CFSP's Banerjee Publishes "Poor Economics" with Co-Author Duflo
Since its release earlier this year, the book by CFSP member Abhijit Banerjee and his co-author, Esther Duflo, Poor Economics: A Radical Rethinking of the Way to Fight Poverty, has gained widespread attention from the media for its unique approach to understanding poverty.
In the book, Banerjee and Duflo explore the nuances of age-old questions. For instance, do poverty traps exist? Is foreign aid the answer to ending those traps? For Banerjee and Duflo, the question is not simply is aid effective but rather what is effective aid? Should we simply hand out materials that are known to foster improvements, like mosquito nets or fertilizer, for free, or should they be offered at a subsidized rate?
While these questions are confronted, many reviewers noted that the strength of Poor Economics is that it uses hard data gleaned from randomized trials by the Poverty Action Lab, where Banerjee and Duflo organize and execute over 300 experiments in 40 countries. Using this foundation, Banerjee and Duflo insist that the task of eradicating global poverty is not hopeless. They write, “The battle against poverty can be won, but it will take patience, careful thinking, and a willingness to learn from evidence.”
Banerjee and Duflo advocate for the use of randomized controlled trials. They argue that policies and solutions must be evaluated with the same rigor of releasing a new drug for consumer use, for instance. These trials are then an important element of the wider, systemic study of ending poverty – answering specific questions that can then translate to widespread use.
Poor Economics has gleaned a very positive response from reviewers, making the Washington Post’s political bestsellers list. Laura Starita of Philanthropy Action calling Banerjee and Duflo (and their research) “truly formidable.” James Crabtree of the Financial Times echoes this praise saying, “The ingenuity of these experiments aside, it is the rich and humane portrayal of the lives of the very poor that most impresses.”
Banerjee has been studying similar questions in Ghana through his CFSP research project Graduating from Ultra Poverty: Evaluating the Effect of Services in Ghana. His economic research examines the effect of financial services on the extremely poor and analyzes the impact of different types of services in conjunction with savings.
While the book highlights research carried out by both Banerjee and Duflo, the authors also cite several research studies by other CFSP researchers, including members Robert M. Townsend, Christopher Woodruff Christopher Udry, and seed grant recipient Cynthia Kinnan.
More information about the book and its burgeoning research can be found at the book's website pooreconomics.com.