Challenges of World Poverty - Lecture 1

Course Overview

• Taught by Abhijit Banerjee and Esther Duflo
• Focus on broad conversations about world poverty
• Non-technical; not focused on analytical tools
• Aims to get students involved in great debates about poverty
• Based on the book Poor Economics (unpublished manuscript)

Course Structure

• No problem sets
• Reading of the book and additional syllabus materials
• Pop quizzes on readings (random dates)
• Five short essays (graded on best five out of max 12)
• One longer essay
• Final exam
• Emphasis on discussion and engagement
• Lectures will be videotaped, but discussions will be private

Goals and Teaching Approach

• Focus on understanding and engaging in big picture thinking
• Class discussions are crucial
• Think about poverty as multiple solvable problems rather than one grand issue
• Move away from the notion that poverty is a single overwhelming problem

Experiment on Generosity

• Compared reactions to general statistics vs. personal story (Rokia)
• Typically, personal stories raise more money (~double), but not in this class
• Possible reasons: selection bias, greater generosity among students

Introduction to Themes

Key Themes

• Poverty is a multi-faceted and deeply entrenched issue
• Large wealth gap: Average income in the US is vastly greater than in poor countries
• Scale of poverty: About 850 million people live under $1 a day

Two Perspectives on Aid

• Jeffrey Sachs' View: More aid and intervention needed
• William Easterly's View: Critique of aid effectiveness

Sachs' Perspective

• Emphasizes dire conditions and need for substantial outside help
• Example: Sachs and Angelina Jolie's initiative in Africa

Easterly's Perspective

• Focuses on the inefficacy of aid historically
• Believes aid might sometimes do more harm than good

Counterfactuals in Aid Effectiveness

• Problem of determining what would have happened without aid
• Different interpretations: aid may be seen as either ineffective or beneficial
• Historical effectiveness of aid remains an open, unanswerable question
• Course will focus on practical questions: How to effectively give aid?

Key Takeaways

• Importance of specific interventions over broad generalizations
• Need to turn big questions into smaller, more manageable ones
• Practical application of knowledge and theories related to world poverty
• Active participation and critical thinking are encouraged