This is a talk on addressing poverty. Having just begun Banerjee and Duflo’s book Poor Economics, thought I’d share her TED talk, as well as a first impression of the book.
What I appreciate most about it at this point is its nuanced approach to thinking about poverty and the issues it can generate. Instead of taking a panacea-like approach such as “aid is the solution!” or “aid never works”, the book (primarily) utilizes randomized controlled experiments, conducted in the real world, to get at the behavior really driving the decisions of the poor. In avoiding the blanket statement, the authors show sensitivity to the diversity of conditions in which the poor live, and therefore, the necessity for a diverse arsenal of proposed solutions.
Take the problem of hunger. To many, the solution seems obvious: give more food. But many shipments of food spoil easily during transport. What about lowering prices for the necessities like rice or grain? Well, evidence presented by Banerjee and Duflo suggests this does not always lead to more food eaten. Instead, poor consumers often substitute in a tastier, more expensive alternative food for some of the rice they would otherwise purchase. This can lead to the conundrum of the poor spending more but still only achieving at best the same caloric intake.
I am not too far into the book just yet. But the chapters on hunger and health are sound, thoughtful, and insightful. I look forward to reading even more. (And a HT to Ryan Mattson on the video.)