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What are the main arguments put forward in the book Poor Economics?

AS, A-Level, IB
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 31 Jan 2023

"Poor Economics" is a book by Abhijit Banerjee and Esther Duflo, both of whom are economics professors at MIT. The book argues that traditional approaches to poverty reduction have often failed to produce meaningful and lasting change, and that a more nuanced understanding of poverty is needed.

  1. Context Matters: The authors argue that the context in which poverty occurs is important, and that policy interventions must be tailored to the specific circumstances of the poor.
  2. Behavioural Insights: The book draws on behavioral economics to understand how poor people make decisions, and how these decisions can impact their economic outcomes.
  3. Micro-level Evidence: The authors advocate for an approach to poverty reduction that is based on rigorous, empirical evidence gathered at the micro-level.
  4. Local Knowledge: The book argues that the poor often have a wealth of local knowledge about their own circumstances, and that this knowledge should be incorporated into policy design.
  5. Incremental Improvements: The authors argue that poverty reduction is best achieved through small, incremental improvements, rather than large-scale, top-down programs.
  6. Market-based Solutions: The book argues that market-based solutions can play an important role in reducing poverty, but that they must be carefully designed and targeted to the needs of the poor.
  7. The Role of Institutions: The authors argue that the role of institutions, such as government and markets, is critical in reducing poverty and that these institutions must be strengthened to support sustainable poverty reduction.

The book presents a rich and nuanced understanding of poverty and offers a new framework for thinking about poverty reduction. The authors argue that the best way to reduce poverty is to focus on the particular needs and circumstances of the poor, and to design policies based on rigorous, evidence-based research.

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