Poor Economics

Poor Economics is a book I would have never read but for a review in a magazine that piqued my curiosity. The review quoted the following words: What is striking is that even people who are that poor are just like the rest of us in almost every way. We have the same desires and weaknesses; the poor are no less rational than everyone else -- quite the contrary. Precisely because they have so little, we often find them putting careful thought into their choices. They must be sophisticated economists just to survive. Yet our lives are as different as liquor and liquorice.

These words were enough for me to want to get a copy and dive into it. It was a strange experience. A sort of deja vu, deja vecu. The book touches upon many of the fields we at pwhy are familiar with: education, health, saving, governance etc. I could almost put a face and a name to every story I read. It was eerie and somewhat comforting. What often seemed to be absurd suddenly became comprehensible. The umpteen frustrations were put into perspective and made some sense. It seemed that what I had often thought as singular instances were present across the spectrum of what you could call the poor worldwide. They all seemed to be talking the same language.

The book is replete of case studies that echo the ones we have experienced over the years. It also raises questions we have asked ourselves over and over again. Be it the state of State run schools, the poor quality of health services available to the poor, the inability of the poor to save, the presence of swanky TV in homes that have scant resources for essentials and so on. I found myself reading the book as you would a whodunit hoping to find not the name of the murderer but answers to all the perplexing whys!

Alas there are no ready made answers but a set of key lessons tucked away in the last chapter that could improve things if applied. The first lesson is that the poor lack critical pieces of information and believe what is not true and when their beliefs turn out to be incorrect they make wrong decisions. This so true and one of the biggest stumbling blocks we have come across in our journey. And often a simple piece of information can make all the difference. However to be effective the information needs to come from a credible source and in a simple way. This lack of information pans a wide spectrum. It could be about education, health and so on. I remember how local goons invaded our workshop on AIDS prevention as for them talking of about AIDS was dirty, a misconception that is sadly very prevalent.

Second the poor bear responsibility for too many aspects of their lives. This statement was an eye opener for me, something I had never thought of. And yet it is so true. The richer we are the less decisions we have to make. Many of our problems are taken care of: job security retirement benefits, access to good quality water, food, health etc. For the poor life is much more demanding as they have none of these. The authors suggest that their lives could be bettered if they were made to do the right thing easily: simple saving accounts, fortified salt, access to chlorine next to drinking water sources. Small remedies that could have lasting effect.

Third some markets are missing for the poor like insurance, easy loans, savings account etc. These according to the authors should be made available to them in innovative ways. This of course is beyond our realm of work but we all know how well micro finance has worked in some places. At the very beginning of our work we did try to launch a small loan programme but unfortunately it did not work as planned and had to be shelved.

Fourth poor countries are not doomed to failure. In many cases the problem is that programmes destined for them land in wrong hands or go the wrong way. This according to the book is due to the three Is: ignorance, ideology, inertia. Often absurd rules once in place keep on going because of inertial. The authors give the interesting example of village education committees which are meant to include parents of the best and worst student. Who decides that as there are no tests until the 8th grade. The good news is that much can be done in improving existing programmes. I have always held that if we could get the present social programmes to run at 50%, India would be a different country.

It is hard to say whether the conclusions of this treatise are optimistic or pessimistic. What the book shows is that the plight of the poor worldwide is worrying and needs to be addressed. There are solutions but they require a lot of effort and goodwill on the part of the very people who have hijacked them to feed their own greed. But what is also apparent is that the efforts of people like us, however small are still needed.

Finally expectations about what people are unable to do end up into turning in self fulfilling prophecies. Children give up on school when teachers signal to them that they are not smart enough to master the curriculum. Changing expectations is not easy, but it is not impossible.