Before writing a review for Poor Economics, I also read some reviews about this book on Goodreads. Overall, the reviews are good, some say bad reviews about this book. Hence, I think before deciding to take on this book, you should have a curiosity in development economics, especially for the problems of poor people. In addition, this book is somehow technical, and hard to understand if you don’t like how economists think. If I read this book before getting my master, I don’t think I will ever finish this book. Because I would think something is quite obvious, but they keep repeating it again and again. However, when my knowledge expands, I understand what randomized control trials (RCTs) are, and I understand how their logics work, it is quite satisfying.
One of SDGs (Sustainable Development Goals) is to end poverty by 2030. In economics world, there are two views on solving poverty. One belongs to Jeffrey Sachs in The end of Poverty who supports the idea of aid and believes in “Poverty trap”. The other is William Easterly with The Elusive Quest for Growth who believes in the market, and sees market as a motivation for development. He does not believe in “Poverty Trap”. Poor Economics lies in between these two views, not too supportive like Jeffrey Sachs, but not too extreme like William Easterly. The authors believe in how we make policies based on scientific results.
The book includes two parts: private lives and institutions. Personally, I like how the authors decided to start this book with private lives – the real examples of some poor people who were struggling in their daily lives. Not surprisingly, I think people would feel more connected with a story of a person than something big out of their hands. This is also confirmed by an experiment in the University of Pennsylvania where some researchers conducted an experiment by delivering two types of posters – one was talking about the poverty situation in Malawi and the other told a tory of a specific individual living in Malawi. In both posters, they asked for donation and the result was that people donated more when they were delivered with a poster of a personal story. (Read more about this research here)
From chapter 2 to chapter 5, the authors talk about hungry people, health, education and population in developing countries. In these stories, I bet you will meet/ hear about one of these here or there before, if you already know some poor people in your lives. But in an economist view, they will ask a question about why the poor people decide to do that, what are the motivations behind that, and whether their behaviors are rational just like how we make assumptions in the fist lessons of microeconomics. There are also many surprising stories, like the idea that volunteer teachers work better than teachers in public and private schools (charter school in the US, Pratham in India), or the “sterilization camps” policy of India to control population, or the idea that HIV/AIDS is called “The Gift of Dying” for future generation in Africa. It is interesting to see how the authors approached the problems in two sides of arguments.
Chapter 6 to chapter 10 the authors explain how institutions are solving the problems listed in part 1. The authors give some thoughts and set a room for readers/ researchers to dig more in these topics: insurance market for poor people, microcredits, start-up of the poor, etc. What I was impressed most was the last chapter in discussing the views of political scientists and economists on solving poverty. For political scientists, “the real problem of development, in this view, is not one of figuring out good policies: it is to sort out the political process”. However, in this book, it once emphasizes on the matter of details. “To really understand the effect of institutions on the lives of the poor, what is needed is a shift in perspective from INSTITUTIONS in capital letters to institutions in lower case – the “view from below”. The authors also listed some examples in some small changes in methods of voting in Brazil, but can make a big impact in how the poor voted there.
I agree with this view. I understand how economic INSTITUTIONS and political INSTITUTIONS have a big impact on a development of a country, especially the problem of corruption, and leading to how they will affect lives of the poor. However, like from the beginning of this book, personal stories matter. Details matter. I believe a change can begin from below too. I hope this type of research would have more funding to conduct in Vietnam and to have a better collaboration between researchers and policy makers in Vietnam.
To end this review, I want to cite final words from this book. These words are humble but strong and motivated enough for whomever is pursuing or is planning to pursue the field of development economics or social work to believe more in the impact of their work.
P/S. The authors got Nobel Prize for their work in development economics and in randomized control trials in 2019.