Rethinking poverty, according to Esther Duflo

After holding the Knowledge Against Poverty Chair at the Collège de France and setting up a laboratory at MIT in Boston to provide concrete answers, Esther Duflo is continuing her fight. This time by the pen. With Rethinking Poverty (Seuil), the economist signs with his former thesis supervisor, Abhijit V. Banerjee, an essay that is as documented as it is disturbing.

The failure of anti-poverty policies can make some people want to throw in the towel. But.., Esther Duflo and Abhijit V. Banerjee want at all costs to prove to us that the problem of poverty is not insurmountable in itself. For them, it is rather the economic theories on the subject that have been misconceived.

We read the book by Esther Duflo and Abhijit V. Banerjee, economists at the Massachusetts Institute of Technology (M.I.T.), Rethinking Poverty. 

The main flaw? The "poor" - erected by Esther Duflo and Abhijit V. Banerjee as a category in their own right - were excluded. More than a billion people live on less than a dollar a day. They are often reduced to clichés or. Yet their lives, and especially their choices, are, according to the authors of Rethinking Povertys as a source of knowledge for researchers: "the poor are no less rational than others, on the contrary. Precisely because they own little, they are often extremely cautious in their choices: only by developing a complex economy can they survive. »

Watch a clip from the France 3 programme, "Ce soir ou jamais", in which Esther Duflo explains her approach and debates with the Nobel Prize winner in economics. Milton Friedman : 

 

A new way of working

But before changing the theories, we need to change the way researchers proceed. Esther Duflo and Abhijit V. Banerjee spent more than fifteen years travelling the world to meet the poor. To understand how the poor decide what to do, they used the randomized trial model. This method, which is used in medicine in particular, involves comparing similar, and therefore comparable, groups at random.

For example, to determine whether distributing free nets has a greater impact in the fight against malaria than selling them for a token sum, it would be wrong to compare people who have benefited from the two programmes respectively. This is because the policies were applied to different groups of people because their characteristics were different at the outset and therefore incomparable.

Questions that turn everything upside down

Using this method, Esther Duflo and Abhijit V. Banerjee were confronted with reasoning they had not expected. If the poor have more money, they will not use it to buy more food, but to buy food that tastes better, like sweets.

It is not for religious reasons that parents do not bring their children for vaccination, but for lack of convenience and procrastination. The limitations of micro-entrepreneurship do not stem from the inability of the poor to think strategically but from the incompatibility between the rigidity of microcredit (which imposes a "zero error" system on its beneficiaries) and the risks inherent in entrepreneurship.

A mother whose daughter has some money will prefer to go into debt to solve her husband's health problems rather than ask her daughter for help.

Rethinking Poverty is replete with these case studies, from which the authors drew five conclusions:

- Lack of information is at the root of poor people's poor decisions. There is therefore a need for information campaigns that are attractive, credible and that reveal new things.

- The poor have more choices to make. They are 100% responsible for the decisions they make and have much more pressure from trying to limit their risks as much as possible. They should be made easier by making decision making easy. For example, lowering the price of iodine-fortified salt, which dramatically improves health, will encourage the poorest to make it their default choice.

- The poor do not have access to certain markets such as savings or health insurance. Social and economic innovations (such as microcredit) or government intervention is crucial to counteract this, even if it means some free services.

- It is not the structures of poor countries that need to be changed, but the problems of public policy design. Three major culprits: ignorance, inertia and ideology.

- Prejudice and beliefs can have a devastating impact on what people believe they can do. Breaking vicious circles is a necessity.

A third channel of development aid

Finally, for Esther Duflo and Abhijit V. Banerjee, "the key question is how to spend the money, not how much to spend. Rather than knowing what the ultimate cause of poverty is in order to determine the solutions, it is better for them to focus on concrete cases: how can an outbreak of dengue fever be reduced, how can vaccination be generalized, should food be given away for free?

By their reasoning, the authors open up a third way in the debate on international aid that pits Jeffrey Sachs à William Easterley or Dambisa Moyo. While Easterley believes that international aid can solve the "poverty trap", William Easterley and Dambisa Moya believe that international aid is harmful because it perpetuates dependency, corruption, bad governance and poverty. What they have in common is that they both develop broad theories about poverty and its solutions.

No general principles or major lessons to combat poverty in the world. Rethinking poverty, but a simple observation: "small changes have big effects. Kenyan children who have been dewormed in school for two years (at a cost of $1.36 PPP USD per child per year, all inclusive) will have higher 20% incomes throughout their adult lives, a total gain of $3269 PPP USD. "Rather than waiting for generalizable macro-economic policies, Esther Duflo and Abhijit V. Banerjee believe that "creativity must be promoted to find solutions that are adapted above all to the real daily realities of the poorest.

To go further :

- Article" Esther Duflo, the genius who rethinks the economy." (Youphil)

- Article "Poverty, the atmospheric violence of societies" (UP' Magazine)

- Article" We need to change our view of poverty." (Youphil)

-Article "We don't have vaccines for extreme poverty, but..." (Youphil)

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