Can We Blame Global Poverty on Pessimism?

MIT economist Esther Duflo has documented how anti-poverty programs create an economic benefit larger than the sum of their parts. She says the margin represents the yield of hope's seeds. 

What's the Latest Development?


Living in poverty exacts a big mental tole but new research indicates that the positive effects of anti-poverty programs often go beyond their immediate material consequences. When MIT economist Esther Duflo investigated a micro-finance operation in the Indian state of West Bengal, she found that giving families "small productive assets"--a cow, a couple of goats or some chickens--benefited them beyond the milk, meat or eggs they could sell as a result. It turns out that recipients were working 28% more hours than before, mostly on projects unrelated to the assets they were given. 

What's the Big Idea?

Duflo believes that micro-financing and other anti-poverty programs provide hope to the impoverished, which turns out to be a very powerful thing. The mental anguish of poverty leads many to believe they are stuck in a poverty trap when they are not. Because prosperity seems an impossibly distant goal to the impoverished, they often forgo incremental improvements they are capable of making: "a bit more fertiliser, some more schooling or a small amount of saving." But when these incremental changes yield tangible dividends, families and individuals are encouraged to make more and more...

Photo credit: Anna Omelchenko / Shutterstock.com

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