Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty

Finally, expectations about what people are able or unable to do all too often end up turning into self-fulfilling prophecies.

Second, the poor bear responsibility for too many aspects of their lives. The richer you are, the more the “right” decisions are made for you.

Third, there are good reasons that some markets are missing for the poor, or that the poor face unfavorable prices in them.

22 Monica Martinez-Bravo, Gerard Padro-i-Miquel, Nancy Qian, and Yang Yao, “Accountability in an Authoritarian Regime: The Impact of Local Electoral Reforms in Rural China,” Yale University (2010), manuscript.

First, the poor often lack critical pieces of information and believe things that are not true.

“Economic institutions shape economic incentives, the incentives to become educated, to save and invest, to innovate and adopt new technologies, and so on. Political institutions determine the ability of citizens to control politicians.”5

The real problem of development, in this view, is not one of figuring out good policies: It is to sort out the political process.

How then can more “good jobs” be created? Clearly, it would help if it were easier to migrate to cities, so policies on urban land use and low-income housing are obviously vital. Less obviously, effective social safety nets, consisting of both public assistance and market insurance, can make migration easier by reducing dependence on social network

Details matter.