Poor Economics Book Summary

Book Summary

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Brief Summary

Global poverty is a huge problem with no clear solution. In order to provide real, lasting improvements to the poverty problem, economists need to understand the social, cultural, and psychological, not just economic, reasons behind why poor people make the decisions they do. When economists understand the real everyday experiences and motivations of poor people, they will be better able to incentivize them to make choices that can lead to lasting change. Finding methods to encourage poor people to educate all their children, take advantage of health care, consume nutritionally dense food, and sign up for insurance, are significant steps to helping reduce poverty. To bring about lasting change, women must be empowered, strong social support systems, and steady, stable jobs must be available in developing nations. Big political change, as well as local problem solving, also has to happen in order to eradicate global poverty.

About the Author

Abhijit V. Banerjee is an economist and the Ford Foundation International Professor of Economics at Massachusetts Institute of Technology. He is a co-founder of Abdul Latif Jameel Poverty Action Lab. Previously, he taught at Harvard University and Princeton University.

Banerjee is a co-winner of the 2019 Nobel Memorial Prize in Economic Sciences with Esther Duflo and Michael Kremer. He was the former president of the Bureau for the Research in the Economic Analysis of Development, and previously worked as a research associate of the National Bureau of Economic Research, and as a research fellow at the Centre for Economic Policy Research. He is also a former Guggenheim Fellow.

Esther Duflo is an economist and the Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics at the Massachusetts Institute of Technology. She is also the co-founder and co-director of the Abdul Latif Jameel Poverty Action Lab.

She is a National Bureau of Economic Research research associate and serves as the director of the Centre for Economic Policy Research's development economics program. Duflo is a co-winner of the 2019 Nobel Memorial Prize in Economic Sciences with Abhijit V. Banerjee and Michael Kremer.

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What You’ll Learn

Why the solution to ending global poverty isn’t simply wealthy nations providing more outside aid to the impoverished
The complex economic decision-making processes that lead poor people to make the choices they make, even if they do not always seem rational
How nutritious food, education, reliable healthcare, women’s empowerment, and access to insurance can help lead to the end of global poverty

Who Is This For

Economists and political scientists who research global poverty and developing nations
Students of economics who want to learn how proposed solutions to global poverty succeed or fail in their goals
Intellectuals who are interested in the complex economic decisions and circumstances that make global poverty such a difficult problem to solve

Key Insights

Global poverty is a huge problem, with around 13 percent of the world’s population making due on less than a dollar a day. However, most people fail to make changes that lead to significant improvement in the lives of poor people, because they are busy studying the big economic questions and they ignore the everyday lived experiences of the poor. People living in poverty make complex economic decisions every day that are shaped by economics, society, culture, and education. Understanding all the economic, social, and psychological factors that come into play are essential to bringing about real world change. Providing access to nutritious food, reliable education and healthcare, and insurance for poor populations would be a significant step in helping reduce global poverty. Empowering women is also an essential step that must be taken to reduce population growth and decrease poverty. While global poverty is a complex problem, there are both large and small scale solutions that can be implemented both on a local and global scale that can have a significant impact on the fight to end global poverty.

Less Than A Dollar A Day

Global poverty is an overwhelming problem that does not have a clear solution. About 13 percent of the world’s population lives on the equivalent of 99 US cents per day, and poverty is the cause of millions of deaths per year. While many individuals and organizations, from politicians and economists to famous actors, have fought to help eradicate poverty, the problem remains far from solved. This is because most people view the problem of global poverty in more general terms while ignoring the day-to-day real-life experiences of the poor people themselves.

Economists focus on big, general economic questions, such as the role that outside aid should play in economic development in poorer countries. However, no one can agree on the answers to these questions. For example, economists such as Jeffrey Sachs argue that outside aid is essential for developing countries to get rid of poverty, saying that it could be completely eradicated in 20 years if more well-off countries spent $195 billion per year on aid. There is some evidence that foreign aid does help some countries prosper. For example, Rwanda saw significant economic growth after it received substantial foreign aid following the Rwandan Genocide.

However, a single case does not prove the whole theory,...