15 May, 2021

Doing Poorly: A Lateral Section

A virtuoso study of poverty employs anthropological rigour, is shot with psychological insight, plumps for contentious randomised trials and believes in small interventions

Swapan Nayak
Doing Poorly: A Lateral Section
outlookindia.com
-0001-11-30T00:00:00+05:53

The economic lives of the poor have been rendered invisible in three ways. At a popular level, there are prejudices about what the poor must be like as economic agents. Many believe that given half a chance, the poor will drink themselves to death rather than plan for their future. But what do we really know about the poor? What do they save? What are their needs and preferences? What are their beliefs? Many of our assumptions about these questions have simply no evidence to back them.

This thicket of assumptions is often countered by the abstractions of standard economic theory. On this view the poor are, plausibly, viewed as economic agents just like anyone else. They respond to incentives, they rationally plan for their future, they assess risk and reward. But these are just abstractions. Saying that economic agents respond to incentives is one thing. Describing what kinds of concrete incentives actually matter to them is another thing altogether. The third set of abstractions that render the poor invisible is the penchant for large...

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