New Book by Yale Economist Outlines Best Solutions for Fighting Global Poverty
In their forthcoming book, “More Than Good Intentions: How a New Economics Is Helping to Solve Global Poverty,” Yale economist Dean Karlan and his co-author Jacob Appel take the reader on a tour of the developing world, where development and behavioral economists are working at the ground level to determine the best way to alleviate world poverty.
In articulating how best to help the three billion people living on less than $2.50/day, development economists tend to fall into one of two camps. One camp claims that wealthy nations contribute too few dollars to combat poverty. The other camp counters that money doesn’t guarantee poverty alleviation, and point to the $2.3 trillion spent in foreign aid over the past 50 years as evidence that throwing money at the problem won’t solve it. Despite their differences, both groups must agree that some types of development interventions work better than others.
Building off that common ground, Karlan and Appel set out to learn what works best, and why, directly from the individuals who struggle to lift themselves and their families out of poverty.
The endeavor is a natural fit for Karlan, the founder and director of the non-profit research organization Innovations for Poverty Action (IPA). IPA’s mission is to work with development organizations and economists to conduct rigorous evaluations of poverty alleviation programs; it conducts projects in areas as diverse as microfinance, public health, governance and education. Before writing the book, Appel, a researcher at IPA, had experience in Ghana, and the book benefits from both authors’ extensive time in the field.
A recent recipient of a $7.3 million Bill & Melinda Gates Foundation grant to study micro-savings for the world’s poor, Karlan belongs to the school of behavioral economics. While this approach seeks to understand deviations from rational behavior for both rich and poor alike, behavioral economics is particularly useful in helping design better programs to combat world poverty, notes Karlan. Not all solutions presented in the book are based on behavioral economics, however, and the authors discuss many ideas straight from traditional economics that help fight poverty. Karlan and Appel bring these theories to life by relating human-interest stories from around the world, for both rich and poor.
“The book is written for a general audience. There are no tables. No fancy econometrics,” said Karlan. “We wrote the book so that those not getting a Ph.D. in economics can still learn what this movement to fight poverty is all about, and most importantly can learn how they can make a difference with their own charity or work.”