Economics
by Abhijit V. Banerjee and Esther Duflo
What would actually help the poor?
Jeffrey Sachs says more aid could end poverty. William Easterly and Dambisa Moyo say aid does more harm than good. Abhijit Banerjee and Esther Duflo think the question is too big to answer. They break it into small ones, test each, and watch how poor families really choose.
Hear a sample · read by Laura
Given a bit more money, even very poor families often buy tastier food rather than more cheap grain. The authors doubt most poor adults are trapped by a lack of calories. Nutrition matters most in the womb and early childhood, where cheap fixes like iodised salt get too little attention.
Farmers in western Kenya knew fertiliser paid off and meant to buy some. By planting time, the harvest money had gone. Offered the chance to buy it straight after harvest, while they still had cash, many more did. Banerjee and Duflo see them as no less rational than anyone else.
Many poor families run a tiny business, a stall or a couple of goats. Banerjee and Duflo find most stay small and earn little, and that many owners would swap them for a steady job. Microcredit, in their own study in Hyderabad, helped some, but rarely changed lives.
When good policies fail, the authors often blame what they call the three I's (ideology, ignorance and inertia) among the experts and officials in charge. Their remedy is modest. Try an idea on a small scale, measure it, often with a randomised trial, and only then scale it up.
Testing
Skip the grand debates about aid. Test small ideas in the field and see what actually works.
Food
When very poor families get more money, they often buy tastier food rather than more calories.
Health
Cheap prevention like bed nets and clean water is underused. Tiny costs and hassles put people off.
School
Schools often teach to the brightest pupils and leave the rest behind, even when every child turns up.
Saving
Saving is harder when you're poor. You face more temptation and have fewer safe places to put money.
A story from the book
In a remote Moroccan village, Oucha Mbarbk told the authors that with more money he'd buy more food. His house also had a television, a satellite dish and a DVD player. Television, he said with a laugh, was more important than food. The authors took the answer seriously.
Hot take · true or myth?
Free bed nets get wasted, so it's better to charge a little for them.
Myth. In trials in Kenya, families given free nets used them as much as families who paid. Even a small price sharply cut the number of families who took a net at all.
One thing to try
Pick a charity you give to, or might. Find out whether its main programme has been tested, for instance in a randomised trial. Banerjee and Duflo would say that question matters more than how moving its adverts are.
Knotd has the key ideas from 250+ non-fiction books, each in a few minutes, in plain words. Poor Economics comes with a Hot Take round to make it stick.
Get the whole book on KnotdOpen in the appWhat would actually help the poor? Jeffrey Sachs says more aid could end poverty. William Easterly and Dambisa Moyo say aid does more harm than good. Abhijit Banerjee and Esther Duflo think the question is too big to answer. They break it into small ones, test each, and watch how poor families really choose.
Flavour over calories; Fertiliser at harvest time; Reluctant entrepreneurs; The three I's.
Pick a charity you give to, or might. Find out whether its main programme has been tested, for instance in a randomised trial. Banerjee and Duflo would say that question matters more than how moving its adverts are.
Yes. Knotd has the key ideas from Poor Economics in a few minutes, in plain words, plus a Hot Take round to test them. It's one of 250+ non-fiction books in the app.
