Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty

Hardcover

ISBN 10: 1586487981 ISBN 13: 9781586487980

Publisher: PublicAffairs, 2011

Winner of the 2011 Financial Times/Goldman Sachs Best Business Book of the Year Award

Billions of government dollars, and thousands of charitable organizations and NGOs, are dedicated to helping the world's poor. But much of their work is based on assumptions that are untested generalizations at best, harmful misperceptions at worst.

Abhijit Banerjee and Esther Duflo have pioneered the use of randomized control trials in development economics. Work based on these principles, supervised by the Poverty Action Lab, is being carried out in dozens of countries. Drawing on this and their 15 years of research from Chile to India, Kenya to Indonesia, they have identified wholly new aspects of the behavior of poor people, their needs, and the way that aid or financial investment can affect their lives. Their work defies certain presumptions: that microfinance is a cure-all, that schooling equals learning, that poverty at the level of 99 cents a day is just a more extreme version of the experience any of us have when our income falls uncomfortably low.

This important book illuminates how the poor live, and offers all of us an opportunity to think of a world beyond poverty.

Learn more at www.pooreconomics.com

About the Author:

Abhijit Vinayak Banerjee was educated in Kolkata, Delhi and Cambridge, MA. He is currently the Ford Foundation International Professor of Economics at MIT. He is the recipient of many honors and awards, including most recently the inaugural Infosys Prize in 2009, and has been an honorary advisor to many organizations including the World Bank and the Government of India.

Esther Duflo is the Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics at MIT. She studied at the Ecole Normale Superieure in Paris, and at MIT. She is a recipient of several important awards, including a MacArthur "genius" award (2009) and the John Bates Clark medal awarded annually to the best American economist under forty (2010). In 2003, Banerjee and Duflo co-founded the Abdul Latif Jameel Poverty Action Lab (J-PAL), which they continue to direct.

Review:

The Guardian, April 11, 2011
“[Banerjee and Duflo] offer a refreshingly original take on development, and they are very aware of how they are bringing an entirely new perspective into a subject dominated by big polemics from the likes of Jeffrey Sachs and William Easterly... they are clearly very clever economists and are doing a grand job to enrich their discipline's grasp of complex issues of poverty – so often misunderstood by people who have never been poor.” The Economist, April 22, 2011“In an engrossing new book they draw on some intrepid research and a store of personal anecdotes to illuminate the lives of the 865m people who, at the last count, live on less than 0.99 a day.”
The Economist’s Free Exchange Blog, April 21, 2011
“Let me recommend it... Poor Economics is more than just a compendium of the randomistas' greatest hits. For one thing, it contains some well-observed reporting.”
 The Economist’s Free Exchange, April 21, 2011

“TO CUT to the chase: this is the best book about the lives of the poor that I have read for a very, very long time. The research is wide-ranging. Much of it is new. Above all, Banerjee and Duflo take the poorest billion people as they find them. There is no wishful thinking. The attitude is straightforward and honest, occasionally painfully so. And some of the conclusions are surprising, even disconcerting.” Forbes.com, April 25, 2011“a compelling and important read... an honest and readable account about the poor that stands a chance of actually yielding results.” Philanthropy Action, April 25, 2011
“Banerjee and Duflo write exceptionally well, and given that there are two of them, the voice is surprisingly singular. But the real surprise in this book is its humility. Both the authors and the material they pull from are truly formidable, yet Banerjee and Duflo are not really out to make a hard pitch, least of all to die-hard Big Idealists who disagree with them. As such, there is nothing directly confrontational about Poor Economics. They are peeling the onion, not hacking it to pieces.”

“Esther Duflo won the John Bates Clark medal last year for her work on development economics, so I was excited to read her new book with Abhijit Banerjee Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. It’s a good book. It doesn’t really contain a radical rethinking of the way to fight global poverty, but it does try to cut past lame debates over whether or not foreign aid “works” to instead attempt to find ways to actually assess which programs are working, which aren’t, and how to improve those that don’t.” The Wall Street Journal, April 30, 2011“Marvelous, rewarding...’More Than Good Intentions’ and ‘Poor Economics’ are marked by their deep appreciation of the precariousness that colors the lives of poor people as they tiptoe along the margin of survival. But I would give an edge to Mr. Banerjee and Ms. Duflo in this area—the sheer detail and warm sympathy on display reflects a true appreciation of the challenges their subjects face... They have fought to establish a beachhead of honesty and rigor about evidence, evaluation and complexity in an aid world that would prefer to stick to glossy brochures and celebrity photo-ops. For this they deserve to be congratulated—and to be read.”
Financial Times, April 30, 2011

“ ’Poor Economics’ moves beyond all the bluster of development theories crafted in fancy rooms and actually examines at close range the rational economic decisions made by folks living on less than one dollar each day. A lot of aid, the book argues, is hampered for the same reason that some businesses are: ideology, inertia and ignorance. And the book compares the very poor to very rich hedge fund managers -- always wrestling with risk, but with almost no margin for error. "Poor Economics" tells us why micro finance may squash entrepreneurial risk taking and that filling the funding gap for medium-sized businesses is the next big challenge facing all those who want to foster entrepreneurship and spur growth around the world.”
 Foreign Affairs“Throughout their book, Banerjee and Duflo examine all facets of the behavior of the poor through this microscopic lens and discuss how certain types of interventions can make things better. They unapologetically propose a solution they acknowledge to be paternalistic: outside interventions by those who know best. But that type of policy makes sense only after detailed investigations of the conditions under which the interventions will occur, and Banerjee and Duflo are careful to tailor their recommendations to the circumstances on the ground.” Bloomberg Business Week

