Think Again, Again | Poor Economics
Chapter 1
Think Again, Again

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. 

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Instead of discussing how to fight diarrhea or dengue, many tend to fixate on “big questions”: What is the ultimate cause of poverty? Is democracy good for the poor? Does foreign aid have a role to play?
Jeffrey Sachs believes that poor countries are stuck in "poverty traps;" they cannot be productive without an initial investment to help fix endemic problems, but they cannot pay for the investments precisely because they are poor. This is why foreign aid is needed.
William Easterly argues that aid does more bad than good: It prevents people from searching for their own solutions, while corrupting and undermining local institutions.
Unfortunately, there is no evidence to give the kind of answers that will tell us who is right. This book will not tell you whether aid is good or bad, but it will say whether particular instances of aid did some good or not.
It is helpful to think in terms of concrete problems, which can have specific answers, rather than foreign assistance in general.
This shift from looking for universal answers to concrete problems was helped along by a new tool: randomized control trials, which give researchers a chance to implement large-scale experiments designed to test if interventions work.
It may be possible for people to be caught in poverty traps. If this were the case, a onetime infusion of aid could make a huge difference to a person’s life, setting her on a new trajectory.
For example, Kennedy, a young farmer living in one of the Millennium Villages, was given free fertilizer, and as a result, his harvest was twenty times what it had been in previous years. With the savings from that harvest, he felt he would be able to support himself forever.
However, finding out whether or not Kennedy is really in a poverty trap requires understanding his situation in more detail. Perhaps he could have purchased a little bit of fertilizer on his own!
It is possible to make very significant progress against the biggest problems in the world, through the accumulation of a set of small steps, each well thought out, carefully tested and judiciously implemented.

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Think Again, Again

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. 

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Extended Body: 

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 I’s” – ideology, ignorance, inertia – the three main reasons policies may not work and aid is not always effective.

But there’s 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. 
 

Spotlight

Esther Duflo / MIT150 Symposium / Watch the lecture

Prof. Duflo presents our take on the way in which we must rethink our approach to development economics. What are the low-hanging fruit of development? How can we maximize our impact in poverty alleviation? This lecture was presented during the panel session, The Evolution of Economic Science: Macroeconomics, Growth and Development, during the MIT 150-year anniversary symposium.

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 I’s” – ideology, ignorance, inertia – the three main reasons policies may not work and aid is not always effective.

But there’s 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. 
 

Spotlight

Esther Duflo / MIT150 Symposium / Watch the lecture

Prof. Duflo presents our take on the way in which we must rethink our approach to development economics. What are the low-hanging fruit of development? How can we maximize our impact in poverty alleviation? This lecture was presented during the panel session, The Evolution of Economic Science: Macroeconomics, Growth and Development, during the MIT 150-year anniversary symposium.