5 Steps to beat poverty

One of the world\'s major problems is how to reduce the crushing weight of poverty, which forces billions of people to fail to meet their potential as human beings. The Millennium Development Goals were drawn up more than 12 years ago, challenging the members of the United Nations to tackle the problems of poverty, education and disease, but more than a quarter of the world\'s population still struggles with poverty every day. But what is striking is that even people who are 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 anyone else — quite the contrary. Precisely because they have so little, we often find them putting much careful thought into their choices: They have to be sophisticated economists just to survive. There is some indication that improvement is under way. An optimistic report from the United Nations Development Programme says that the number of people living under the international poverty line of $1.25 (Dh4.6) a day has declined from 1.8 billion to 1.4 billion between 1990 and 2005, and that the proportion of people living in extreme poverty in developing regions dropped from 46 per cent to 27 per cent. In addition, looking ahead to the next generation, it is encouraging that about one in four children under the age of 5 is underweight in the developing world, down from almost one in three in 1990. But these signs of improvement are not enough. More than a billion people still have to deal with the issues of poverty survival, and there is the truth that the economic crisis following the financial crash of 2008 pushed an estimated 64 million more people into extreme poverty in 2010. Practical ways to tackle poverty, both at the policy and operational level, are examined by Abhijit V. Banerjee and Esther Duflo in Poor Economics. The authors do not take a very prescriptive tone but base their comments on years of observation of how governments, non-governmental bodies and international organisations have tried (sometimes succeeding and sometimes failing) to tackle poverty. The authors offer five key lessons about how to improve the lot of the poor. First is giving the poor access to information, as they often lack critical pieces of information and believe things that are not true. Second is recognising that the poor bear responsibility for far too many aspects of their own lives. The richer you are, the more right decisions are made for you. For example, the poor have no piped water, and therefore do not benefit from a municipal clean water programme. If they want clean water, they have to clean it themselves. Third, understanding the impact of some markets simply not being open to the poor. Savings accounts or loans, for example, are impossible or too expensive for people at the bottom of society, as is health insurance. But this can be altered by using ideas such as microfinance, or allowing money transfers on mobile phones. Fourth, poor countries are not doomed just because they are poor. It is important to keep seeking improvement because although some projects may not work and some programmes might end up in the wrong hands, these failures are often a result of what the authors call the three I\'s — ignorance, ideology and inertia. Fifth, expectations of failure become self-fulfilling prophecies. Children give up on school when teachers and parents signal that they cannot manage the curriculum. Fruit sellers do not pay their debts because they expect that they will fall back into debt anyway. Nurses stop coming to work because they know that no one expects them to come. The authors take issue with the thought that corruption has to be dealt with from the top down, in massive countrywide political efforts. They point to the case of the Ugandan Ministry of Education, which was supposed to be giving per-student grants to schools to maintain their buildings, buy textbooks and fund extra programmes. In 1996 researchers went out and asked the schools themselves how much of this got to them. The stunning answer was only 13 per cent of the funds reached the schools, and more than half the schools got nothing. However there was an interesting ending to this research. The results were published in the Ugandan media, leading to a huge row as headmasters initiated formal complaints against the ministry. They were not beaten up or made to suffer, and when the research was re-run in 2001, over 80 per cent of the schools were getting their full grants. It appears that the officials were happy to steal the money when no one was watching, but when it became an issue they stopped. The suggestion is that defeating corruption does not have to wait for political change, but simply requires imposing careful and rigorous checks. The authors point out that this story has an important and hopeful message for everyone struggling with programmes that do not seem to be working. Poor Economics: A Radical Rethinking of the Way to Fight Global PovertyBy Abhijit V. Banerjee and Esther Duflo, Random House India, 320 pages, Rs499