Abhijit Vinayak Banerjee is currently the Ford Foundation International Professor of Economics at MIT. He was educated at the University of Calcutta, Jawaharlal Nehru University, and Harvard University. Together with Esther Duflo and Sendhil Mullainathan of Harvard University, he founded the Abdul Latif Jameel Poverty Action Lab in 2003. He is also the author of the best selling Poor Economics - A Radical Rethinking of the Way to Fight Global Poverty.

Banerjee was recently speaking at a literature festival in Mumbai on why most people don't understand what it exactly means to be poor and how the decisions made by the poor might be irrational to us but are very rational decisions given the situation they are in.

Here are few excerpts from what he said. This is the first part.

The poor man from Morocco

A part of the point of writing this book was to say that the poor make lots of choices. They are very active participants in their own lives. They are like all of us, excited about making choices. And they make choices that are often sort of not intelligible to us, which is different from saying they are making irresponsible choices.

Let me give you an example. We were in a village in Morocco talking to a guy who was standing in front of his house. He was telling us about his life and to get the conversation going we asked him, suppose you had some small amount of money what would you do with it? And he said, "I am going to buy some food." And then we asked him what would he do if he had some more money? He said, "I will buy more food."

So we were very persuaded that this was a hungry man. We walk into his house and see that he had a television, a parabolic antenna and a DVD player. So we asked him what is this? He said, entirely without missing a step, "television is more important than food."

An evening in a village

When you first hear it, you say, that can't be right. But I think the mistake we make is we don't think about what he is trying to say. One advantage of being a development economist is that you get to spend a lot of evenings in random villages. One thing uniform across the world is that an evening in a village is very boring. There are no movie theatres. No music halls. No place to go. There is one tea shop. You can go there. You have been there before. All the other people have been there for years. They have talked to each other for years and they say the same things more or less. Somebody says something, other says, oh yeah, and then they are silent.

So what does this tell us?

That evenings in a village are very boring. And that person in the village in Morocco really felt life would be unbearable without a television. He explained that he had three friends and they typically did not have anything to talk to each other. And that happens because there is almost nothing coming in from the outside. Television gives them something to talk about. This is why I empathise. In any decision we make there is a space for pleasure. A space that recognises we are human beings and the domain of pleasure is an essential driver for us.

The poor are thinking that they could either grab healthy calories or buy a TV. If they grab calories then maybe they will become a little bit healthier and their resistance will go up, maybe they will go from being extremely poor to slightly extremely poor. On the other hand if they forego calories they can watch television right now. The typical way we think is that these guys who buy television and don't eat nutritious food are somehow damaged or irrational or are somehow different, and we can't help them because they are not helping themselves.

I think they are helping themselves. We should understand what they are doing.

The right to food

The principle behind the right to food is that if we give poor people subsidised food their nutrition will improve. I am part of the Poverty Action Lab where we run large scale field experiments. We do these experiments to figure out what works.

One of the things that we are trying to figure out is whether the policy of giving people cheap subsidised food to improve nutrition, really works.

We carried out a nice experiment in China. We gave some people a voucher to buy cheap rice. Instead of buying rice lets say for Rs 10, they could buy it for Rs 2, using the vouchers. The presumption was that this would improve nutrition. This was done as an experiment and hence some people were randomly given vouchers and others were not.

When people went back and looked at it, they were astounded. People with vouchers had were worse off in nutrition. They felt that now that they have the vouchers, they are rich and no longer need to eat rice. They could eat pork, shrimps etc. They went and bought pork and shrimps and as a result their net calories went down. This is perfectly rational. These people were waiting for pleasure.

Pleasure is something very important not just for us to live but also in terms of being able to control our destiny. You think the rest of my life will be drab, and it becomes very difficult to live. In that particular sense they had little opportunity and they knew that this wouldn't last forever. They could improve their nutrition or for the next ten days they could also eat a little bit better. Fun is something that we forget about. The answer surprised everybody because we thought about it as what we would have done if we were in a similar situation.

The auto-rickshaw drivers of Chennai

When you look at poor people the first thing you notice is that they are not doing what you think they should be doing. That is partly because you have it wrong and partly also because it is hard to be poor. Sometimes you just want relief.

