Abhijit Banerjee Quotes

poverty is not just a lack of money; it is not having the capability to realize one’s full potential as a human being.

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.

We must arm ourselves with patience and wisdom and listen to the poor what they want. This is the best way to avoid the trap of ignorance, ideology and inertia on our side.

The point is simple: talking about the problems of the world without talking about some accessible solutions is the way to paralysis rather than progress.

If the rules make such a difference, then it becomes very important who gets to make them.

What is dangerous is not making mistakes, but to be so enamored of one’s point of view that one does not let facts get in the way. To make progress, we have to constantly go back to the facts, acknowledge our errors, and move

But then it is easy, too easy, to sermonize about the dangers of paternalism and the need to take responsibility for our own lives, from the comfort of our couch in our safe and sanitary home. Aren't we, those who live in the rich world, the constant beneficiaries of a paternalism now so thoroughly embedded into the system that we hardly notice it?

Awareness of our problems thus does not necessarily mean that they get solved. It may just mean that we are able to perfectly anticipate where we will fail.

there is a strong association between poverty and the level of cortisol produced by the body, an indicator of stress. And

Economics is too important to be left to economists.

Herd behavior generates informational cascades: the information on which the first people base their decision will have an outsized influence on what all the others believe.

ideology, ignorance, and inertia—the three Is—on the part of the expert, the aid worker, or the local policy maker, often explain why policies fail and why aid does not have the effect it should.

For each successful entrepreneur in the Silicon Valley or elsewhere, many have had to fail.

A combination of unrealistic goals, unnecessarily pessimistic expectations, and the wrong incentives for teachers contributes to ensure that education systems in developing countries fail their two main tasks: giving everyone a sound basic set of skills, and identifying talent.

So at the end of the day, although we will try to stitch together the best evidence for these theories, the result will be tentative. We have already seen that growth is hard to measure. It is even harder to know what drives it, and therefore to make policy to make it happen. Given that, we will argue, it may be time to abandon our profession’s obsession with growth.

There is always some cheap pleasant thing to tempt you.

Talking about the problems of the world without talking about some accessible solutions is the way to paralysis rather than progress.

And, perhaps most urgently, how can society help all those people the markets have left behind?

no one leaves home unless home is the mouth of a shark you only run for the border when you see the whole city running as well your neighbors running faster than you breath bloody in their throats the boy you went to school with who kissed you dizzy behind the old tin factory is holding a gun bigger than his body you only leave home when home won’t let you stay.7

Mi a közös az aszály sújtotta vidéken élő indiai gazda, a chicagói South Side fiatalja és az ötvenes éveiben járó munkanélkülivé vált, fehér férfi között? Az, hogy bár vannak problémáik, nem ők jelentik a problémát. Megérdemlik, hogy annak lássuk őket, akik; és ne az őket sújtó nehézségek határozzák meg a róluk kialakított képet.

The government exists in part to solve problems no other institution can realistically tackle. To demonstrate waste in government, one needs to show there is an alternative way of organizing the same activity that works better.

It is not easy to escape from poverty, but a sense of possibility and a little bit of well-targeted help (a piece of information, a little nudge) can sometimes have surprisingly large effects. On the other hand, misplaced expectations, the lack of faith where it is needed, and seemingly minor hurdles can be devastating. A push on the right lever can make a huge difference, but it is often difficult to know where that lever is. Above all, it is clear that no single lever will solve every problem.

The curriculum and organization of schools often date back to a colonial past, when schools were meant to train a local elite to be the effective allies of the colonial state, and the goal was to maximize the distance between them and the rest of the populace.

research in education shows that children quickly internalize their place in the pecking order, and teachers reinforce it. Teachers told that some children are smarter than others (even though they were simply chosen randomly) treat them differently, so that these children in fact do better.

Most people believed, correctly, that most normal North Africans tended to be relatively poor and therefore unlikely to be able to afford a new car, and on the basis of that statistical association their presumption was that the individual North African driver of a nice car was a criminal. Now they assume he is an Uber driver, which is clear progress.

A közgazdaságtan túlságosan fontos ahhoz, hogy csak a közgazdászokra bízzuk.

Only a social policy founded on respect for the dignity of the individual can help make the average citizen more open to ideas of toleration.

This is why political institutions matter—they exist to prevent leaders from organizing the economy for their private benefit.

