Akosua Nyamekye

AP Economics
9/4/14
Summer Reading Assignment: Poor Economics
Have you ever imagined what it would be like to survive on just 99
cents a day? Poor Economics, a Financial Times and Goldman Sachs
business book of the year, allows you to do just that. Written by Abhijit V.
Banerjee and Esther Duflo, this book takes on a new look into finding
unique ways to deal with helping the worlds poverty-stricken. Readers are
taken into the lives of some of our worlds most underprivileged, and
provided unguarded access into their economic actions and definitions.
Poor Economics seeks to help readers gain better understanding of
not only how to eliminate global poverty, but take a deeper look into why
families are trapped into cycles of said hardship. The book takes an
important look at how elements such as food, healthcare, and education
play a role in what it means to be poor. Readers are also presented with
examples of why seemingly necessary programs such as healthcare,
education, and microfinance may not be as strong in helping the poor as
previously believed. Different strategies, and scenarios are tested
throughout the book in order to determine what the benefits and
disadvantages are, along with explanations as to the overall effectiveness of
each strategy.

Banerjee and Duflo seek to empower people to consider a world

beyond poverty. They seek to bring awareness to need for assumptions and
generalizations about the worlds poor to stop in order to be able to
successfully begin to assess and attempt to change the situation. Poor
Economics changes the way the world used to think about what it meant to
be poor.

After reading Poor Economics, I was able to gain new perspective into
the meaning of poverty around the world and was also able to understand
how different methods may or may not be useful in helping to eliminate
poverty. I have now realized that my original outlook on global poverty was
too narrow, and have allowed my mind to adopt different mindsets that are
not always similar or familiar to what I have always believed. My definition
of poor had always centered on a lack of food and money. Therefore, if
provided with these two necessary items, a persons life would be
immediately changed for the better.
Reading this book, made me realize that many times those in poverty
are often generalized into all having one type of character. Words such as
unintelligent, inactive, helpless and careless come to mind when I think of
how the impoverished are occasionally viewed as. However, lack of access
to proper education does not mean a person is unintelligent, rather they
have not been given the chance to tap into their true intellect. In fact, due

to their situation, many people in poverty take the time to consider

economic choices more carefully. Though some may accuse the worlds poor
of being careless, this isnt the case in the majority of situations. The poor
are often provided with limited access to news and information, and are left
at a disadvantage when it comes to items such as food, and vaccines for
children. After all, it has been said that A rich man is nothing but a poor
man with money.
I have always believed that no matter what economic standing your
parents had before, an education and/or the will to work hard would lead
you to success. Although this mentality has not changed much, one must
realize that an escape from poverty is not always easy. There is a
misunderstanding on how to rid poverty, not only from the impoverished
themselves, but also those who seek to help the poor. It should be realized
that it will take time to discover what methods are most effective in dealing
with this situation, however finding success is not impossible.
Give a man a fish, and you feed him for a day; show him how to catch
fish, and you feed him for a lifetime. Poverty has long been a standard part
of the human civilization in the world. For years, attempts have been made
to eliminate this standard, however, there continues to remain an alarming
percentage of the world left poverty-stricken. Experts have continued to
debate upon what strategies work best in combatting this economic disease.
This raises the question: Can microfinance be used as the number one
solution to fighting global poverty? Microfinance (also referred to as

microcredit) is the idea that low-income individuals are capable of lifting

themselves out of poverty if given access to financial services. Although, the
concept of providing underprivileged people with microcredit has been
beneficial, microfinance should not be used as the primary approach to
ending global poverty because it may lead to debt, retains a lack of
enthusiasm, and has not been able to change much about the face of
poverty in past trials.
Microfinance cannot be used as the only solution in fighting poverty
because of the debt it may accumulate for the borrower. In a passage
written in Poor Economics, it explains, Weekly repayments after the loan
is disbursed are also not ideal for people who need money urgently but
arent exactly sure when they will start paying. This method is unsuitable
for any new business owner on the outset of starting anew. Instead of
benefitting from this free money, borrowers may be left in an even poorer
state than beforehand, causing the poverty problem to increase.
When it comes to the offer of microcredit in the underprivileged
community, there is doubt and a lack of enthusiasm. Unfortunately, many
families and people were not as eager to use microcredit, as opposed to, for
example, to their local moneylenders. With the use of moneylenders, there
was more flexibility in the use of the loan. Microcredit, unfortunately, puts
too much stress on the poor to not only make sure they have repaid debt,

but also be able to start and run a successful business, something not every
person would be interested in doing.
The system of microcredit has not been able to make any lasting or
notable impact in dealing with the global poverty problem. In an article by
Georgetown University, they note that in research conducted by the World
Bank, microcredit programs did not look as if they were removing
considerable amounts of people out of poverty. Although, in specific cases
there was significant improvement, there were no impressive results one
would have hoped to see.
Microfinance should not be seen or used as the main solution in the
fight to help eliminate poverty. It accumulates debt, leaving the borrower
worse off than when they started. The programs associated with
microfinance do not receive the enthusiasm one would expect from those it
is aimed towards helping. There have been few statistics to show dramatic
improvement in large amounts of citizens in needy areas. Although this
process cannot be used as the number one solution in fighting poverty,
when used as part of a larger initiative there is a yield in positive results in
the poverty-stricken community. Those who seek to rid the world of poverty
must first come to the conclusion that unfortunately, there is no one way
answer to solving this problem.