Table of Contents - Warwick

1 Table of ContentsTitle PageDedicationForewordChapter 1 - Think Again, AgainTRAPPED IN POVERTY?PART I - Private LivesChapter 2 - A Billion Hungry People?ARE THERE REALLY A BILLION HUNGRYPEOPLE?ARE THE POOR REALLY EATING WELL,AND EATING ENOUGH?WHY DO THE POOR EAT SO LITTLE?SO IS THERE REALLY A NUTRITION-BASEDPOVERTY TRAP?Chapter 3 - Low-Hanging Fruit for Better (Global)Health?THE HEALTH TRAPWHY AREN T THESE TECHNOLOGIES USEDMORE?UNDERSTANDING HEALTH-SEEKINGBEHAVIORTHE VIEW FROM OUR COUCHC hapter 4 - Top of the ClassSUPPLY-DEMAND WARSTHE CURSE OF EXPECTATIONSWHY SCHOOLS FAILREENGINEERING EDUCATIONC hapter 5 - Pak Sudarno s Big FamilyWHAT IS WRONG WITH LARGE FAMILIES?

2 DO THE POOR CONTROL THEIR FERTILITYDECISIONS?CHILDREN AS FINANCIAL INSTRUMENTSTHE FAMILYPART II - InstitutionsChapter 6 - Barefoot Hedge-Fund ManagersTHE HAZARDS OF BEING POORTHE HEDGEWHERE ARE THE INSURANCE COMPANIESFOR THE POOR?Chapter 7 - The Men from Kabul and the Eunuchsof India: The (Not So) Simple ..LENDING TO THE POOR4/591 MICRO INSIGHTS FOR A MACRO PROGRAMDOES MICROCREDIT WORK?THE LIMITS OF MICROCREDITHOW CAN LARGER FIRMS BE FINANCED?Chapter 8 - Saving Brick by BrickWHY THE POOR DON T SAVE MORETHE PSYCHOLOGY OF SAVINGSPOVERTY AND THE LOGIC OF SELF-CONTROLC hapter 9 - Reluctant EntrepreneursCAPITALISTS WITHOUT CAPITALTHE BUSINESSES OF THE POORGOOD JOBSC hapter 10 - Policies, PoliticsPOLITICAL ECONOMYCHANGES AT THE MARGINDECENTRALIZATION AND DEMOCRACY INPRACTICEAGAINST POLITICAL ECONOMYIn Place of a Sweeping ConclusionAcknowledgementsNotesIndexCopy right Page5/591 For our mothers,Nirmala Banerjee andViolaine.

3 With3feetby3feetmarkedoutontheground,eac hwithahumanpawn,asitwere, , ,shefeltvaguelydis-appointed;everywheres helooked,therewasemptyspace trees,patchesofgrass, book ? Where had all the people gone?Atsix, ,andtheycouldbeathimatanysport:Whenhewen tdowntoplaymarbleswiththem,themarbleswou ldalwaysendupinthepock-ets of their ragged shorts. He was shasbeenwithusforaslongastherehasbeenpov erty:Thepoorappear,insocialtheoryasmucha sinlit-erature,byturnslazyorenterprising ,nobleorthievish,angryorpassive, : Freemarketsforthepoor, Makehumanrightssubstantial, Dealwithconflictfirst, Givemoremoneytothepoorest, Foreignaidkillsdevelopment, ,buttheyrarelyhavemuchspaceforaveragepoo rwomenormen,withtheirhopesanddoubts,limi tationsandaspirations, ,itisusuallyasthedramatispersonaeofsomeu pliftinganecdoteortragicepisode,tobead-m iredorpitied,butnotasasourceofknowledge, notaspeopletobeconsultedaboutwhattheythi nkor want or ,theeconomicsofpovertygetsmis-takenforpo oreconomics.

4 Becausethepoorpossessverylittle, ,thismisunderstandingseverelyunderminest hefightagainstglobalpoverty:Simpleproble ms8 ,wehavetoabandonthehabitofreducingthepoo rtocartooncharactersandtakethetimetoreal lyun-derstandtheirlives, ,wehavetriedtodojust , ,spreadovermanyyears,onthegroundworkingw ithNGO(nongovernmentalorganization)activ istsandgovernmentbureaucrats, ,askingques-tions, ,moreoftenthannot, ,evenwhentheymadelittlesense;manystories wereshared with ,rememberingthesestoriesandanalyzingthed ata,wewerebothfascinatedandconfused,stru gglingtofitwhatwewerehearingand9/591seei ngintothesimplemodelsthat(oftenWesternor Western-trained) , ;itrepresentsourattempttoknittogetheraco herentstoryofhowpoorpeoplelive their , , ,theywouldneedtospendmore ,youhavetoimaginehavingtoliveinMiamiorMo destowith99centsperdayforal-mostallyoure verydayneeds(excludinghousing).

