Few days ago I got stunned when I had a privilege to read a Latest (well it has published one year ago) book commenting on Poverty and the ways to end it. The Book is titled as “POOR ECONOMICS: Rethinking Poverty and ways to end it,” and is jointly authored by Abhijit D. Banergee and Esther Duflo.
Abhijit is a learned scholar holding doctorate of Harvard University and currently working with Ford Foundation as International Professor of economics at the Massachusetts Institute of technology. He is also a past president of Bureau for the research in the economic analysis of development. His areas of research are development economics and economic theory.
Esther Dufflo is Abdul Lateef Jammel professor of poverty alleviation and development in the department of economics at MIT and a founder and director of the Abdul Lateef Jammel Poverty Action Lab, a research network, specializing in randomized evaluation of social economic programmes. Esther, too, an academic scholar and has been honored with multiple awards for her contribution in applied economics.
The duo has tried their best to throw light on structural aspects of poverty in their book. They both rightly point out that there are no magic bullets to eradicate poverty i.e. no one shot cure all! Since the poverty is a multidimensional problem, the key lessons of basic poverty eradications are exhaustively discussed in the book. The duo maintains that better understanding of the choices of the poor, a willingness to experiment is the key to solve the problems of poverty.
Interestingly the book reveals the side effects of the so called “Large Policy Framework” and states that every large policy framework is an accumulation of narrowly defined interventions. The authors cut through many abstractions and generalizations in the context of poverty alleviation. They also assume long term challenges that may jump in and maintain that strong measures are needed to cure the disease of poverty. The book advocates the importance of effectiveness of Long Term policies and has its focus on tyranny of details.
On the background of heated debate going on in India about revisiting the mechanisms to identify the poor in India which is extremely important for targeting the better social assistance, the authors opine that the best way to solve the problem is giving up on targeting. While India is doing poor job when it comes to BPL, studies have shown that a large fraction of the poor do not have a BPL card and ironically many non poor people do! It states that the poverty alleviation is a step by step process and requires small but strengthen doses. The authors suggest that if everybody gets entitled to a minimum transfer, corruption and inefficiencies would be cut down.
They also admit that the cash transfers are the instrument to implement anti poverty programmes. Several countries have implemented cash transfer programmers and evaluated its impact. The book also throws light on the fact that conditional cash transfer programme has had beneficial effects all the way from improving education and health to encouraging savings and micro enterprises. Simultaneously, it also states that the conditionality may not be strictly necessary. The authors advocate that the pinpointed efforts like distribution of assets to poor in a under developed economy can have an immense effect on the economy at micro and macro levels.
They also further admit that with Unique ID system like adhar, it becomes practical and feasible to implement the distribution programmes with low overheads. There is a strong scope, particularly in the developing economy for trying this out that will also entail strengthening of Public Distribution System. The experiment can be structured such that several alternative variants can be worked out together and the lessons drawn from them would help to decide whether or not to scale up the programme and in what form.
This book reveals about some fundamentals about the poverty and poverty alleviation and also reorganizes the theory of poverty and ways for its eradication in pure, prolific and lucid manner. Since the book brings in the crux of Poverty in the context of pure economics it could have titled rightfully as “Pure Economics: Re- Presenting (Reorganizing) poverty. The advocates of pure economics would love it!