The call to action is not just for academic economists—it is for all of us who want a better, saner, more humane world. Economics is too important to be left to economists.

economic phenomena to show that we think about the present very differently from the way we think about the future (a notion referred to as “time inconsistency”).37 In

the present, we are impulsive, governed in large part by emotions and immediate desire:

More generally, time inconsistency is a strong argument for making it as easy as possible for people to do the “right” thing, while, perhaps, leaving them the freedom to opt

In the slums of Delhi, a study found that only 34 percent of the “doctors” had a formal medical degree.

there are no iron laws of economics keeping us from building a more humane world,

The answers to these problems take more than a tweet. So there is an urge to just avoid them. And partly as a result, nations are doing very little to solve the most pressing challenges of our time; they continue to feed the anger and the distrust that polarize us, which makes us even more incapable of talking, thinking together, doing something about them. It often feels like a vicious cycle.

Capital-scarce economies grow faster because new investment is highly productive. Rich economies, which are, in general, capital abundant, tend to grow more slowly because new investment is not as productive.

In one large US university, where roommates were assigned at random, a study found that white students who happened to end up with African American roommates were significantly more likely to endorse affirmative action, and that white students assigned roommates from any minority group were more likely to continue to interact socially with members of other ethnic groups after their first year, when they had full freedom in choosing whom to associate with.

It is both patronizing and wrong-headed, in our view, to assume people must have screwed up just because we might have behaved differently. And yet society routinely overrules people’s choices, especially if they are poor, supposedly for their own good,

The bottom line is that, much as in rich countries, we have no accepted recipe for how to make growth happen in poor countries. Even the experts seem to have accepted this. In 2006, the World Bank asked the Nobel laureate Michael Spence to lead the Commission on Growth and Development (informally known as the Growth Commission). Spence initially refused, but convinced by the enthusiasm of his would-be fellow panelists, a highly distinguished group that included Robert Solow, he finally agreed. But their report ultimately recognized that there are no general principles, and no two growth episodes seem alike. Bill Easterly, not very charitably perhaps, but quite accurately, described their conclusion: “After two years of work by the commission of 21 world leaders and experts, an 11-member working group, 300 academic experts, 12 workshops, 13 consultations, and a budget of $4m, the experts’ answer to the question of how to attain high growth was roughly: we do not know, but trust experts to figure it out.

For that, we need to understand what undermines trust in economists. A part of the answer is that there is plenty of bad economics around. Those who represent the “economists” in the public discourse are not usually the same people who are part of the IGM Booth panel.

the parts of the brain corresponding to the limbic system (thought to respond only to more visceral, immediate rewards) were activated only when the decision involved comparing a reward today with one in the future. In contrast, the lateral prefrontal cortex (a more “calculating” part of the brain) responded with a similar intensity to all decisions, regardless of the timing of the options. Brains that work like this would produce a lot of failed good intentions. And indeed, we do see a lot of those, from New Year’s resolutions to gym memberships that lie unused.

The benefits of good nutrition may be particularly strong for two sets of people who do not decide what they eat: unborn babies and young children. In fact, there may well be an S-shaped relationship between their parent’s income and the eventual income of these children, caused by childhood nutrition. That is because a child who got the proper nutrients in utero or during early childhood will earn more money every year of his or her life: This adds up to large benefits over a lifetime. For example, the study of the long-term effect of deworming children in Kenya, mentioned above, concluded that being dewormed for two years instead of one (and hence being better nourished for two years instead of one) would lead to a lifetime income gain of $3,269 USD PPP. Small differences in investments in childhood nutrition (in Kenya, deworming costs $1.36 USD PPP per year; in India, a packet of iodized salt sells for $0.62 USD PPP; in Indonesia, fortified fish sauce costs $7 USD PPP per year) make a huge difference later on.

Additionally, there is good evidence that people particularly hate mistakes of their own making. The world is fraught with uncertainties, many of which people have no control over. These vagaries make them unhappy, but perhaps not as unhappy as making an active choice that ends up, purely as a result of bad luck, making them worse off than if they had done nothing.

After every patient left, the doctor would come outside and make a show of washing his needle with water from the drum. This was his way of signaling that he was being careful. We do not know whether he actually infected anyone with his syringe, but doctors in Udaipur talk about a particular doctor who infected an entire village with Hepatitis B by reusing the same unsterilized needle.

