August 19, 2016
- Poverty the biggest problem in the world
- More money needed to help poor
- Direct transfers more efficient than subsidies
Anti-poverty programs often fail because of an inadequate understanding of poverty by policymakers. So argues Abhijit Banerjee, Professor of Economics at the Massachusetts Institute of Technology (MIT), who has worked in dozens of countries to better study the economics of poverty. In a recent podcast interview, Banerjee talked about this main theme in his book, Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty.
Professor Banerjee also shared his views on policies to help the poor in a panel discussion on sustainable economic development in low-income developing countries , during the IMF-World Bank Spring Meetings in April 2016.
Excerpts:
IMF News: Why do we know so little about the more than one billion poor people in the world?
Banerjee: Well, it is very expensive to collect data. To be honest, there are a billion poor people in the world, but how many of us would live next door to them? So, we don’t see them. They are mostly invisible except in their most extreme manifestations—you see the person who is begging in the street, or the person who has made it out of poverty and can tell his own story . . .
IMF News : You also speak a lot about poverty traps. Do you think there are circumstances in which people or groups of people do, in fact, find themselves trapped in poverty?
Banerjee: There are two answers to that question.
One is: do I believe it is true? Yes, I believe it’s true.
Do I have any very well-founded reason to believe it’s true? Much harder question. I would say the evidence on these interventions—which help people today and many years later they are still richer—suggests that there might be a trap [for the poor], because if there wasn’t one, you would think that [the people who were helped] would fall back [into poverty].
If it were the case that some people are doomed to be who they are and some people are just poor because they are unskilled or undisciplined or not hardworking enough, then you would imagine that you couldn’t get them out of poverty by doing something today, because tomorrow they will still be lazy and will go back to where they belong. I think the evidence suggests that this is not true, that many people are in a situation where, if given an opportunity, they would be in a different place.
Source: http://www.imf.org/en/News/Articles/2016/08/19/NA081916-Rethinking-Poverty
Banerjee: Well, it is very expensive to collect data. To be honest, there are a billion poor people in the world, but how many of us would live next door to them? So, we don’t see them. They are mostly invisible except in their most extreme manifestations—you see the person who is begging in the street, or the person who has made it out of poverty and can tell his own story . . .
IMF News : You also speak a lot about poverty traps. Do you think there are circumstances in which people or groups of people do, in fact, find themselves trapped in poverty?
Banerjee: There are two answers to that question.
One is: do I believe it is true? Yes, I believe it’s true.
Do I have any very well-founded reason to believe it’s true? Much harder question. I would say the evidence on these interventions—which help people today and many years later they are still richer—suggests that there might be a trap [for the poor], because if there wasn’t one, you would think that [the people who were helped] would fall back [into poverty].
If it were the case that some people are doomed to be who they are and some people are just poor because they are unskilled or undisciplined or not hardworking enough, then you would imagine that you couldn’t get them out of poverty by doing something today, because tomorrow they will still be lazy and will go back to where they belong. I think the evidence suggests that this is not true, that many people are in a situation where, if given an opportunity, they would be in a different place.
Source: http://www.imf.org/en/News/Articles/2016/08/19/NA081916-Rethinking-Poverty
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