Poor Economics Review

Poor Economics by Abhijit V. Banerjee and Esther Duflo

When I picked up Poor Economics, I wasn’t looking for an easy read. This isn’t a book that you breeze through while relaxing on the couch. It’s dense, it’s data-driven, and it’s unapologetically academic. But that’s exactly what makes it important. The book doesn’t sugarcoat the harsh realities of global poverty—it digs deep into the complexities of why poverty persists and challenges the usual narratives about how to fix it.

The premise is pretty straightforward: Can policy alone lift people out of extreme poverty? Can you really “policy” people into prosperity? The authors, both Nobel Prize-winning economists, tackle these questions with a mix of hard data, real-world experiments, and a willingness to challenge common assumptions. They’re not talking about the American version of poverty—you know, the kind where people have cell phones and cars but still struggle to make ends meet. They’re talking about the kind of poverty where people survive on less than a dollar a day.

I wouldn’t call Poor Economics gripping or thrilling by any means. It’s dry—no blood, no gore, no jaw-dropping plot twists. You don’t read this book to be entertained. You read it because you’re curious, because you want to know how poverty actually works on a global scale. The authors explore everything from healthcare and education to microfinance and entrepreneurship, always asking the hard questions: Why do poor people make seemingly irrational decisions? Why do some interventions work while others fail spectacularly?

"People don’t want to be in poverty; they are just stuck because every decision they make is dictated by the need to survive today."

One of the things that really stuck with me was how Banerjee and Duflo push back against the stereotype that the poor are inherently irresponsible. It’s easy to judge from the outside, but the truth is, when you’re constantly fighting for survival, every choice is strategic—even if it doesn’t make sense to those of us who aren’t living it. They illustrate this with examples of cash transfer programs that seem counterintuitive but actually work better than more complicated aid schemes. It’s a reminder that when you have almost nothing, your decisions are driven by short-term survival, not long-term planning.

One of the key concepts the authors discuss is the Iron Law of Oligarchy—the idea that even in efforts aimed at poverty alleviation, power tends to concentrate among a few, leading to programs that serve the interests of the powerful rather than those they’re supposed to help. It’s a sobering reminder that well-meaning initiatives can get co-opted by the very systems they aim to reform, leading to inefficient or even harmful outcomes.

The book also dives into the generational aspect of poverty: how being born into deprivation shapes your mindset and limits your opportunities long before you have a chance to change your situation. It’s not just about money—it’s about the mental and social barriers that keep people stuck. That’s where the 3I Problem comes into play: Ideology, Ignorance, and Inertia.  The book does a great job of showing how preconceived notions, combined with a lack of insight and a resistance to adapt, can make even promising initiatives fall flat. It’s a stark illustration of how complex real-world solutions need to be and how one-size-fits-all approaches almost always fail.

"The poor are no less rational than anyone else—quite the contrary. Precisely because they have so little, we often find them putting much more thought into their choices."

If there’s a downside, it’s that this book is not exactly a page-turner. There’s no narrative arc to keep you hooked. It’s academic, methodical, and doesn’t waste time trying to make the topic palatable. You read it for the substance, not for the style.

In the end, I’d recommend Poor Economics to anyone serious about understanding global poverty from a grounded, evidence-based perspective. It’s not a feel-good read, but it’s one that challenges you to rethink what you think you know about poverty and the ways we try to address it. It’s the kind of book that makes you question not just how you see the world, but how the world actually works.