The poor, on the other hand, may well be more skeptical about supposed opportunities and the possibility of any radical change in their lives. They often behave as if they think that any change that is significant enough to be worth sacrificing for will simply take too long. This could explain why they focus on the here and now, on living their lives as pleasantly as possible, celebrating when occasion demands it.

After the first lot of policyholders universally claimed to have lost their cattle, they decided that in order to claim that an animal had died, the owner would need to show the ear of the dead cow. The result was a robust market in cows’ ears: Any cow that died, insured or not, would have its ear cut off and the ear would then be sold to those who had insured a cow. That way they could claim the insurance and keep their cow. In

A better conversation must start by acknowledging the deep human desire for dignity and human contact, and to treat it not as a distraction, but as a better way to understand each other, and to set ourselves free from what appear to be intractable oppositions. Restoring human dignity to its central place, we argue in this book, sets off a profound rethinking of economic priorities and the ways in which societies care for their members, particularly when they are in need.

To make matters worse, learning about health care is inherently difficult not only for the poor, but for everyone.33 If patients are somehow convinced that they need shots to get better, there is little chance that they could ever learn they are wrong. Because most diseases that prompt visits to the doctor are self-limiting (i.e., they will disappear no matter what), there is a good chance that patients will feel better after a single shot of antibiotics. This naturally encourages spurious causal associations: Even if the antibiotics did nothing to cure the ailment, it is normal to attribute any improvement to them. By contrast, it is not natural to attribute causal force to inaction: If a person with the flu goes to the doctor, and the doctor does nothing, and the patient then feels better, the patient will correctly infer that it was not the doctor who was responsible for the cure. And rather than thanking the doctor for his forbearance, the patient will be tempted to think that it was lucky that everything worked out this time but that a different doctor should be seen for future problems.This reaction creates a natural tendency to overmedicate in a private, unregulated market. This is compounded by the fact that, in many cases, the prescriber and the provider are the same person, either because people turn to their pharmacists for medical advice, or because private doctors also stock and sell medicine. It

The only recourse we have against bad ideas is to be vigilant, resist the seduction of the “obvious,” be skeptical of promised miracles, question the evidence, be patient with complexity and honest about what we know and what we can know. Without that vigilance, conversations about multifaceted problems turn into slogans and caricatures and policy analysis gets replaced by quack remedies. The call to action is not just for academic economists—it is for all of us who want a better, saner, more humane world. Economics is too important to be left to economists.

The increasing sophistication of robots and the progress of artificial intelligence has generated considerable anxiety about what would happen to our societies if only a few people had interesting jobs and everyone else had either no work or had a horrible job, and inequality ballooned as a result. Especially if this happened because of forces largely out of their control. Tech moguls are getting desperate to find ideas to solve the problems their technologies might cause. But we don’t need to contemplate the future in order to get a sense of what happens when economic growth leaves behind the majority of a country’s citizens. This has already happened—in the United States since 1980.

Women retained more information from the training, and those who were trained by them and listened to them did in fact learn more. But most farmers did not listen. They assumed women were less able, and therefore paid less attention to them. Along the same lines, when women in Bangladesh were trained to become line managers, they were just as good as men based on an objective assessment of their leadership and technical qualities, but they were perceived as less good by their line workers. And, presumably as a result, the performance of their lines also suffered, perversely confirming the prejudice that they were worse managers.39 What started as an unjustified preference against women resulted in women actually doing worse through no fault of their own, and this reinforced their inferior status.

Good economic institutions will encourage citizens to invest, accumulate, and develop new technologies, as a result of which society will prosper. Bad economic institutions will have the opposite effects. One problem is that rulers, who have the power to shape economic institutions, do not necessarily find it in their interest to allow their citizens to thrive and prosper. They may personally be better off with an economy that imposes lots of restrictions on who can do what (that they selectively relax to their advantage), and weakening competition may actually help them stay in power. This is why political institutions matter - they exist to prevent leaders from organizing the economy for their private benefit. When they work well, political institutions put enough constraints on rulers to ensure that they cannot deviate too far from the public interest.

