NEWS Release - Rethinking Poverty
Poverty the biggest problem in the world - More money needed to help poor - Direct transfers more efficient than subsidies
Anti-poverty programs often fail because of an inadequate understanding of poverty by policymakers. So argues Abhijit Banerjee, Professor of Economics at the Massachusetts Institute of Technology (MIT), who has worked in dozens of countries to better study the economics of poverty. In a recent podcast interview, Banerjee talked about this main theme in his book, Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty.
Professor Banerjee also shared his views on policies to help the poor in a panel discussion onsustainable economic development in low-income developing countries , during the IMF-World Bank Spring Meetings in April 2016.
IMF News: Why do we know so little about the more than one billion poor people in the world?
Banerjee: Well, it is very expensive to collect data. To be honest, there are a billion poor people in the world, but how many of us would live next door to them? So, we don’t see them. They are mostly invisible except in their most extreme manifestations—you see the person who is begging in the street, or the person who has made it out of poverty and can tell his own story: “I used to sell tea and now I’m X.” But between those two extremes you often don’t encounter most of these [poor] people; they are not in your life. So, it’s not at all obvious that we have any way of intuitively understanding what’s easy and what’s difficult for people. I think we need data. We need to actually focus on the problem.
MF News : You also speak a lot about poverty traps. Do you think there are circumstances in which people or groups of people do, in fact, find themselves trapped in poverty?
Banerjee: There are two answers to that question. One is: do I believe it is true? Yes, I believe it’s true. Do I have any very well-founded reason to believe it’s true? Much harder question. I would say the evidence on these interventions—which help people today and many years later they are still richer—suggests that there might be a trap [for the poor], because if there wasn’t one, you would think that [the people who were helped] would fall back [into poverty].
It’s not at all obvious that we have any way of intuitively understanding what’s easy and what’s difficult for people. I think we need data. We need to actually focus on the problem.”
IMF News : In the book’s Foreword you say that “poverty is the biggest problem in the world.” How is poverty the biggest problem in the world?
Banerjee: Let’s say that if you believe that your concept of welfare should be founded in the welfare of people as opposed to religiosity, beauty, or other things, and if you think that the living standards of people are the primary determinant of welfare, then I think it’s obvious that this is where the biggest losses are.
Copyright: IMF COMMUNICATIONS DEPARTMENT
Media Relations
E-mail: media@imf.org
Phone: 202-623-7100
page source http://www.imf.org/
