A review of Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty by Abhijit V. Banerjee and Esther Duflo

In Poor Economics, Abhijit Banerjee and Esther Duflo put forward an alternative way of thinking about the fight against global poverty. They posit that global poverty will not be solved by debating the big ideological questions around world poverty; questions such as, what is the cause of poverty? does aid really work? should we put our faith in free markets? As a consequence, they reject emphatically, any notion that the development project of lifting the poor out of poverty can be furthered by engaging with the orthodox contest between aid versus market solutions or supply versus demand (as exemplified by Jeffrey Sachs and William Easterly). Indeed, Banerjee and Duflo reject the notion that ideology can lead us down the path to the 'right' answers.

Banerjee and Duflo's approach seems seductively simple. Their re-thinking is essentially two fold. First, dealing with the ideological question, they say it is necessary to break down the big questions about global poverty into smaller questions; that is, to think of concrete problems with specific answers. The task is then to gather empirical evidence to find answers to those problems, identifying the best way of solving these problems. To do this, Banerjee and Duflo have advocated the use of randomised controlled trials or 'RCTs'; large scale experiments first used in the medical field to test the effectiveness of new drugs. In an RCT, individuals or communities are randomly assigned different treatments or different versions of the same treatment, to test the effectiveness of the treatment or perhaps, the method of delivery of the treatment. Since the individuals or communities chosen are exactly comparable, any differentiation in results can be attributed to the treatment itself. Although Banerjee and Duflo say there are no 'magic bullet' solutions to fighting poverty, they say that RCTs are one way in which the effectiveness of social policy can be tested. Banerjee and Duflo believe that by placing policies and programmes under rigorous scrutiny, we can begin to avoid making social policy based on guess work and faith in an ideology. Banerjee and Duflo are not however, mere advocates of RCTs; they have for over a decade, championed its use as the new way of 'doing' developmental economics. Together, Banerjee and Duflo founded the Poverty Action Lab or J-PAL at the Massachusetts Institute of Technology in 2003 and by 2010, J-PAL had completed or engaged in over 240 experiments in forty countries.

Poor Economics documents Banerjee and Duflo's admirable dedication to tackling global poverty through a patient and meticulous process of evidence gathering, one experiment at a time. It is also a testament to Banerjee and Duflo's commitment to seeking to understand real problems faced by the poor and how the poor make decisions about their daily lives. In short, they are passionate and they evince good intentions. Poor Economics is a detailed, but very engaging account of the work Banerjee and Duflo have done through J-PAL and in an eighteen country data set, to systematically and methodically test (and therefore challenge) particular applications of the big 'projects' within the global poverty and development. Thus, the book dedicates one chapter to each of these projects, namely, food, health, education, population and family planning, insurance, credit, savings, entrepreneurship and institutional and political reform. Banerjee and Duflo's ultimate message is that there are no miracle solutions to eradicate global poverty, but by studiously examining the lives of the poor and the poverty traps which effect them, it is possible to create change slowly, by implementing small, well planned and well tested steps; or in their words, 'nudges' in the right direction.

It is easy to be somewhat taken in by the combination of the ease of Banerjee and Duflo's narrative style, the seeming accessibility of economics and statistics as explained in Poor Economics and Banerjee and Duflo's commitment to a “grassroots” approach to doing development. One is also persuaded (naturally) by the eminent sensibility of demanding evidence for policies and programmes; 'proof' as it were, that something works before a wholesale dedication to the idea based on faith of ideology. But underneath or perhaps beyond this, there are some interesting and perhaps, uncomfortable themes in operation.

The accessible tone of Banerjee and Duflo's narrative style seems to invoke a sense of inclusion. But inclusion of whom? The 'we' and the 'our' in Banerjee and Duflo's narrative is decidedly they themselves (the authors) and us (the readership). Problematically, the poor, remain always, the subject of study and examination; they are never active participants in this narrative, despite the myriad of stories and rich insights into the lives of the poor portrayed in Poor Economics. In this interpretation of Banerjee and Duflo's narrative, RCTs are devised, implemented and concluded from above and outside. As such, one might see the poor, represented in Poor Economics always as the inactive, depoliticised Other.

There is thus a silent paternalism in Poor Economics which raises important notions concerning consent. Poor Economics appears to imply consent of participants in the RCTs about which Banerjee and Duflo write. This invites the question of the nature of consent. Whilst it might readily be accepted that participants gave their formal consent to experiments, the issue is not quite so clear when we turn to the question of the true nature of consent. There is a presumption that there is consent to the presence of we/us (the development workers, the economists and even the readership). On closer examination, behind the narrative of Poor Economics, is a very active and intrusive process of interference; we are intruding as it were, into the lives of the poor, dissecting, examining, observing and moreover, measuring and judging, using our terms, our measures and our values. On a more basic level, there is the question of true consent to experimentation itself. Paternalism is in fact raised by Banerjee and Duflo in their chapter on health care, and arguably, rather unsatisfactorily dealt with. Rather than engage with the problem of paternalism, Banerjee and Duflo appear to merely accept that there is paternalism in the development enterprise and say, it is easy to sermonise about paternalism from the comfort of our couches, but that we of the rich world are beneficiaries of embedded paternalism and its resultant virtues. That seems somewhat a reductive and circular argument.

Operating at an overarching level is an ascendant economic narrative. It is perfectly reasonable for a book written by development economists, about development economics and what it has to say about world poverty to be decidedly economics-centric. But it raises the interesting consideration, to what degree does such focus then exclude other discourses which might have something to say about the lives of the poor? It is noted that particularly in this context, this notion of 'the poor' is itself hugely problematic, notably but not in the least, for its implication of (false) hegemony and universality. In Banerjee and Duflo's narrative, people and communities unavoidably become ultimately absorbed within a large social experiment. They are consequently collated; into data, outcomes and then finally, bodies of statistics for further examination and judgment. This is not to say that Banerjee and Duflo do not engage with the social and the cultural; indeed, Poor Economics evidences quite the opposite. Banerjee and Duflo report, time and again on the impact that cultural practices and beliefs have on economic decisions made by the poor. The point is, that there is something discomforting in Banerjee and Duflo eschewing big philosophies on the one hand, and arguably embracing another philosophy of economic determinism on the other.

Finally, the question of ethics, connected to the notion of the absence of participation and true consent. Randomised controlled trials in this context necessarily entails the taking of real human subjects and experimenting with aspects of their lives. In the case of RCTs described in Poor Economics, those conducting the experiments seemingly devise and carry out the experiments. There are deeply problematic ethical issues surrounding the giving of one group a 'beneficial' treatment and depriving another of the same and indeed, experimentation with real lives, for observational purposes, justified on the assumption that ultimately, 'we' (the development industry) want what is best for the poor. Banerjee and Duflo do not address the ethical question, and consequently, there is seemingly (and regrettably) a sense that the evident vulnerability of the poor we meet in Poor Economics vis-a-vis the authors and the bigger development enterprise is ignored. Put another way, there is an apparent failure on the part of Banerjee and Duflo to acknowledge (or perhaps, recognise) the power structures which underlie their very narrative. There is no reflection upon the very fact of power which the development enterprise holds over the supposed beneficiaries of the project. From this perspective, there is a hidden process within Poor Economics which operates and disempowers its subject.

Poor Economics is not short of achievements. Banerjee and Duflo succeed in their objective, to show how fighting global poverty could be done differently and they certainly provide passionate and rich insights into the lives of the poor. Poor Economics invites us into the lives of the poor and therefore, the development enterprise. Therefore, we, the critical reader should, in accepting this invitation, examine and acknowledge the more difficult issues within and around Poor Economics.