Generally, it is clear that things that make life less boring are a priority for the poor. This may be a television, or a little bit of something special to eat—or just a cup of sugary tea. Even Pak Solhin had a television, although it was not working when we visited him. Festivals may be seen in this light as well. Where televisions or radios are not available, it is easy to see why the poor often seek out the distraction of a special family celebration of some kind, a religious observance, or a daughter’s wedding. In our eighteen-country data set, it is clear that the poor spend more on festivals when they are less likely to have a radio or a television. In Udaipur, India, where almost no one has a television, the extremely poor spend 14 percent of their budget on festivals (which includes both lay and religious occasions). By contrast, in Nicaragua, where 58 percent of rural poor households have a radio and 11 percent own a television, very few households report spending anything on festivals.33

Statistical discrimination explains why the police in the United States justify stopping black drivers more often. And how the Hindu majoritarian government of the state of Uttar Pradesh recently explained why so many of the people “accidentally” killed by the state police (in what are called “encounter deaths”) are Muslim. There are more blacks and Muslims among criminals. In other words, what looks like naked racism does not have to be that; it can be the result of targeting some characteristic (drug dealing, criminality) that happens to be correlated with race or religion. So statistical discrimination, rather than old-fashioned prejudice—what economists call taste-based discrimination—may be the cause. The end result is the same if you are black or Muslim, though. A recent study on the impact of “ban the box” (BTB) policies on the rate of unemployment of young black men provides a compelling demonstration of statistical discrimination. BTB policies restrict employers from using application forms where there is a box that needs to be checked if you have a criminal conviction. Twenty-three states have adopted these policies in the hope of raising employment among young black men, who are much more likely to have a conviction than others and whose unemployment rate is double the national average.31 To test the effect of these policies, two researchers sent fifteen thousand fictitious online job applications to employers in New Jersey and New York City, just before and right after the states of New York and New Jersey implemented the BTB policy.32 They manipulated the perception of race by using typically white or typically African American first names on the résumés. Whenever a job posting required indicating whether or not the applicant had a prior felony conviction, they also randomized whether he or she had one. They found, as many others before them, clear discrimination against blacks in general: white “applicants” received about 23 percent more callbacks than black applicants with the same résumé. Unsurprisingly, among employers who asked about criminal convictions before the ban, there was a very large effect of having a felony conviction: applicants without a felony conviction were 62 percent more likely to be called back than those with a conviction but an otherwise identical résumé, an effect similar for whites and blacks. The most surprising finding, however, was that the BTB policy substantially increased racial disparities in callbacks. White applicants to BTB-affected employers received 7 percent more callbacks than similar black applicants before BTB. After BTB, this gap grew to 43 percent. The reason was that without the actual information about convictions, the employers assumed all black applicants were more likely to have a conviction. In other words, the BTB policy led employers to rely on race to predict criminality, which is of course statistical discrimination.

Aren’t we, those who live in the rich world, the constant beneficiaries of a paternalism now so thoroughly embedded into the system that we hardly notice it? It not only ensures that we take care of ourselves better than we would if we had to be on top of every decision, but also, by freeing us from having to think about these issues, it gives us the mental space we need to focus on the rest of our lives. This does not absolve us of the responsibility of educating people about public health. We do owe everyone, the poor included, as clear an explanation as possible of why immunization is important and why they have to complete their course of antibiotics. But we should recognize—indeed assume—that information alone will not do the trick.

Schools are available. In most countries, they are free, at least at the primary level. Most children are enrolled. And yet in the various surveys that we have conducted around the world, child absentee rates vary between 14 percent and 50 percent

The average poverty line in the fifty countries where most of the poor live is 16 Indian rupees per person per day. 2 People who live on less than that are considered to be poor by the government of their own countries. At the current exchange rate, 16 rupees corresponds to 36 U.S. cents. But because prices are lower in most developing countries, if the poor actually bought the things they do at U.S. prices, they would need to spend more—99 cents. So to imagine the lives of the poor, you have to imagine having to live in Miami or Modesto with 99 cents per day for almost all your everyday needs (excluding housing). It is not easy—in India, for example, the equivalent amount would buy you fifteen smallish bananas, or about 3 pounds of low- quality rice. Can one live on that? And yet, around the world, in 2005, 865 million people (13 percent of the world’s population) did.

Many people would also agree with Amartya Sen, the economist-philosopher and Nobel Prize Laureate, that poverty leads to an intolerable waste of talent. As he puts it, poverty is not just a lack of money; it is not having the capability to realize one’s full potential as a human being. 10 A poor girl from Africa will probably go to school for at most a few years even if she is brilliant, and most likely won’t get the nutrition to be the world-class athlete she might have been, or the funds to start a business if she has a great idea.

Parents are not alone in focusing their expectations on success at the graduation exam: The whole education system colludes with them. The curriculum and organization of schools often date back to a colonial past, when schools were meant to train a local elite to be the effective allies of the colonial state, and the goal was to maximize the distance between them and the rest of the populace.

