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In Schultz’s “The Economics of Being Poor,” he discussed the misconception that land and energy are of prime importance to the development of agriculture and stressed the importance of investments in human capital.
Technology and innovation are important in fields besides the manufacturing sector. Before reading this article, although I know that technology is important, I associated it with a factory-based setting. Schultz’s article helped me understand that technology is important in the agricultural sector just as well. With enhanced investment in education and health of farmers, the agricultural sector can produce more products with the limited land and energy they have. Such understanding may help eliminate the urban bias problem. Policy makers rationalize their urban bias by arguing that the returns to investments in the agricultural sector would be lower than those of the modern sector. They pay little attention to farmers and invest little in their human capital. Since human capital investment is vital to the development of the agricultural sector, of course the government would not see strong development in the agricultural sector with a low-quality population. Reading Schultz’s article, I understand that society should not attempt to improve poor people’s human capital solely to prepare them to leave their farmland. What human capital investment attempts to do is to enhance people’s capabilities so that they can choose whether they want to enter the modern sector or develop the agricultural sector through research and innovation.
I find Schultz’s critique on assumptions of capital homogeneity interesting. Connecting it to “The Fall and Rise of Development Economics,” it is apparent that although simplified models can help people understand the world better, economists should be cautious what they are simplifying. For crucial elements that directly relate to the result, like how capital homogeneity matters to understanding whether to invest in the urban or rural sector, economists should not oversimplify.
Schultz’s idea that an increase in life expectancy would increase their utility interest me. According to Schultz, when people expect to live longer, they would acquire better education, invest more in their children’s education, and produce less children. Better education improves people’s productivity, which leads to economic development; reduced fertility enables the concentration of limited capital on less people, which would help improve population quality and the economy. Better life expectancy thus is a freedom that leads to the cultivation of other freedoms.


In Theodore W. Schultz’s article, “The Economics of Being Poor”, he discusses some common fallacies he finds in economic thought, such that “the presumption that standard economic theory is inadequate for understanding low income countries and that a separate economic theory is needed,” and that land and energy are the most important to agricultural improvement, while human capital really is the most important factor.

When I do agree with the majority of what he described, I think that there are some parts of his article that are contradictory to the Rodrik article on the beginnings of development economics we discussed previously in class. When Schultz wrote that “the presumption that standard economic theory is inadequate for understanding low income countries and that a separate economic theory is needed” was a fallacy, it seemed to contradict what Rodrick said when he discussed how high development theorists were largely ignored because in their era the extent of the complexity of modeling was not high enough to model for phenomena like asymmetric information and other aspects that deviate from the ideal perfect econ 100 class type of model. However, in Rodricks article, I remember him saying that much of what these high development theorists said had some merit and that it was disheartening to think about the 50 odd years lost when these ideas were not looked into and their creators grew old.

I also thought it was interesting that the early contributors to economics in England had very similar economic situations in comparison to developing countries today. It was something that I was unaware of since it is very difficult to imagine a developed country like Britain as its developing self after seeing it all my life as a developed country. However, wouldn’t that also go against Schultz’s point of similarity? While it is true that Britain was similar to developing countries today by his metrics, Britain a couple hundreds of years ago did not have to compete with the fully industrialized countries that developing countries today do.

Alec Horne

Schultz’s article discusses the importance of investing in human capital in order to increase the population quality of a country to spur economic advancement. Although I agree with the article entirely, there is evidence that even though investments in population quality are positive for a country, there is still a separation between the rural and urban sectors in a country.

China, for example, implemented a one childbirth law policy in order to decrease fertility rates and allow families to invest more heavily in one child. Individuals in urban areas had to follow this policy extremely closely and would otherwise be heavily fined with the risk of losing their job. In rural areas, this policy was much looser, and families didn’t fear not following the policy and often were “too poor and didn’t have anything to lose”. The article in the science direct database states, “The rural-urban gap in China is huge. Specifically, compared with rural areas, urban areas have much better health, medical facilities, and education systems, all of which are crucial to new-born babies. Therefore, given an increase in population concentrated in backward rural areas, the OCP may spur an adverse selection in terms of population quality” (Wang). This idea is known as the quantity-quality tradeoff theory. The result is from the effect on human capital where investments in human capital in rural areas are much lower compared to urban areas. To explain further, if families in urban areas were only allowed one child yet those in rural areas were allowed 10, we would see a decrease in China’s average human capital level for the next generation.

