Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. By Abhijit Banerjee and Esther Duflo. PublicAffairs, 2012. 320 pages.
Review by Craig Leisher, senior social scientist, The Nature Conservancy
Steven Levitt, author of Freakonomics, says Poor Economics “represents the best economics has to offer.”
Building on 15 years of studies in developing countries, Banerjee and Duflo demonstrate the power of Randomized Control Trials (RCTs) and why such trials are considered the “gold standard” for measuring impacts on people.
Banerjee and Duflo are top economists at MIT’s Poverty Action Lab and use RCTs to measure what works to reduce poverty and what doesn’t.
Who knew, for example, that micro-savings has far greater benefits to the poor than microcredit, or that de-worming students in developing countries is one of the most cost-effective ways to keep kids in school? It’s because of RCTs by Banerjee, Duflo and others that we now have this knowledge.
The key advantage of RCTs is that when people are randomly selected from the population and divided into participant and control groups, the two groups will be very similar. RCTs eliminate the problem of pre-existing differences. All the hard-to-measure qualities and quirks of individuals get averaged out. Thus, any impacts over time on participants can be attributed with some certainty to the activity or the treatment.
Banerjee and Duflo write this book without the polemics of Jeffery Sachs or William Easterly that often color the discussion of poverty. They note that the biggest problems for reducing poverty are the “three I’s”: ideology, ignorance and inertia.
It makes me wonder if we couldn’t say the same for conservation.