Perspectives on the Economics of Poverty
Income inequality is a fast growing issue both in the United States, where a shrinking middle class only serves to show the widening gap between the wealthy and poor, and in third world countries from a international perspective.
Recently while traveling, I spent some time reading two books, Poor Economics and Why Nations Fail, which both touch on the issue of modern poverty. I’ve summarized a number of key insights here.
The central points of both Abhijit Banerjee and Esther Duflo’s book, Poor Economics as well as Daron Acemoglu and James Robinson’s book Why Nations Fail consist of the analyses of how economics applies to the poor, and how political institutions and actors exert a significant force on the economy and its impoverished inhabitants.
Banerjee and Duflo’s approach in Poor Economics utilizes a multitude of statistical data to explore the rationale of the poor when making economic decisions. For instance, one interesting finding reported in Poor Economics refers to the fact that the poor of Zambia, who, despite knowing about the benefits of chlorinating water and of an incredibly affordable chlorine bleach brand, Chlorin, overwhelmingly refuse to…
