ATIENZA, Danielle Nicole L                                                                        11575700

ECONDEV/ V25                                                                                January 31, 2018

There were a lot of issues that were raised in the first chapter
of the book, titled “Poor Economics” by Abhijit Banerjee and Esther Duflo.
First, the general view of the poor is not unilateral nor is it bilateral but
more of complex, a grey area. It was raised that the policies of addressing the
poor were not inclusive to those who were the “average” poor. These policies
mostly target the lower end of the spectrum of the marginalized. Through
randomized control trials (RCTs), the authors were able to develop an analysis
of determining how the poor determine their choices in life. Because of
insufficient data in developing countries, many rely on the data of developed
countries like the U.S. or the U.K. and this creates problems in analysis
because what is “poor” in a developed countries does not necessarily mean poor
of developing countries, this is due to the fact that the global estimate for
the poverty line is different from a country’s local poverty line. For India,
it is 16 Indian Rupees or about 36 U.S. cents per person per day. For people
that live below 16 Indian Rupees per person per day is considered to be poor by
the India’s government. But being poor is relative depending on the country a
person is in. If a person is in a developed county, the poverty line is much
higher than those in developing countries. As of 2011, the World Bank records
the poverty line to be about 1.90 dollars per person. The authors raise an
issue that the poor do not enough income to grow financially as Individuals.
Most of the marginalized usually have a higher proportion of people dying,
increased illiteracy, as well as a higher proportion of income allocated to
food and this gives problems to a miniature amount or none at all going to
other things such as savings, financial planning, education and the like. An
issue whether or not it is advisable to give a certain beneficial good for
free, subsidized or paid in full. I think that for the marginalized, there are
certain levels of income that should be taken into account. For those who are
can afford to pay for a product, they should pay for it in full. For those who
cannot afford to pay in full, give them subsidies and for the extremely marginalized,
give it for free. However, they should be educated that the first round of
products to be sold, whether for a certain price or free, that they should be
able pay for the next or at least partially.

            Sachs argues that it foreign aid or
aid could help an individual (marginalized) reach their potential where as
Easterly argues otherwise, that an individual (marginalized) could only reach
their potential through hard work. Both are actually true. The problem actually
lies within the government. With the right actions and enforcement, foreign aid
can go directly where it is needed, which are the climate-stricken areas
wherein the marginalized communities cannot help themselves at all. Those who
can actually fend for themselves should be given other opportunities to learn
how to better themselves with projects such as livelihood education and the
like. The poverty trap suggested by Sachs states that the poor are poor because
they are poor, meaning they are incapable of providing for themselves. Given
aid, they are able to increase their potential and this can continue with
regular intervals of aid. However, Easterly argues the opposite that foreign
aid or aid will make the general poor more lax and unproductive. I think that
both of these ideas are true in a sense yet false in another. An individual
should not be generalized. Again, it is always a grey area when it comes to
humans because no one human is alike, which is why I agree to the use of RCTs
to be able to simulate “equal” chances via different methods. 

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