Let me give you an example of the auto-rickshaw drivers in Chennai, where one of my students did a survey. The survey found that 40% of their income goes into drinking. If you were to ask why they are doing that, the answer is "my body hurts and I want something to stop the hurt". You are in an auto-rickshaw 12 hours a day. Your body is bouncing. Your bones are hitting against each other. At that point you want something. I understand that alcohol is not the best possible relief. But whenever we want to be judgemental of the poor, and whenever we don't want to trust their judgement, the question for us is to ask first is what is it that makes them make that choice? Unless we ask that question we are often tempted to impose our own conditions on their lives.

It never occurred to me that driving an auto-rickshaw for 12 hours a day is so painful. I thought of many things but not that. And then I realised that being in an auto-rickshaw for five minutes is painful, and think of 12 hours a day, bouncing on Chennai's streets. I don't doubt that their wives are not happy about it. I am sure if we could find a way to get them to drink less it would be good for all of us. But the first thing that one has to do is to start by trusting that they have a reason.

Why immunisation rates are low?

One of the facts about the world is that immunisation is a life saver. A lot of blindness in India is caused by the fact that a lot of woman are not immunised when they are pregnant. They get rubella, which causes a cataract and makes people blind. So lots of people are curably blind because of their mothers not being immunised.

Immunisation is seen by people as an obvious thing to do. Given that, why are the poor not immunised? We tend to think that it must be because they are poor. But that is almost truly the wrong answer if you take it at face value. You realise it's the wrong answer because immunisation is free. It is something that the system is supposed to provide. But the next answer is that it must be because the government is failing to provide it. There is some truth to that answer.

We did a large-scale field experiment in villages in the Udaipur district in Rajasthan. NGO Seva Mandir visited 60 villages and communicated that every third Monday they will come and immunise. So immunisation was guaranteed. It was done reliably. And that raised the immunisation rate from about 5% to about 17%.

What raised the immunisation rates?

What got it up was that in 30 of the 60 villages we said that every time you come for immunisation you get a kilo of dal. That's it. That got it up to 40% in those 30 villages.

The first reaction when the life of children is at a stake is why are you trading it off for a kilo of dal? Why does a kilo of dal make such a difference?

The second thing is you think about what immunisation means? For my children I have no idea of how many times they have been immunised. You get a shot for this, a shot for that and so on. And you are supposed to keep track of all this. Make sure that your child gets this one at the right time and that one at the right time. And remember.

My children grew up in the US. In the US and in most other western countries, there is a piece of paper at the hospital which helps keep track. You don't have to actually remember any of this. What does the dal do? It reminds you that it is important to get your child immunised.

Otherwise there is no external pressure. For me I knew that my child could not go to school unless he was immunised. I was under external pressure. The same is true about my pension. It is deducted from my salary. And somebody will give it to me when I retire. I know there is some money and haven't checked actually how much. I have no choice.

Of all things about Western Capitalism the thing I really loved was cold clean water all the time. The water I drink, comes out of a tap and I pour it into a glass and drink it. I don't think about whether it's a good water or bad. It is always good water.

Think about a poor person and when we ask him why don't you boil your water? Think about every time you drink it, you have to boil the water, you have to put in chlorine and wait for one hour before the chlorine vapours go out and then drink it. It's a challenge to live your life well as a poor person by our standards. You have to make sure that the water is clean. You have to make sure that you are putting away money for future because there is no automatic deductions of your savings. You have to make sure that your children get immunised.

It is difficult to be poor

We need to understand how difficult it is to be poor. That is the first fact to keep in mind. Every poor person is much more in control of his life than I am of mine. I don't know how much my salary is. I don't how much my pension is. I don't know where my water comes from. I have automatic health insurance. I don't have a choice. Most of my choices have been taken out of my life. In fact, wait, I don't want those choices. Those are hideous choices. I would rather want to choose whether I want to eat meat today or fish. That is a much more pleasurable choice to make. I could choose my pleasures because my needs are taken care of.

Vivek Kaul is a writer and you can reach him at vivek.kaul@gmail.com

Updated Date: December 20, 2014 14:46:09 IST

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