Introduction
I read a few optimistic books about the world. They describe increasing living standards, namely in the developing world. Poor economics evaluates interventions that help the developing world to catch up.
The authors examine various areas of life and point out where the help is efficient and needed. They also correct misconceptions about the developing world.
They look at everything through an "S-shape framework". Sometimes, the poor are in a poverty trap. They cannot get out. In that case, small help helps the poor to take care of themselves.
The S-shape curve is below. On the X-axis, we have income today. On Y-axis, we have income tomorrow. Line N, P, Q means that you have the same the next year as you have now.
Between N and P, the curve lies below the straight line. It means that if you have A1 money, next year you will have A2 money (A1 is bigger than A2). It is because you don't make enough money to sustain yourself. It is the poverty trap.
Between P and Q, the curve goes above the line. If you work with and you have B1 amount of money, next year, you have B2. You are escaping poverty.
An efficient help to the poor is to identify areas where the incomes follow this curve. And help the poor to get out of the income trap. Maybe, it's buying malaria nets or helping to get enough calories or micronutrients.
World hunger is solved!
One misconception about the poor is that they don't have enough to eat. And malnutrition is an obstacle to working.
It is incorrect.
Anywhere, people have enough quality calories unless they are in the middle of a conflict. Some people can still miss micronutrients. The authors show how the problem of the developing world is more about information than material problems. (So, not enough food does not create the S-shaped curve.)
They found that even the poorest can spend 30% more money on food if they choose to. That means cutting back on alcohol, tobacco, and festivals. Subsidizing food seems like a way to help, but it doesn't work in practice. Subsidized food is viewed as less luxurious and consumed less.
Similarly, when the food expenditure increase in a household, they don't eat more. The poor eat more expensive food. Especially tasty (sweet) one, even less nutritious.
The food prices dropped in the last 30 years. Share of the budget devoted to food declined. People consume fewer calories. (It is because the work and satiation changed. You don't need to get water from a distant source. You don't lose calories in diarrhea or parasites.)
The above points mean that world hunger is solved.
The biggest problem with malnutrition is missing micronutrients. Buying "fortified" food with given nutrients is cheap. Poor don't buy it. They don't have information. And it's tedious. In developed countries, micronutrients are added automatically (iodine in salt, for instance). We don't need to think about that, and we wouldn't. Poor people need to.
Number of children
Poor have more children. There is a lot of good reasons for it. Children mortality is high (or was, recently). To have at least a few of them, they need to try to have more.
Children help with work.
Children insure for old age. Some of them might get successful and take care of their parents.
Having more siblings is not a disadvantage for the children. When the authors control for the wealth, they see that the number of siblings does not reduce the success of others. It is not bad for a child to have a sibling. Nevertheless, the mother has fewer opportunities.
Having fewer siblings also means that parents don't expect children to help later. So instead of investing in children, they save.
Because the poor have children for good reasons, even the access to contraceptives does not change too much.
Risk management
In the book, the authors describe what instruments poor use to mitigate risks. Generally, they are losing a lot of profit for security.
If you have one big field, you can farm it efficiently. Poor have tiny and many of them. They lose a lot, but in the case of a bad harvest somewhere, they still have something to eat.
Poor hold multiple jobs or side-hustles. They do not commit to one. It would pay more, but it is risky.
The poor do not move to a city. Countryside provides security of your village. A worker stays in the city for a few months and then moves back. It reduces the money they earn.
Entrepreneurship
Many poor are self-employed. From the outside, it looks that they are very entrepreneurial. It is pronounced in many books about helping the poor. "There are a billion entrepreneurs. They just need money."
The authors look at data a little bit closer. Indeed, the poor report themselves as self-employed, and there exist some success stories. Generally, the poor try to get employment, not start a business. They run the business because every bit helps. They have no desire to grow or extend it.
Poor prefer stability. When a factory opens next door, children in the village get taller and healthier, even if it's a factory that pays low wages.
Conclusion
I liked the book. I would recommend it to everyone with a warning it's more a research book than popular nonfiction. It contains a lot.
While writing the post, I revisited the book and my highlights. After a highlight, I read further on, and it was gripping as before. I might reread it in the future.
The authors talk about much more. I didn't mention health, education, politics, and relationships between men and women.
Finishing facts
Taller people earn more because they are smarter (I'm 193, nice to meet you). It has a common cause: tall people had good nutrition when they were young. It makes them realize their genetic potential not only in height but in intelligence.
Witch killings correlate with droughts and bad weather. People identify an unproductive (usually) woman and accuse her of being a witch. Sometimes even families do this to their relatives. But it seems necessary for survival.
The authors cite research saying that thanks to AIDS, Africa is 5.6% richer. Yes, many people die, but facing a war because of overpopulation or feeding old is worse. The authors put it there as a curiosity, but it's chilling.
Unintended consequences: Young girls get AIDS more often than young boys. They tried three approaches for that: Either give a lecture about fidelity and sexual abstinence, give a lesson about safe sex, or give them school uniforms. Save sex worked great. Girls got infected less. School uniforms worked well. Girls stayed longer at school. The sexual abstinence was terrible. Girls decided to marry. They married richer and older guys with AIDS (probably). This lecture undid all the school uniforms.
A way to bring wealth to a country is to reserve an empty strip of land for a foreign country to lease for 99 years. It happened in Hong Kong. The UK developed it and then handed it to China. It might stimulate investments and help the country without giving up too much control.
There is a place after which a popular mathematical programming language takes its name. It is MatLab.