5 Itisnoteasy inIndia,forexample,theequivalent10/591am ountwouldbuyyoufifteensmallishbananas, ,aroundtheworld,in2005,865mil-lionpeople (13percentoftheworld spopulation) ;thepoorarenolessrationalthananyoneelse , think newspapers,television,andbooksallcostmon ey andsoyouoftenjustdon tknowcertainfactsthattherestoftheworldta kesasgiven,like,forexample, , tcoveralotofunpro-nounceablediseases?Itm eansgoingtovotewhenyourentireexperienceo fthepoliticalsystemisalotofpromises,notd elivered;andnothavingany-wheresafetokeep yourmoney,becausewhatthebankmanagercanma kefromyourlittlesavingswon t cover his cost of handling it.

6 And so sfuturetakethatmuchmoreskill,willpower, ,thesmallcosts,thesmallbarriers,andthesm allmistakesthatmostofusdonot think twice about loom large in their ,butasenseofpossibilityandalittlebitofwe ll-targetedhelp(apieceofinformation,alit tlenudge) ,misplacedexpectations,thelackoffaithwhe reitisneeded, , ,itisclearthatnosingleleverwill solve every , , sfamilylives:whattheybuy;whattheydoabout theirchildren sschooling,theirownhealth,orthatoftheirc hildrenorparents;howmanychildrentheychoo setohave; :Cantheyborrow,save,insurethemselvesagai nsttheriskstheyface?

7 Whatdogovernmentsdoforthem,andwhendothey failthem?Throughout, ,andwhatispreventingthemfrombeingabletod othesethings?Isitmorethecostofgettingsta rted,orisiteasytogetstartedbuthardertoco ntinue?Whatmakesitcostly?Dopeoplesenseth enatureofthebenefits?Ifnot,whatmakes it hard for them to learn them?PoorEconomicsisultimatelyaboutwhatt helivesandchoicesofthepoortellusabouthow tofight13 ,forexample,whymicrofinanceisusefulwitho utbeingthemir-aclesomehopeditwouldbe;why thepooroftenendupwithhealthcarethatdoest hemmoreharmthangood;whychildrenofthepoor cangotoschoolyearafteryearandnotlearnany thing;whythepoordon :whytokensubsidiesmighthavemorethantoken effects;howtobettermarketin-surance;whyl essmaybemoreineducation.

8 ,itmakesclearwhyhopeisvitalandknowledgec ritical, talwaysasfaraway as it Again, AgainEveryyear, inthedevelopedworld,thechanceisonein5, ,mostoftheminsub-SaharanAfrica, ,morethan50millionschool-goingchildren cannot read a very simple ,ideally,forgetaboutthiswholebusinessofw orldpoverty:Theproblemseemstoobig, is to persuade you not $ ,oneoftheworld (randomlyselected)studentswereshown this:FoodshortagesinMalawiareaffectingmo rethan3millionchildren;InZambia,severera infalldeficitshaveresultedina42% ,anestimated3millionZambiansfacehun-ger; FourmillionAngolans onethirdofthepopulation havebeenforcedtofleetheirhomes.

9 Morethan11millionpeopleinEthiopia need immediate food of a young girl and these words:Rokia,a7-year-oldgirlfromMali,Afri ca, ,andthesup-portofothercaringsponsors,Sav etheChil-drenwillworkwithRokia sfamilyandothermembersofthecommunitytohe lpfeedher,provideherwitheducation,aswell asbasicmedical care and hygiene $ ,inwhichtheplightofmillionsbecametheplig htofone,raised$ ,itseems,werewillingtotakesomere-sponsib ilityforhelpingRokia,butwhenfacedwiththe scaleoftheglobalproblem, ,alsochosenatrandom, ,forZambia,Angola,andMali,gavemoreorless whatthatflyerhadraisedwithoutthewarning $ ,forRokia.

10 Afterthiswarninggaveonly$ , ,butnotmoregeneroustoeveryoneelse in , ,likethePennstudents,oursecondthoughtiso ftenthatthereisreallynopoint:Ourcontribu tion17/591wouldbeadropinthebucket, ,again:toturnawayfromthefeelingthatthefi ghtagainstpovertyistoooverwhelming,andto starttothinkofthechallengeasasetofconcre teproblemsthat,onceproperlyidentifiedand understood,canbe solved one at a , ,manyofthemostvocalexpertstendtobefixate donthe bigquestions :Whatistheultimatecauseofpoverty?Howmuch faithshouldweplaceinfreemarkets?Isdemocr acygoodforthepoor?