Angus

Since our preferences are strongly influenced by whom we associate with, social divides are particularly costly because there is very little mixing across these divides; people tend to associate with others like themselves

The first is that the circulation of news on social media is killing the production of reliable news and analysis. Producing fake news is of course very cheap and very rewarding economically since, unconstrained by reality, it is easy to serve to your readership exactly what they want to read

Prejudice is often a defensive reaction to the many things we feel are going wrong in the world, our economic travails, and a sense that we are no longer respected or valued.

Economists are more like plumbers; we solve problems with a combination of intuition grounded in science, some guesswork aided by experience, and a bunch of pure trial and error. ... What is dangerous is not making mistakes, but to be so enamored of one’s point of view that one does not let facts get in the way. To make progress, we have to constantly go back to the facts, acknowledge our errors, and move on.

The British Somali poet, Warsan Shire, wrote: no one leaves home unless home is the mouth of a shark you only run for the border when you see the whole city running as well your neighbors running faster than you breathe bloody in their throats the boy you went to school with who kissed you dizzy behind the old tin factory is holding a gun bigger than his body you only leave home when home won’t let you stay.

There is also a long tradition in developing countries of governments using price and tax policies to benefit the urban sector at the cost of the rural. Many countries in Africa in the 1970s created what they called agricultural marketing boards. This was a cruel joke, since many of the boards were intended to prevent the marketing of produce so the board could buy it at the lowest prices, thereby stabilizing prices for city dwellers. Other countries, like India and China, banned exports of farm products to keep prices where urban consumers wanted them. A by-product of these policies was to make agriculture unprofitable, encouraging people to leave their farms.

What is dangerous is not making mistakes, but to be so enamored of one’s point of view that one does not let facts get in the way. To make progress, we have to constantly go back to the facts, acknowledge our errors, and move on

What is dangerous is not making mistakes, but to be so enamored of one’s point of view that one does not let facts get in the way. To make progress, we have to constantly go back to the facts, acknowledge our errors, and move on.

the fact that free trade raises GNP means there is more to go around for everybody, and therefore even workers in the United States can be made better off if society taxes the winners from free trade and distributes that money to the losers. The problem is that this is a big “if,” which leaves workers at the mercy of the political process.

A report by the Center for American Entrepreneurship found that, in 2017, out of the largest five hundred US companies by revenue (the Fortune 500 list), 43 percent were founded or co-founded by immigrants or the children of immigrants.

The average estimate implies that when your income increases by 10 percent, your CO2 emissions increase by 9 percent.

the answer is relatively simple: People avoid the public health system because it does not work well. This could also explain why other services that are provided through the government system, like immunizations and antenatal checks for prospective mothers, are underused.

That it worked in those two countries does not necessarily mean it is something every country should emulate. Economists tend to be very wary of industrial policy, for good reasons. The history of state-directed investments is not one that inspires confidence; judgments are frequently bad even when they are not actually deliberately distorted to benefit someone or some group, which is often.

One very real danger is that in trying to hold on to fast growth, India (and other countries facing sharply slowing growth) will veer toward policies that hurt the poor now in the name of future growth. The need to be “business friendly” to preserve growth may be interpreted, as it was in the US and UK in the Reagan-Thatcher era, as open season for all kinds of anti-poor, pro-rich policies (such as bailouts for overindebted corporations and wealthy individuals) that enrich the top earners at the cost of everyone else, and do nothing for growth. If the US and UK experience is any guide, asking the poor to tighten their belts, in the hope that giveaways to the rich will eventually trickle down, does nothing for growth and even less for the poor. If anything, the explosion of inequality in an economy no longer growing has the risk of being very bad news for growth, because the political backlash leads to the election of populist leaders touting miracle solutions that rarely work and often lead to Venezuela-style disasters.

In fact, most years, actively managed funds do not do any better than “passive funds” that simply replicate the stock market index. In fact, the average US mutual funds underperform the US stock market 52 —they seem to have borrowed the language of individual talent but not the talent itself. A large part of the premiums paid to financial sector employees are almost surely pure rents ; that is, rewards not for talent or hard work but for nothing more than having lucked out in landing that particular job.

The majority of Americans whose wages and income have stagnated, and who confront an ever-widening gap between the wealth they see around them and the financial woes they are experiencing, face a choice between blaming themselves for not benefitting from the opportunities they believe their society offers and finding someone to blame for stealing their jobs.

