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09/12/2014

Comments

Taylor Theodossiou

I really like the Banerjee and Duflo article because it forces us to look at the importance certain goods and services are to the poor. I think that the article did a good job explaining how the poor must find creative to make money or get “insurance.” Also, there were many things about this article that stood out to me. The first thing that surprised me was the emphasis on entertainment and festivals taking up a portion of what the poor's income. However, I realized that this type of thinking was simply a factor of my being privileged and living in a developed world. We take for granted a lot of things in our world and so I don’t think it is fair, and I believe Banerjee and Duflo would agree, to just make the claim that the poor need to focus simply on necessities such as food. In order to properly nourish themselves would they need to spend all of their income on food? I do not think that this would not be a very good way to live. I think it is necessary, no matter how little you make, that you be able to enjoy at least some form of entertainment in your life.
I was also surprised by how entrepreneurial the poor are and how the article explained how it was beneficial for the poor to be entrepreneurs. I believe the Duflo and Banerjee article explained this entrepreneurial tendency well. On page 20 they say "if you have few skills and little capital, and especially if you are a woman, being an entrepreneur is often easier than finding a job: You buy some fruits and vegetables (or some plastic toys) at the wholesalers and start selling them on the street…" At first glance it seems that this is an ingenious way for the poor to help themselves. However, Duflo and Banerjee point out that this entrepreneurial tendency is a way to lessen risk and the businesses they start aren’t always unique because they are often low risk and it is easy to enter in to these markets.
The story of the fertilizer I found to be incredibly interesting, especially the way Duflo and Banerjee used it as an example of how poor people don't save. I was surprised by the two different outcomes of the surveys. I am confused by the why the Kenyan farmers seemed to save in one circumstance but not want to save their money another. Is it simply a lack of education that causes the differences in spending with the vouchers or no vouchers? And why is saving so limited among the poor? I would like to understand more about this scenario and whether or not it translates in to other aspects of poverty and in other regions of the world.

Brian Lawler

I find the brief section on short term migration for work particularly interesting. In their study, they generally find that the head if the household was the person to move for work. They also found that generally the move was a short distance and for a short period of time, generally about three months. I took the economics course on China's modern economy last semester and migration was a huge topic there. We also found China's migrants to differ significantly from what this article finds.
Generally Chinese migrants were from the younger generations, both men and women, as they were looking for jobs in the rapidly rising mega cities that provided better wages and opportunities than staying in the country and farming. These migrants often travelled great distances as many Western provinces did not yet have major cities to work in. However, this has changed as roads and power lines have spread through the country. Migrants often moved for work for years at a time, only returning home for brief visits.
My question then is what makes migrants in China, a huge player in development economics so different from the other countries studied in this article? My theory would be that younger generations of Chinese migrants were offered education opportunities, which were not available to their elders, that made them uniquely prepared for the capital intensive or service related jobs available in mega cities. However, this is only my opinion and the answer may actually lie in different family structures, geographical differences, or even the nature of the mega cities in China as compared to the much smaller cities used in the study.

Daphine Mugayo

If we are mainly looking at welfare of people, what stands out for me is that the poor just like the many other humans try to make decisions that make them the happiest.
That being said, it seizes to be a surprise that they spend significant portions of their income on alcohol and tobacco. These goods, even though expensive help them escape the constant thoughts on their inadequate standards of living and in so doing somewhat act as stress relievers. More so, such activities are often social. They grow social networks and thus provide more happiness to the individual. Whether these activities are sustainable for the future, that could be questionable but their accessibility makes them primary choices.

Looking through the same lens, setting aside money for festivals seems like a rational choice. The social nature of this activity of celebration is a major source of happiness to these families. It covers up the thoughts and stress of living under such minimal resources and brings everybody together.
As no human being finds happiness in constant stress and torment, the poor too seek out activities that remind them of the joys of life. Such activities give them reason to continue living even a midst such intense poverty and political abandonment.

Daphine Mugayo

On a different note though, one major point that stands out for me that was not mentioned in the paper yet answers a number of questions is subsistence farming.

Many poor families do not spend much on food because they are able to grow their own food. It is for this reason that they spend mainly on processed goods like sugar and cooking oil since they are unable to grow these goods. With large sizes of households, there is enough labor to cultivate these lands and have at least enough food to feed the family.
Because this may be the main source of food and sometimes income for the family, farming becomes the main activity for the entire family even the children. Education becomes only a secondary goal since with no food, death and sickness triumph and education seizes to be any worth.

The returns from subsistence farming are pretty limited and in that case, monetary savings are limited. One idea that comes in here is savings in form of dried foods. Although these are sometimes sold, they often come in handy as a source of food when the weather is unfavorable. But it is apparent that savings could be done in other forms rather than money or investment.

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