“The ingenuity of these experiments aside, it is the rich and humane portrayal of the lives of the very poor that most impresses. Both books show how those in poverty make sophisticated calculations in the grimmest of circumstances... Books such as these offer a better path forward. They are surely an experiment worth pursuing.” Cleveland Plain Dealer, May 2, 2011
“Here's something Jesus might recommend: Reading the clear, calm and revelatory book "Poor Economics," from Abhijit Banerjee and Esther Duflo. It is gloriously instructive, and bracing testimony in itself to the gold standard of the Enlightenment: the scientific method. The authors, both economists at MIT, spent 15 years in the field, running randomized controlled trials to test various approaches to combating poverty. They bring both rigor and humility to a predicament typically riven by ideology and blowhards.”

Financial World (UK),June 2011
“A remarkable work: incisive, scientific, compelling and very accessible, a must-read for advocates and opponents of international aid alike, for interested laymen and dedicated academics... Amartya Sen, fellow Nobel Prize winner Robert Solow and superstar economics author Steven Levitt wholeheartedly endorse this book. I urge you to read it. It will help shape the debate in development economics.”

Amartya Sen
“A marvellously insightful book by two outstanding researchers on the real nature of poverty.”

Steven D. Levitt“This book is a must-read for anyone who cares about world poverty.  It has been years since I read a book that taught me so much. ‘Poor Economics’ represents the best that economics has to offer.” Robert Solow“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.” Book Dwarf, February 14, 2011

Reilly Media,“Radar” blog, June 27, 2011  “This is possibly the best thing I will read all year, an insightful (and research-backed) book digging into the economics of poverty... Love that the website is so very complementary to the book, and 100% aligned with the ambition to convince and spread the word.”

Publishers Weekly (online), May 2011
“Their empirical approach differs from policy discussions that base support or criticism of aid programs on a broad overview; instead they illuminate many practicable and cost-effective ways to keep children and parents living healthier and more productive lives. An important perspective on fighting poverty.”

The Guardien, June 6, 2011“Duflo and Banerjee tell these stories (of their randomised control trials) in a lovely new book called Poor Economics. As they admit, randomistas cannot answer some big questions – how to tackle food prices, for instance. But through lots of microstudies, they make a subtle case for one big argument: aid really can help poor people, provided the money follows the evidence.” Vancouver Sun, June 11, 2011

Fast Company, June 15, 2011“Fascinating and captivating. Their work reads like a version of Freakonomics for the poor. There are insights into fighting global poverty from the remarkable and vital perspective of those whom we profess to serve...They remind us, I think, of our shared humanity and how at some fundamental levels we really do think alike.” IndianExpress.com, June 18, 2011“This is a welcome shift in methodology as it implicitly concedes the need to combine social science with hard economics.” Outlook India, June 25, 2011“It vividly, sensitively and rigorously brings alive the dilemmas of the poor as economic agents in a variety of contexts, whether as consumers or risk-takers. There are splendid chapters on a variety of topics that affect the poor: food, health, education, savings, micro-credit, insurance, risk and even some cursory observations on political behaviour.” 

DNA (Daily News Analysis), India, September 24, 2011“The book is full of such interesting insights and is worth reading for anyone who really wants to know why the poor of the world behave the way they do. And things are not always as bad as they are actually made out to be.”
Hindustan Times, September 24, 2011“[A] remarkably noses-on-the-ground book” Livemint.com October 4, 2011“There is no better place to solve the problem than the place where the problem is. One of the better economics books this year, Poor Economics, is by Abhijit Banerjee and Esther Duflo who found economic solutions to problems by being in India, Indonesia, Kenya, etc.” James Pressley, Bloomberg“An enlightening look at what randomized control trials, such as those used to assess new medicines, tell us about the behavior of impoverished people -- and how to help them. The Massachusetts Institute of Technology economists describe the rational motivations that underpin “irrational” decisions. We meet, for example, Moroccan villagers who find money to buy televisions, DVD players and cell phones when they can’t afford enough food.” Gayle Tzemach Lemmon, PRI’s Marketplace


The New York Times, May 19, 2011
“Randomized trials are the hottest thing in the fight against poverty, and two excellent new books have just come out by leaders in the field. One is “Poor Economics,” by Abhijit Banerjee and Esther Duflo... These terrific books move the debate to the crucial question: What kind of aid works best?” The Guardian, May 18, 2011
“Abhijit Banerjee and Esther Duflo's book, Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty, is making waves in development circles. Beyond the strong focus on randomised control trials, the book distinguishes itself by wading into issues on which the development community has often ignored or made uninformed guesses. These include the rationale behind the decisions made by the poor, whether they make the "best" decisions available, and how policymakers should respond.” Matthew Yglesias, May 7, 2011