------------------------------------------1--------------------------------------------------------------------------------------------Poverty and development can sometimes feel like overwhelming issues the scale is daunting, the

problems grand. Ideology drives a lot of policies, and even the most well-intentioned ideas can get bogged
down by ignorance of ground-level realities and inertia at the level of the implementer. In fact, we call
these the three Is ideology, ignorance, inertia the three main reasons policies may not work and aid
is not always effective.

But theres no reason to lose hope. Incremental, real change can be made. Sometimes the change seems
small, but by identifying real world success stories, facing up to real world failures, and understanding
why the poor make the choices they make, we can find the right levers to push to free the poor of the
hidden traps that keep them behind.
--------------------------------------------------------2--------------------------------------------------------------------------------The second chapter of Poor Economics: A Radical Rethinking of the way to Fight Global Poverty by Abhijit
Banerjee and Esther Duflo discusses the existence of a nutrition-based poverty trap. To look at the
likelihood of such a poverty trap two graphical models of poverty are considered. One is an s-shaped curve
showing that what you have today directly influence what you will have tomorrow. This graph illustrates
the existence of a nutrition-based poverty trap (12). The second is an inverted L-shaped graph that
illustrates that there is no poverty trap. Therefore, the poor will end up at a certain income level regardless
of any help they receive (13). To begin the analysis of the existence of a hunger trap the authors consider
the first hand account of Pak Solhin, a poverty stricken man living in Bangladesh. Solhin believes that his
quest for food leaves him with meager nutrition and little energy. Therefore, he is essentially stuck, unable
to gain the nutritional energy needed to advance economically. Solhins description of his poverty trap is
rationally appealing. However, the biased opinion of one mans first hand account is not sufficient
information to prove a theory. To truly determine the existence of such a trap the authors wisely turn to
statistical information. Unfortunately, their statistical information appears too highly opinion dependant.

One of the basic assumptions of the existence of the poverty trap is that your nutrition today directly
affects your productivity and ability to earn an income tomorrow. As a result, it would make sense that
poverty stricken people whom whish to advance would try to consume as many calories as possible.
However, the authors find that in reality the poor dont spend their money solely on high calorie, cheap
food but on luxury food and entertainment (23). This discrepancy is cited as evidence that a nutritionbase poverty trap does not exist.

According to the statistical evidence presented people are eating less calories today than they historically
have even though there is wider availability of food. The authors continue with this strain of thought citing
that the percentage of people who consider that they do not have enough food has dropped dramatically
over time (Banrejee 26). However, this is where their statistics are deceiving. The percent of people who
consider that they do not have enough food it is an opinion-based question. People in America may
consider themselves not to have enough food, and people in India may consider themselves also not to

have enough food, but because of cultural norms I suspect that the reality of their situations would be
drastically different. The second part of the information that leads to this statistical drop was information
on whether people were eating two meals a day (26), but this too leaves room for interpretation. What
constitutes a meal for one person may not constitute a meal for another. These opinion questions are the
basis for the authors larger conclusion that people are eating less by choice and that the hunger-based
poverty trap maybe inconsistent (27). Such a conclusion is a large leap when considering the limited
information that people are eating less and appear to be less inclined to be negative about their situation.

Upon my first reading the authors statistical information and conclusions seemed solid. However, after
reexamination there are many possibilities for inconsistencies and limitations based on response bias.
Even the seemingly undisputable studies on the inclusion of iron into diets and the nutrition of pregnant
mothers have variables that it would be difficult to control for. Therefore, I am at a loss of what to make
of this chapter. Although, many of the studies make sense and the authors conclusions are rationally
appealing, can a reader really put any stock in what appears to be mere opinion polls? Also, unbiased
information is almost impossible to develop and I wonder if it would be possible to develop better
statistical information. Therefore, do you think that this is the best statistical information possible to
collect on hunger, a word that is an expression of opinion and varies in interpretation for all people?

____________________________-3_____________________________________________________
In the third chapter of Poor Economics: A Radical Rethinking of the way to Fight Global Poverty authors
Abhijit Banerjee and Esther Duflo present their thesis about health care for the poor and low hanging
fruit. Low hanging fruit is used to describe cheap medicines, preventive medicines, and low-cost actions
that drastically benefit peoples health. Some of the low hanging fruits discussed are bed nets in India and
other regions affected by Malaria and ORS salt for children with diarrhea. The poor underutilized these
cheap but affective solutions to health problems and instead select more expensive medications once
they are sick.

For example, the poor tend not to immunize their children or finish immunization shots once they have
begun. Such immunizations protect the children and community. The most mind-boggling example of
poor individuals disregard for cheap preventative measures is not using chlorine to disinfect water. Clean
water drastically affects the health and increased productivity of individuals resulting in higher life
earnings.

