrease in illness in children under five, a 19 percent decrease in daily activity difficulty for those aged 18 to 50, and for daily activities, day incapacitated, and days in bed, adults 50 and older saw 17-22 percent decrease in all three categories (“Improving”, n.d.). This simple incentive although these numbers might seem small, did have a significant impact on the daily lives of the rural poor in Mexico. This idea of small changes is a common theme by the authors, and it is hard to see in America how these changes are working without this type of evidence.
Another case that supports my point, is a study done in China on iodine deficiency. According to this case study, China bears the most iodine deficiencies in the world which leads to disorders such as goiter stillbirths, stunted growth, mental defects, and more (Vines, n.d.). The National Iodine Deficiency Disorders Elimination Program was introduced and has this raised awareness, improved iodization in salt, created monitoring of quality and enforcement of salt and banned non-iodized salt (Vines, n.d.). Since this development work has begun, iodized salt has now reached 94 percent of China, and the goiter rates have fallen to 8.8 percent in children aged 8 to 10 (Vines, n.d.). This example is similar to a theory by Dr. David Barker where “conditions in utero have long-term impact on a child’s life chances” (Banerjee & Duflo, 2011, p. 32). This hypothesis is supported in Tanzania where children completed one-third to one-half year more of schooling when their mothers received sufficient amounts of iodine while pregnant, further backing my argument (Banerjee & Duflo, 2011, p. 32). With this simple policy approach, rates decreased and overall health and success of children who received iodine supplementation increased.
The approach and arguments that have been presented in this policy memo, provide you with hard evidence as to why you should integrate them into your Foundation’s work. As Banerjee and Duflo put it, through “careful understanding of the motivation and the constraints of everyone… can lead to policies and institutions that are better designed, less likely to be perverted by corruption or dereliction of duty. These changes will be incremental, but they will sustain and build on themselves. They can be the start of a quiet revolution” (Banerjee & Duflo, 2011, p. 265). With the help of your foundation, this revolution can begin.
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