What Wang is saying, is that although fertility control can improve investments in human capital, the policy can also have a substantial effect on the income gap between different sectors of a single population leading to an “adverse selection”. This is ultimately caused by rural families not following certain policy implementations creating a larger population with fewer returns to human capital. The country thus loses more of its urban children where human capital returns are highest.

Alice Chen

Shultz's paper relates back to what we covered the first week on the "Economic Lives of the Poor" by Banerjee and Duflo where we studied how the poor typically spend their money and time. He reiterates what we have already learned: that the poor spend a bit more than half of their income on food, and tend to have larger families. However, a few new points stuck out to me as the majority of the paper was focused on improving human capital.
First, I think it's interesting how Shultz describes land as overrated. He gives several examples where those who are agriculturally dependent are poor regardless of where they live. Whether it be on the Deccan Plateau where productivity is low, or on the highly productive soils of South India, people residing there continue to be poor. While Banerjee and Duflo discussed the differences in the land-population ratio, Shultz states that there is a decline in the importance of farmland and a rise in the need for human capital. This, of course, makes sense as investments in health and education have greatly improved the quality of lives for the poor, but makes me wonder if farmland can be more productive and develop a nation.
Shultz also argues for the importance of the quality of human capital. It's interesting to see how quality and quantity are substitutes, and how richer families will decrease the quantity of children they have so they can increase the quality of each one. The poor, on the other hand, continue to have multiple children and are not concerned about improving their well-being, but birth them solely so they have more labour. Decreasing quantity and increasing quality lead to healthier and better educated children, which can stimulate growth and development within a nation.
I supposed the final question would be: how can we expect the poor to invest in the quality of human capital if we need a certain quantity to retain the same productivity in the short term?

Kenza Amine Benabdallah

In “The Economics of Being Poor”, Theodore W. Shultz talks about the major mistakes made by economists when trying to understand the reasons why some countries are still developing, while others have reached the status of developed. He analyses the history of economic development and realizes the major misconceptions that economists have believed for years.
The first and most important misconception that economists have had is that they think that the standard economic theory is inadequate for understanding low-income countries and that a separate economic theory is necessary. I thought it was a very interesting point since I myself thought that cultural and behavioral factors were as important as economic factors and that they should be highly considered when making economic models. However, he argues that “standard economic theory is just as applicable to the scarcity problems that confront low-income countries as to the corresponding problems of high-income countries”.
Another mistake that has long been made is the neglect of economic history. I highly agree with that. As we’ve talked about earlier in the class, context is important when analyzing economic activity and history is a very important part of context.
I thought it was fascinating that he talked about how land is overrated when around me people have always talked about land scarcity being a limiting factor of growth. He even argues that “differences in productivity of the soils is not a useful variable to explain why people are poor in long-settled parts of the world.
Finally, he argues that the quality of human agents is underrated. It seems obvious that a more educated population results in higher productivity and higher income. However, governments around the world tend to forget the importance of investing in health and in education to attain this objective.

Lauren Paolano

In Theodore W. Schutlz’s paper, The Economics of Being Poor, he touches upon a section that describes how the quality of human agents is underrated. The human agent is a critical factor of being poor, and land is not. There is a significance behind the investment in improving population quality which will enhance the economic prospects and the welfare of poor people. Improvements in the human agent include: child care, home and work experience, the acquisition of information and skills through schooling and investment in health and overall schooling can improve population quality. These investments in early age development will set up the individual to have more opportunities in their future. Schultz then goes to discuss the expectations of human agents in agriculture and explains how farm laborers and farm entrepreneurs who both work and allocate resources are shaped by new opportunities and by the incentives to which they respond.
This relates to our class discussion a few weeks back when we talked about how the farmers will choose a safer farming technique with fewer returns, rather than a riskier technique that can either yield an extremely high return on crops or an extremely low yield on crops. As you spoke further in class how the Mexican farmers couldn’t afford to take risks to raise productivity because they have to be so concerned with the uncertainties. Farmers would rather act rational in order to avoid the uncertainties such as weather issues or their technology breaking in the middle of nowhere. The limitations to agricultural development include simple access to land, labor, access to technology, lack of collateral, and risk and uncertainty of the farm. In my opinion, there needs to be more investments from the government spent towards agricultural development in order for there to be more productive and successful crop seasons which will benefit economic development throughout society.

