Book Launch – Poor economics by Abhijit Banerjee and Esther Duflo

Banner from the Poor Economics Website
“Revolutions need love” argued Minister Trevor Manuel in his introduction to Professor Abhijit Banerjee. Minister Manuel passionate reference to the link between love and revolution was as a reference of reverence to Albertina Sisulu – an outstanding and passionate leader of the South African revolution. In fact, the setting of Constitutional Hill – an old women’s prison – in a room decorated with powerful images of the female freedom fighters incarcerated at the jail providing a powerful backdrop to  the South Africa  launch of a book called “Poor Economics: A radical rethinking of the way to fight global poverty”.  Professor Banerjee, the speaker for the evening, is co-author with Esther Duflo of a hotly debated book. It has become a major talking point in the online channels focussed on development, especially as it challenges other mainstream attempts to make development issues real and popular.
I am hoping to have time to read and write a review of the book. The launch lecture however was exceptionally interesting, demanding and humbling. One description of the book given by Minister Manuel was that it was like learning to understand how the internal combustion engine works before learning to drive. Minister Manuel opinion was that the book told us that about how the engine of public policy worked, and through in turn the drivers of public policy became better drivers.  In a telling admission Minister Manuel indicated that there many issues that went beyond the econometric modelling that guided the frontend of public policy.  The Minister would have been more accurate to argue that the book tells policy makers not only why the engine is broken, but also questions if econometric modelling is the appropriate engine!
Banerjee highlighted four areas in development policy where slogans and ideology have driven policy choices. The book he argued was a reaction to this overly ideological context that informs anti-poverty policy. He argued that this focus on ideological solutions was a rhetorical stance, but more worryingly that public policy failures could be explained through the powerful; imposing their solutions on poor communities. The examples covered health, education, health, hunger and microcredit.
The details for each of these areas is different, but the storyline  is remarkably the same across the different areas discussed. Policy development is initiated by government officials; often on the advice of multilateral institutions; to solve a particular problem. The solution is praised as an innovative approach to the problem, but often reflects a particular stance on a problem, with a premade solution. The solution is often unlikely to work because:

  • No one bothered to confront the empirical data that is available. In other words, government failed to create what has come to be called “evidence-based public policy”. (Banerjee did not use the words evidence based public policy)
  • No one bothered to ask the poor what they wanted – Using a series of data that is available, Banerjee and Duflo show the disconnect between public policy choices of government and the actual needs of people.

The results are pretty much the same. Government spending and activities in areas result in poor outcomes, leaving government officials confused as to why the results have not been achieved. Very importantly, the major reason is that the underlying system remains intact, and thus we should not be surprised with poor outcomes.
This idea that policy makers often make poor decision due to a lack of consultation or not carefully evaluating the data available is in well-covered territory. Robert Chambers work is  an early and important example of this argument, especially in Whose Reality Counts: Putting the First Last. In fact, the argument is over two decades old. In some respect, there is thus a broader theme – development economics playing catch-up with the work of a  motley crew of sociologists, historians and activists .  This is not to devalue the argument or the book, but to point out that it argues an idea that has been argued over the last two decades. The importance of the book is that the idea is about to enter more and more into the mainstream.
The authors direct the Abdul Latif Jameel Poverty Action Lab (JPAL) which is an innovative research centre and network focussed on anti-poverty public policy. JPAL for instance runs large experiments to tell us both how to make policy work for the poor, and how to construct policy alternatives that is fiscally sustainable. In India, for instance, they ran a programme to encourage immunisation, by providing one group with a token gift of one kilogram of dried beans. Compared to sites not offering the gift, the results were remarkably different. There is thus humbleness in the approach, and a curiosity with ideas and implementation.  Of course, there remain ethical concerns with selecting one area for an intervention, and excluding another. My sense is that the ethical concerns are mediated because the idea is to start with an experiment, learn from it, and then create evidence based policy arguments, which supports the extension of the interventions to a wider population, which they call “scale-ups”.
Interestingly, both the examples Banerjee presented on good outcomes involved changing the way people elect leaders. He cited a programme to include women in leadership positions in India, and the shift to electronic voting in Brazil as examples where good outcomes are noticeable, and measurable. Thinking about this, it highlighted the importance of political reforms in South Africa that will support constituency-based representation at provincial and national levels.
The audience asked some important questions, centred on what role pleasure plays in public policy. The audience build on a question in the launch flyer which asked: Why would a man in Morocco who doesn’t have enough to eat buy a television?
The audience quizzed the meaning of why poor people spend on “luxuries”, especially on televisions. Initially, I was a little irritated with the line of questioning. However, after the launch, it hit me –  this is a major theme in South African development discourse, mostly articulated with reference to social grants. Banerjee, jocular response was that he could not see government providing pleasure, but then on a more sobering note argued that the spending of the poor has both a short-term and a long-term perspective. It suggested that a poor person may have an immediate need for food, but there is a longer term need to be entertained and informed.
Another set of  questions was that development priorities are different for different communities. Banerjee supported this view, and gave the example of Indonesia, where the cash grants to communities can be spend as decided by communities,  provided that a fair process of decision-making supported the allocation decisions.
Minister Manuel then closed the discussion with a story about a social housing project that he had visited. Importantly, he noted that over time the priorities of the community changed, and that it required continuous engagement between government and the community. It was an interesting way to close the discussion – The Minister of Planning providing tacit support for processes to improve public policy, with an emphasis on government working with the people.
I will be reading the book soon, and have a couple of questions about how the approach described can be applied to “structural change” and to make societies more equal, so will leave this for then. These are thoughts for another day. Today, I learned a lot about what the book Poor Economics is about, and even more about constructing evidence based argument that challenges poor decision making in government.  I am however left wondering, can randomised experiments  be an expression of love?
Like the post? Take a moment to subscribe to Zapreneur.

News and deals for 🇿🇦 entrepreneurs!

Publishing since 2011.

We hate spam as much as you do!