More generally, in a world of skyrocketing inequalities and “winner take all,” the lives of the poor and the rich are diverging wildly and will become irremediably different if we allow markets to drive all social outcomes

In the United States, there is clearly an ideology of self-reliance, even though for many years it has been based, to a significant extent, on a fantasy—the states in the US where people take the most pride in their autonomy are also the ones most dependent on federal subsidies (Mississippi, Louisiana, Tennessee, and Montana top the list by federal aid as fraction of revenue)

The mantra that government is corrupt and incompetent has produced the kind of jaded citizenry who can react to news of shameless corruption among its elected leaders with a shrug, from Washington, DC, to Jerusalem and Moscow. They basically have learned to expect nothing else, and stop paying attention.

we should be wary of any policy sold in the name of growth because it is likely to be bogus. Perhaps we should be even more scared if we think that such a policy might work, because growth will benefit only the happy few.

High and variable inflation constitutes a regressive tax, with the poor bearing the biggest brunt, since their incomes are typically least indexed to inflation.

We are often inclined to see the world of the poor as a land of missed opportunities and to wonder why they don’t put these purchases on hold and invest in what would really make their lives better.

We are often inclined to see the world of the poor as a land of missed opportunities and to wonder why they don’t put these purchases on hold and invest in what would really make their lives better. The poor, on the other hand, may well be more skeptical about supposed opportunities and the possibility of any radical change in their lives. They often behave as if they think that any change that is significant enough to be worth sacrificing for will simply take too long.

The benefits of good nutrition may be particularly strong for two sets of people who do not decide what they eat: unborn babies and young children. In fact, there may well be an S—shaped relationship between their parent’s income and the eventual income of these children, caused by childhood nutrition. That is because a child who got the proper nutrients in utero or during early childhood will earn more money every year of his or her life: This adds up to large benefits over a lifetime.

The richer we are, the more these decisions are made for us.

The problem is that self-control is like a muscle: It gets tired as we use it, and therefore it would not be a surprise if the poor find it harder to save. This is compounded by the fact, which we discussed in Chapter 6 on risk, that the poor live under considerable stress, and stress-induced cortisol makes us choose more impulsive decisions.

Unfortunately, bad institutions tend to perpetuate bad institutions, creating a vicious circle, sometimes called the “iron law of oligarchy.” Those who have power under the current political institutions get to make sure that the economic institutions work toward making them rich, and once they are rich enough they can usually use their wealth to forestall any attempts to move them out of power. For example, in an article that has become a classic, Acemoglu, Robinson, and Simon Johnson showed that former colonies where the disease environment prevented large-scale settlements by Europeans tended to have worse institutions during colonial times (because they were naturally picked for being exploited from afar), and these bad institutions continued after decolonization. Abhijit and Lakshmi Iyer found a striking example of the long shadow of political institutions in India. During British colonization, different districts got different systems of land-revenue collection, for largely accidental reasons (mainly, which institution was chosen depended on the ideology of the British servant in charge of the districts and the views prevalent in Britain at the time of conquest).

First, the poor often lack critical pieces of information and believe things that are not true. They are unsure about the benefits of immunizing children; they think there is little value in what is learned during the first few years of education; they don’t know how much fertilizer they need to use; they don’t know which is the easiest way to get infected with HIV; they don’t know what their politicians do when in office. When their firmly held beliefs turn out to be incorrect, they end up making the wrong decision, sometimes with drastic consequences—think of the girls who have unprotected sex with older men or the farmers who use twice as much fertilizer as they should. For example, the uncertainty about the benefits of immunization combines with the universal tendency to procrastinate, with the result that a lot of children don’t get immunized. The richer you are, the more the “right” decisions are made for you. These decisions are difficult for everyone because they require some thinking now or some other small cost today, and the benefits are usually reaped in the distant future. As such, procrastination very easily gets in the way. For the poor, this is compounded by the fact that their lives are already much more demanding than ours: Many of them run small businesses in highly competitive industries; most of the rest work as casual laborers and need to constantly worry about where their next job will come from.