William Chapman

In his essay “The Economics of Being Poor,” Theodore W. Schultz talks about the importance of population quality or human capital for improving the lot for the poor. I agree with him that it is not enough to simply give people more land or resources. At the same time, it is not enough to just give the population more human capital, whether that be through education or health care or even freedom. These inputs need to be able to complement each other. Schultz does not really put forward many solutions to this problem of ‘population quality.’ Schultz says that governments give poor incentives that hold back farm productivity, but I do not buy his argument that simply providing opportunities for more entrepreneurship would work much better. Schultz does not put forward any examples of his model and I cannot think of any in the more recent past.

The advancements these farmers and countries can make have in large parts already been made. There are technologies from seeds to fertilizers to harvesting equipment that could provide massive efficiency benefits to farmers in developing countries. I recently read an article stating that a strand of rice with enriched vitamin A has been developed for decades but some developing countries have not yet allowed this strain of rice to be grown in their countries. This has possibly cost millions of lives. Technologies such as these allow governments an opportunity to provide good and helpful incentives through distributing these technologies with low or zero upfront cost and then collect a return on investment through the increase in population productivity.

Margot McConnell

Schultz’s Nobel Prize talk on the Economics of Being Poor fits in perfectly with just about everything we have discussed in this class.

The first part of his lecture talks about the misconception economists and others who are not poor have about those who are poor and the choices they make. This goes hand-in-hand with Banerjee and Duflo’s article that we read at the beginning of the year. There are a lot of choices that poor people make that might not make sense to someone who is rich. It causes many to look down on those who are poor for not making “the right decisions.”

Schultz hits home, however, when he says that we need to work on improving population quality, specifically human capital. The quality of life of these poor individuals is important. Perhaps some of the choices that these people are making is because they would prefer to be able to listen to the radio and be happy than have an extra bowl of pasta and be sad. Because it is important to focus on the human capital side of things, it makes sense that there should be a large focus on agriculture as that is the sector where many of the poor people in the world work. One thing that always comes to mind to me when reflecting on the treatment of people in agriculture has to do with pesticides. Many of the pesticides that are used in these countries are harmful to the people working in the fields. In fact, in my developmental biology lab, we are looking at the effects of organophosphates and pesticides on development in frog eggs and C. elegans. There are massive negative spillovers to the mass use of pesticides, and the fact that it hurts so many of the workers is truly unacceptable. Therefore, more reform needs to be made in order to protect these farmers from harm, not just with pesticides but also with other diseases, physical labor, and so on.

One constant topic we always bring up is government policy/investment in health and education. We talked about how in South Korea there were major improvements due to an increased focus on health and education. However, one thing that Shultz mentioned that I had never really considered before is the importance of placing emphasis on highly skilled workers. We tend to discount poor countries because of their lack of resources; however, they can be considerably helpful especially in terms of research. Last year in my Health Economics in Developing Countries class, we looked at Cuba and its reciprocal relationship with Latin America. In Cuba, people can attend medical school for free. They are given this education for free with the incentive that they will go to other countries and help those in need. In other words, people from poorer countries who cannot afford medical school will go to medical school in Cuba (one of the largest medical schools in the world) and will get their degree then return to their country to improve healthcare.

