The Financial Express

Poor Economics

| Updated: December 22, 2020 20:34:15

Poor Economics

The meaning intended by the authors of 'Poor Economics' (Abhijit Banerjee and Esther Duflow -- the Nobel Lauriate duo) is Derridian in import, inviting de-construction of the words. What the title suggests is not that the brand of economics the book discusses is poor in nature, content and style but that it is simply and in a straightforward way, the 'economics' perceived, lived and experienced by the poor as opposed to the one that can bee seen in conventional books on economics of poverty. The writers duo suggest, while standard economic text book on the poor render them into cartoon characters, `poor economics' that is experienced by them makes the poor a flesh and blood reality.

`Poor economics', the writers assert, shows the average poor as they exist in their mundane environment and struggle to survive. They may have become dramatic personae in some shinning success stories (or conversely) who live to prove (or disprove) facts based on conventional wisdom. `Poor economics', the book, is the story of the poor mostly told by them as economic beings. But the poor have little time to talk about them to outsiders, they are too busy with their struggle in daily life. They tell the `others' (reaschers) about decisions they make routinely in the course of their average working day without being conscious about the economic connotations or implications. It is the outsiders, who sometimes approach them asking about their economic life and the various decisions inherent in it.

Why be curious to know the `poor economics' from the horse's mouth, rather than reading conventional books on economics of poverty? The authors do not explain it explicitly but the reasons are manifold from their point of view. Firstly, to know how the poor people live their lives caught in `poverty trap' of one type or another. The authors have given examples of several such traps (healthcare, nutrition etc.). Secondly, to try to know what they think about those `traps' even when those do not appear as such to them, but rather as fact of their life. Thirdly, to have an insight into what they want or want to do. The third is related to the first, originating in this query that leads to the third one, trying to know about their quotidian existence. The authors believe any 'nudge' or outside intervention to change the second i.e., the why and wherefores of their living as poor, should be based on an understanding of their working and decisionmaking in the day to day life. In trying to understand this the authors consulted them in various places, scattered in three continents Asia, Africa and Latin America and gathered information over a period of 15 years focusing on the various aspects related to the `poverty traps'. The book sums up the information gathered at field level and reaches conclusions based on them. Though there is a reference to data being used from research findings of Random Control Trials (RCT), no specific cases have been mentioned in the book about any of these. The examples given are simply case studies on a number of problems/subjects (poverty traps) that according to the authors, define the lives of the poor as they are, and not as they should be. For the latter, the authors intend to use their findings for successful intervention from outside, either by them or by others who desire to help the poor to change their life so that they can break free of the poverty traps in which they are caught now.

By way of nomenclature, the scope of the study and its result, as they appear in the book, fall in the category of Action Research undertaken to gather information and data about the process of changes that takes place after intervention in a project area. But, of course the case studies in the book provide no outside intervention as is done in `controled areas' under RCT. It is not clear whether the field level studies are part of a RCT or simply case studies of problems perceived by researchers without any intervention of assistance. If the studies are based on observations by outsider researchers, they have an anthropological character, minus the 'participation part'. Multi-lateral lenders and bi-lateral donors used these kind of case studies in the past to gather information and data before implementing a project. In poverty focused programmes RCT was rarely, if ever, used because of the unfairness involved in respect of people in control area who were denied assistance to facilitate comparison. So, what is new about the case studies in 'Poor Economics', the book? The apparent novelty appears to lie in collecting information about not a single but a number of problems (poverty traps) confronting the poor which according to the authors make a 'coherent whole' of their life. In contrast, it is implied, the focus of conventional case studies is on one or two problems (use of micro-credit, family planning method).

Going through the book it is not clear if all the aspects in the life of poor people  seen as 'poverty traps' were studied in the same village and at the same time, either as one-off exercise or longitudinally. If different problems were studied in different places, even if at the same time, and their findings have been collated to give 'a coherent picture' about the life of the poor, there will be problem of comparability. For instance, the problem of nutrition faced by the poor in village X cannot be compared with the same in village Y where it may have been addressed differently by the poor. In other words, success of the poor in handling one particular problem (nutrition) does not ensure that it will be the same in the another village. Therefore, only simultaneous observations of all the target subjects/problems (poverty traps) in the same village can be the basis of any reasonable conclusion in the nature of generalisations. Moreover, in order to be  more realistic in finding/conclusion, the field level studies have to be longitudinal and not a short term one. A holistic approach to understand how and why the poor live the way they do requires all the subjects/problems to be studied together, spatially and temporally. The book `Poor Economics' appears to give understanding of the problem (poverty traps) selected in a scattered manner, geographically and at different times.

Even where problems and challenges are universal in nature, response by poor people may differ from one place to another, depending on social institutions, economic activities and cultural practices. Universality of the problems does not lend themselves to `one-size-fits-all' type of conclusions and solutions.

Poor economics, the book, gives first hand accounts of the experiences of the poor people in different parts of the world coping with problems and challenges of universal nature. But the poor in the study, not being the same group, standardised nudge or outside intervention with a package cannot help them or strengthen their capacity to overcome the handicaps more successfully than they do on their own. If the geographical and temporal differences are not kept in view, `poor economics' giving the experiences of poor people in different places cannot be the basis for making general conclusions, far less concerted action. It will be more realistic coming from horses mouth than conclusions in conventional economics of poverty but not realistic enough to generalise about the economic behaviour of poor everywhere at all times.

The face of poverty is the same everywhere with minor variations. But the socio-economic environment, poor peoples' capacity and skills are different in different places. That is why, no two poor are the same when it comes to the way they live or deal with `poverty traps'. Seeing the turn of analysis in the book in contrast with the title's original intention, Derrida might have been tempted to say literally, `Poor Economics'. For a change there would be no need for de-construction of the words. 

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