The three preventative measures discussed all lead to healthier more productive lives for villagers because
they prevent common illnesses. However, the authors found that the poor tend not to use these free and
subsidized solutions. Instead the poor wait until they get sick and then choose to go to more expensive
private doctors even when they have access to free public health clinics. There are many reasons for such
a disregard for the low hanging fruits and use of private doctors. First, it may be rational. Private doctors

are more likely to be in their offices during work hours than doctors at public clinics. Many poor people
are also uneducated, which leads to misunderstandings about their options.

The authors, however, think that the main reason poor people are not utilizing the lower fruit is that they
suffering from a universal ailment. Poor people like most individuals value their present time more highly
than their future time. This leads to procrastination. In the present bringing ones child to the doctor to
be immunized takes time and commitment, but the reward of such commitment will not be realized until
the future. Therefore, because the present is more valuable than the future many mothers will not bring
their child to get immunized and instead will hold off until the future even though the rewards of such
present actions will reap great benefits in the future.

The authors present some statistical evidence about preventative and cheap medication on page fortytwo. The discussion is opened by a sweeping statement: Of the 9 million children who die before their
fifth birthdaysroughly one in five dies of diarrhea (42). This sweeping conclusion is followed by the
introduction of statistical evidence on the effects of chlorine packages and ORS salt. Chlorine packages,
which are cheap and easily obtained are only used by ten percent of families in Zambia, even though, they
could potentially prevent childhood diarrhea caused by unsanitary water. Also, ORS salt, which prevents
dehydration the fatal symptom of diarrhea in children, is only used in one-third of children under five who
have diarrhea in India. This statistical evidence has a great effect when it is used along with the initial
sweeping statement.

The relationship the authors create between the one and five children who die from diarrhea and the
minimal use of preventative and cheap diarrhea medication is not defended, however. The author makes
an assumption that of the one in five children who die of diarrhea, ORS salt and chlorine water sanitization
was available to them, or to their families. Therefore, the families of these children for various reasons
made a choice not to utilize these measures. Such a conclusion does not take into account that many poor
children do not come from stable, intact families.

Throughout the chapter there was an assumption that it was the mothers role to get these medication. I
wonder how many of the children who died from diarrhea have healthy mothers and fathers. The
conclusions and causation implied about the effects Chlorine and ORS salt could have had on the one in
five children is not fully explained. I think that the thesis would have been strengthened had the authors
discussed family background and its effect on medication usage. For example, the statistic which claims
only one-third of Indian children with diarrhea receive ORS salt could be symbolic of the fact that these
Indian children did not come from stable homes with mothers to get the salt. Therefore, not using ORS
salt maybe indicative of not having parental influence and not of poor peoples disregard for cheap
medication.

Regardless the statistics reinforce the thesis that poor people are not using preventive and cheap
medications. ORS salt and chlorine are shown to be cheap and highly effective yet are minimally used
according to the cost-benefit analysis on page forty-two. The conclusions and broad notions about the
effects and reasons such measures are being minimally used, however, may be beyond the scope of the
present statistics.

The thesis of chapter three is fascinating and reminds me of similar discussion about AIDS. Although it is
widely know that AIDS is a deadly disease, it is still being transmitted and people are not protecting
themselves in some parts of Africa. Condoms are very cheap and often given our for free, yet people dont
use them and continue to be infected and transmit the disease. Overall, the discussion is very interesting
and presents some very relevant data about the effects and under utilization of cheap medication and
preventative measures.
------------------------------------------------------------------4----------------------------------------------------------------------Chapter four of Poor Economics discusses education in developing countries and the most effective way
to establish schools. First the authors present two models for efficiently building schools. One model is
supply focused, build a school and students will come. The second model is demand focused, wait until
the citizens demand a school and then build it. These two models offer different methodology for the
most effective way to get poor children to go to and stay in school. The chapter also discusses incentive
systems for education and the implications of economic background, parental influence, and social
expectations on student achievement.

Poor Economics focused on developing and very poor countries. However, even in America there is a
disparity between the education the rich and the poor receive and obstacles to providing quality
education to the poor. The New York Times article Education Gap Grows Between Rich and Poor, Studies
Say by Sabrina Tavernise discusses the disparity between rich and poor student achievement based on
the initial endowment of family resources, a phenomena that is also discussed in Poor Economics. The
educational problems faced by poor people internationally and poor people in the US are not that
different. They have lower test scores, less education, and attend below average schools.

Both the article and the book attribute some of the difference in educational success to parental influence.
The article cites that in 2007 American upper-income families were spending nine times as much on
educating their children than lower-income families. The upper-income children as a result were scoring
higher on standardized tests and completing more years of schooling. Tavernise concludes that parents
investment in their children starting at an early age is a key factor in success.

Similarly, in poorer countries parents chose the level of investment they make in their children. This
determines the level of education and encouragement a child will receive from their families. In the very
poor countries discussed in the chapter there are financial incentive systems to try to encourage such

investment. This also happens in America. Laws, scholarships, and tax breaks for parents with dependent
children are all incentives for parents to invest in their children.