Fourth, poor countries are not doomed to failure because they are poor, or because they have had an unfortunate history. But many of these failures have less to do with some grand conspiracy of the elites to maintain their hold on the economy and more to do with some avoidable flaw in the detailed design of policies, and the ubiquitous three Is: ignorance, ideology, and inertia. Finally, expectations about what people are able or unable to do all too often end up turning into self-fulfilling prophecies. Children give up on school when their teachers (and sometimes their parents) signal to them that they are not smart enough to master the curriculum; fruit sellers don’t make the effort to repay their debt because they expect that they will fall back into debt very quickly; nurses stop coming to work because nobody expects them to be there; politicians whom no one expects to perform have no incentive to try improving people’s lives.

If the teachers and the parents do not believe that the child can cross the hump and get into the steep part of the S—curve, they may as well not try: The teacher ignores the children who have fallen behind and the parent stops taking interest in their education. But this behavior creates a poverty trap even where none exists in the first place.

For example, people who don’t know how to drive may nevertheless want to drive their car. But society feels that it is better if they don’t, because of what it means for the rest of us. A free market in driver’s licenses obviously cannot solve this problem.

The poor stay poor here because they do not save enough.

found that, on average, teachers gave significantly lower grades to lower-caste students when they could see their caste than when they could not. But

The lower-caste teachers were actually more likely to assign worse grades to lower-caste students. They

careful understanding of the motivations and the constraints of everyone can lead to policies and institutions that are better designed, and less likely to be perverted by corruption or derelication of duty. these changes will be incremental, but they will sustain and build on themselves. they can be the start of a quiet revolution.

Do we know of effective ways to help the poor?” Implicit in Singer’s argument for helping others is the idea that you know how to do it: The moral imperative to ruin your suit is much less compelling if you do not know how to swim. This is why, in The Life You Can Save, Singer takes the trouble to offer his readers a list of concrete examples of things that they should support, regularly updated on his Web site.12 Kristof and WuDunn do the same. The point is simple: Talking about the problems of the world without talking about some accessible solutions is the way to paralysis rather than progress. This is why it is really helpful to think in terms of concrete problems which can have specific answers, rather than foreign assistance in general: “aid” rather than “Aid.” To take an example, according to the World Health Organization (WHO), malaria caused almost 1 million deaths in 2008, mostly among African children.13 One thing we know is that sleeping under insecticide-treated bed nets can help save many of these lives. Studies have shown that in areas where malaria infection is common, sleeping under an insecticide-treated bed net reduces the incidence of malaria by half.14 What, then, is the best way to make sure that children sleep under bed nets? For approximately $10, you can deliver an insecticide-treated net to a family and teach the household how to use it. Should the government or an NGO give parents free bed nets, or ask them to buy their own, perhaps at a subsidized price? Or should we let them buy it in the market at full price? These questions can be answered, but the answers are by no means obvious. Yet many “experts” take strong positions on them that have little to do with evidence. Because malaria is contagious, if Mary sleeps under a bed net, John is less likely to get malaria—if at least half the population sleeps under a net, then even those who do not have much less risk of getting infected.15 The problem is that fewer than one-fourth of kids at risk sleep under a net:16 It looks like the $10 cost is too much for many families in Mali or Kenya. Given the benefits both to the user and others in the neighborhood, selling the nets at a discount or even giving them away would seem to be a good idea. Indeed, free bed-net distribution is one thing that Jeffrey Sachs advocates.

Those who buy from the homophobic baker prove that preferences are not stable. Our preferences usually depend on what other people do. Even when our preferences are independent of other people’s actions, the behavior of others can convey a signal that alters our beliefs and our behavior.

...a child who grew up malaria-free earns 50 percent more per year, for his entire adult life, compared to a child who got the disease.

This result suggests that the financial return to investing in malaria prevention can be fantastically high. A long-lasting insecticide-treated bed net costs at most $14 USD PPP in Kenya, and lasts about five years. Assume conservatively that a child in Kenya sleeping under a treated net has 30 percent less risk of being infected with malaria between birth and age two, compared to a child who doesn’t. In Kenya, an adult makes on average $590 USD PPP a year. Thus, if malaria indeed reduces earnings in Kenya by 50 percent, a $14 investment will increase incomes by $295 for the 30 percent of the population that would have gotten malaria without the net. The average return is $88 every year over the child’s entire adult work life—enough for a parent to buy a lifetime supply of bed nets for all his or her children, with a chunk of change left over.

A bottle of Chlorin (a brand of chlorine distributed by PSI) costs 800 kwachas ($0.18 USD PPP) and lasts a month. This can reduce diarrhea in young children by up to 48 percent.