‘There needs to be an effective social nest for the poor’
Bangalore : Economist Abhijit Banerjee , director, Abdul Latif Jameel Poverty Action Lab, Massachusetts Institute of Technology,
whose interests include economic development, information theory, and the theory of income distribution, spoke to Deepa Bhasthi on the poor and their relevance in a country’s economy:
whose interests include economic development, information theory, and the theory of income distribution, spoke to Deepa Bhasthi on the poor and their relevance in a country’s economy:
How does the poor man figure in a marketing department’s strategies?
Some economists believe the poor represent huge untapped business potential. There is some truth to it. The poor are certainly interested in consumption goods, maybe too interested in some cases. The cellphone industry is an exception, but that apart, i haven’t really come across compelling examples of products designed for the poor. Marketers are yet to understand how to come up with cost-effective products to target the poor alone. The poor buy low-end goods in the existing product category and no innovation is needed for that. In East Africa, the poor are using cellphones for financials and banking, that’s an innovation for the poor. But, there aren’t many other possibilities of tailor-made goods for the poor.
What are the driving principles of the Poverty Action Lab?
We start with the view that anti-poverty theories don’t work because the design of the programme is lazy, cynical and bad. Very little thought goes into design and implementation. It could be partly because of a lack of political view and partly because of a lack of science in them.
Is India in the focus of the lab?
India is one of the two biggest countries where the lab is located. There is huge attempted innovation here. The political process is dynamic. There is innovation energy that should be channelised into other areas. There is a lot of innovation but less scaling up of the efforts.
When the poor become rich, what do they give back to the society? Who benefits from their benevolence?
The poor rarely get rich; there is very little mobility. Even Dhirubhai Ambani was not really, really poor. There is no well-levelled-out tradition of the non-local. Those who become rich might build a temple in their area. The tradition of philanthropy is local. We need more people with vision.
When a poor man is in need of immediate financial assistance, how good is the theory teach a man how to fish than give him a fish to eat?
I am not a big subscriber to this theory. The fact is that people have to bear a huge amount of risk in learning and practising a trade. There needs to be an effective social nest and more diversification to minimise such risk. It is not clear to me if people would be better off learning something in place of instant assistance.