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A child holds a bucket as he stands at the top of a hill in a poor neighborhood in Lima, Peru (File photo) Esteban Felix/AP/Press Association Images

Column Tackling poverty is not just about money, it's about persuasion

The economist Abhijit V. Banerjee, author of the book Poor Economics, explores why it is the case that people who live in extreme poverty can buy a mobile phone or a TV instead of food.

THERE IS A lot of discussion about tackling poverty and anti-poverty policy in the world today but lots of that seems to miss fairly elementary things.

For example, there is an almost mechanical equation of the poor with the hungry. Of course, historically this was exactly true. Three hundred years ago the poor were the hungry. But right now, I would say that in many countries, many of the people we call poor can afford enough calories, nutrition and protein for themselves and their families. But just because they can afford it does not necessarily mean that they go and buy it.

If they don’t, it is because something else is a priority for them. It’s a much more complicated problem which is maybe about all of the consumer goods that are around and a person feeling that they’re left out if they don’t have, for example, a mobile phone. A mobile phone costs money and that comes out of the food budget.

During the course of researching our current book, my colleague Esther Duflo and I were in Morocco. We were speaking to a man outside his house and asked him: ‘What would you do if you got a little bit more money?’ He said he would buy more food and if he had even more money he would still buy more food.

So, we felt that we’d actually found someone who is really starving. I am sure he was, but then we walked into his house and we saw that he had a television and a DVD player inside his house. “If you can’t afford food, why do you have a TV?” we asked after doing a double-take. He very blandly said that a TV is more important than food.

That kind of attitude means that if you want those in poverty to have better nutrition, we need to persuade them about what’s important for them and their children, that the cellphone or the TV will have to be sacrificed for the sake of nutrition. So how do we persuade them? How do we offer them alternatives? Maybe we can’t but that’s the set of questions we need to wrestle with.

‘It’s not all about money’

Too often, we just assume it’s a matter of income and that we have to find income sources for the poor but people have a vision of their lives and they don’t necessarily want to be rational. We think that you should invest in your children’s health and make them stronger. Then they will have a better life. It’s all true but the alternative view is that you must also live your own life. You can’t just live with delayed gratification all the time, saving up to buy the essentials that you need such as food.

Is it a matter of educating them? Well, if you look at the malnutrition rates they are reasonably high even amongst the people who are quite well-educated, at least in South Asia, and that’s a very striking fact. It’s not just the poorest of the poor who suffer from malnutrition. You have very high rates among the lower middle classes.

So it’s not just a matter of education, it’s a matter of persuading people of the importance of nutrition. It’s not just a matter of: ‘If I go to school more I will realise I shouldn’t buy a mobile’. It’s a matter of targeted education and campaigns, making it easy for people to get good nutrition. It’s all of those things combined.

So what kind of programmes can work to tackle poverty in the world? Well, if you take the very, very poorest, the people who live on under 50 cent per day, they are completely destitute. But there’s a programme which basically helps these people learn to keep a few cows.

If you give them a cow, a pig or some other animal and help them to figure out how to maintain them, it turns out that when you analyse that programme statistically it has a massive impact on people’s well being, happiness, and of course nutritional consumption.

Their children go to school more, they are eating more. It’s certainly possible to make people substantially better off by giving them a relatively inexpensive asset such as a cow that they can build their life on.

There are other programmes like when kids get deworming medicine. There is evidence that ten years down the road the kids who have been given the medicine earn more than 20 per cent than those who do not receive it. These schools were chosen by lottery, there was no difference between kids to start, but now they are earning 20 per cent more. It’s very cheap, it costs about 50 cents per year and it’s kind of amazing how much of a benefit it has.

‘We can rid the world of shameful poverty’

We are economists but we work with organisations to generate ideas together based on what we have studied and learned.

In one case we worked with an organisation in India to see how we could get children immunised. We helped this organisation to establish a campaign where they targeted areas where immunisation was abysmally low.

In one area more than 95 per cent of kids were not immunised fully. We persuaded this NGO we were working with that we should give a kilo of dried beans to the parent of a child every time that child was immunised. That had a massive effect on immunisation rates.

While immunisation rates were only 17 per cent if you didn’t give them dried beans, this doubled if you did. That’s the kind of programme were you think that it is fairly implausible that something like that would work so well. But when you see it working it’s hard not to be impressed.

In terms of ending global poverty, there’s clearly always going to be some people who are poorer than others. But we can rid the world of these shameful forms of poverty where people don’t have a proper place to live, proper sanitation or enough income to afford food or send their children to school.

There’s been a lot of progress over the last 30 years. The number of poor people in the world has gone down a lot. A lot of that is driven by one country, China, and to a lesser extent India. So these two countries together have had a huge effect on world poverty numbers.

But even if you look at the rest of the world lots of things have improved. Adult and child mortality rates are falling everywhere in the world especially in Africa and there is an increase in education levels almost everywhere.

I think we can end this kind of poverty. It’s not so far away if we actually put our minds to it.

Abhijit V. Banerjee is the professor economics at the Massachusetts Institute of Technology (MIT). He is a former advisor to the World Bank and the Government of India. He has co-authored the book ‘Poor Economics: Barefoot Hedge-fund Managers, DIY Doctors and the Surprising Truth about Life on less than $1 a Day‘ with Esther Duflo.

As told to Hugh O’Connell.

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Abhijit V. Banerjee
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