Taversine also discusses the social factors that contribute to the differences between the rich and the
poor. For example difference in everyday life experiences such as time spent at cultural events and
shopping malls make upper-income children more likely to be successful. Such social differences are
similar to the confidence problem face by lower caste people discussed in Poor Economics. When people
are aware of their shortcomings in social or educational situations they are less likely to excel and more
likely to discount themselves and their intelligence.

It is very interesting and disheartening that similar educational obstacles exist in the wealthiest country
in the world and in the poorest and most socially rigid countries. It shows that the educational solutions
offered in Poor Economics may be insufficient to stop inequality and educational obstacles will perpetuate
even in the ideal environment.

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Chapter 5 of Poor Economics discusses the effects of family size and population growth on an economy.
The economic growth in a country and of a family is partially determined by family planning choices
including education and birth control availability and social phenomena including disease control, cultural
evolution, and government programs.

An interesting statistic in the chapter is that South Africa could be 5.6 percent richer in the future due to
the reduction in population from the HIV/AIDS epidemic (107). This statistic reflects the theory of some
experts that countries with higher fertility rates are poorer. Yet, some studies find that historically regions
with higher populations grow faster than the rest of the world. Therefore, my hypothesis is that the
decline in population due to HIV/AIDS will result in increased wealth in rural areas of South Africa.
Alternatively, the decline in population due to HIV/AIDS in cities will result in decreased wealth and
innovation.

To test this hypothesis you would need to develop a regression model that test the effect of the HIV/AIDS
infection rate and the fertility rate on the wealth of a rural population. Such a model could be set up as
shown below.

Y1=a+ bX1+ bX2+ m

Y1= wealth in rural areas

X1= percent of population infected with HIV/AIDS

X2=death rate

A dummy variable that might be useful to include in this regression is gender, which could be coded 0 for
women and 1 for men. According to poor economics young men are less likely to be infected with
HIV/AIDS than women of the same age therefore this dummy would account for such variation. The sign
on b (positive or negative) for this dummy variable would tell us if the gender of the percent of the
population infected with HIV/AIDS effects the wealth in rural areas differently.
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The poor face a huge amount of risk - a friend of ours from the world of high finance once noted that
they're like hedge fund managers. These risks can come from health shocks - like an accident - or
agricultural shocks - like a drought - or any other number of unexpected crises. Often, the poor just don't
have the means to weather these shocks, and so they get pushed into poverty traps.

The steps they take to protect themselves form these risks are insufficient and often costly: they choose
less profitable and less risky crop, they spread themselves too thin across a great number of activities;
they exchange favors with neighbors. Yet all this doesn't always even cover large shocks.

So where is formal insurance for the poor? Is that the next billion-customers opportunity?
------------------------------------------------------7--------------------------------------------------------------------------It is apparently hard to be dispassionate about microcredit, which has been simultaneously presented as
the biggest hope to eradicate poverty and the cause for multiple suicides of innocent borrowers.

The truth is that microcredit is an extremely impressive social innovation: the movement has managed to
find a way to lend to the poor at reasonable interest rates, against all odds, where many government
efforts had previously failed. And it has real, if modest, effects on the lives of its clients. But it is not a

silver bullet. In particular, it leaves open the next big challenge: how to lend to larger firms, so that
microbusinesses can turn into viable enterprises.
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The Victorians used to think that poverty went hand in hand with impatience, at best, and sloth, at worst.
It was believed you had to frighten and punish the poor into thinking that any misstep off the straightand-narrow would cause them to plunge into even more terrible conditions.

Todays more benign version of this argument is: How can the poor save when they have no money?" In
fact, the poor do save and they do it despite considerable odds: no bank will take their savings, and money
saved at home is not very safe. Still, like the rich, they tend to procrastinate and give in to temptations.
The double injustice is that these temptations are more likely to derail the poor, and that they have fewer
guards against them.

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Are there really a billion barefoot entrepreneurs, as the leaders of MFIs and the socially-minded business
gurus seem to believe? Or is it just an optical illusion, stemming from a confusion about what we call an
"entrepreneur"? There are more than a billion people who run their own farm or business, but most of
them do this because they have no other options.

Microcredit and other ways to help tiny businesses have an important role to play in the lives of the poor,
because these tiny businesses will remain, perhaps for the foreseeable future, the only way many of the
poor can manage to survive. But we are kidding ourselves if we think that these businesses can pave the
way for a mass exit from poverty.
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Even the most well-intended and well-thought-out policies may not have an impact if they are not
implemented properly. Unfortunately, the gap between intention and implementation can be quite wide.

The many failings of governments are often given as the reason good policies cannot really be made to
work. Is there any hope for poor countries that are often still living under the long shadow of extractive
colonial institutions. Countries that suffer from corruption and capture by the elite? Or should they - can
they - be rescued from themselves?

Politics, we feel, is not that different from anything else. Well-designed incremental changes in the rules
of the game, often implemented at the most local level, can make real differences on the ground. And
although one never knows when the spark will come, local progress can pave the way to a quiet
revolution.