Christopher Watt

In his Nobel talk, T.W. Schultz focuses on the vitality of human capital development to improve the “quality” of human agents for development. He highlights the idea that this is more important than the available land and resources that exist for those experiencing poverty in a given area. He describes many of the ideas about the two sectors of society that we discussed earlier in the term, criticizing the importance placed on the urban sector. It seems that the belief that modernization occurs in urban centers fails to incentivize or enable improvement of individuals in the agricultural sector; rather, the urban sector operates at the expense of the traditional, forcing food prices down and harming the well-being of poor farmers. Traditional economic principles are believed to only apply to the urban sector rather than the “backward” rural populations. In opposition to this view of many economists, Schultz promotes the idea that human capital development and improvements in quality can lead to development in both sectors. Furthermore, he points out that farmers often participate in other small business and entrepreneurial operations. The ability to improve their economic opportunities and actively participate in private enterprise is vital to development.
One of the most valuable things I took away from this paper is Schultz discussion of Economic history, pointing out that every westernized nation was once an agricultural society, later developed an urban sector, then dealt with issues that are currently present in many countries considered to be developing today. Schultz articulates that the “experience and achievements of poor people” point to opportunities for modern advancement in low income countries, and understanding this history can lead to greater development than knowing the particularities of a country’s resources and technology. Furthermore, development in low income countries can be viewed through standard economic theory and applied to achieve economic efficiencies.
Another big take away is Schultz’ discussion of the returns to human capital development. He argues that improvements in quality allow rents to rise over time and the greater quality improvements are, they greater their return. This leads to returns in individual productivities, as well as a decrease in demand for “quantity” (as quality is a substitute for quantity). This discussion and ideas related to it remind me of our previous discussion of gender equality and improvements in the well-being of women. AS women develop greater human capital, acquiring greater agency in the job market and decision making ability in th household, they are able to develop greater independence, have greater power over their own economic well-beings by means of outside incomes, and ultimately have more say within their families. Both their improved economic output and greater agency in their families contribute to a reduction in “quantity demanded,” allowing them to have less children, which in turns leads to better health outcomes and allows them to improve output even more by improving the quality of each allocation of child rearing to fewer children. On a macro level, as Schultz describes, this push toward quality over quantity helps with the issue of population growth.

Maisie Strawn

I thought Schultz’s lecture tied together a number of things we have been discussing all semester, which I suppose makes perfect sense--it would be hard to talk about development economics without talking about human capital or population quality as Schultz puts it. I appreciated Schultz’s focus on agriculture at the beginning of the lecture, and his point that “discrimination against agriculture is rationalized on the grounds that agriculture is inherently backward and that its economic contribution is of little importance” leads me to the conclusion that I have been thinking about through a number of our discussions and in my Food in the Holocene class with Professor Fisher, which is that we really need to rethink and revalue agriculture globally. There is perhaps no more important industry than agriculture globally, and yet it seems that livelihoods for farmers the world over are less than adequate. Schultz first attributes this to failures by governments to let farmers be entrepreneurs and modernize agriculture themselves. I was a little confused by this statement and I would love to discuss it more in class if time permits. However, his second point about inevitability of disequilibria and that “interventions by governments are currently the major cause of the lack of optimum economic incentives” rang true for me, at least in the U.S.. Various government subsidies for agricultural products, particularly corn, have led to a whole host of problems for both American farmers and farmers in other countries. However, it seems that there may be some government policies like crop insurance that could actually help farmers participate in the entrepreneurial activity that Schultz talks about. The importance of investments in health and education are clearly incredibly powerful for development both in the agricultural sector (which still holds most of the population in developing countries), but also for non-agricultural workers. It is very interesting to me to think about investments in health and education in the U.S. for agricultural-based communities. In my own experience, public schools in rural areas are typically far inferior to those in metropolitan areas. It is harder to get good teachers, there are less programs, and overall less funding. Healthcare is also a huge concern for rural areas in the United States. Accessing high quality healthcare is somewhat of an issue in my own community, but in the Western United States hospitals can be hundreds of miles apart and incredibly poorly staffed. I wonder what the implications of failing to invest in the most basic population quality factors (health and education) in rural areas will mean for the future development of the United States as a whole. It is not just investments in health and education where we are failing either. As we discussed in relation to land-grant universities, despite the huge benefits of agricultural research, research institutions are systematically underfunded. We will certainly fall behind developing countries like India and China that are investing heavily in such research activities.

Olivia Luzzio

In his Nobel Prize lecture “The Economics of Being Poor,” Theodore Schultz asserts that land is over-rated and human capital investment is underrated in the field of economics. Arguably, it is this line of thought that leads to increasing discrimination against the agricultural sector and enlargement of the modern sector due to opportunities for economic development through human capital advancement. As the majority of productivity shifts from the traditional to the modern sector, cities are the targets of government investment. This urban bias is visible across both developing and developed societies throughout the world. I believe it causes not only an economic but a sociopolitical divide between members of a society in the rural sector and those in the urban sector.
The ripple effects of urban bias in the United States were reflected in the outcome of the 2016 presidential election. 62% of Americans in rural areas of the U.S. voted for Donald Trump and 59% of voters in urban areas voted for Hilary Clinton. This demonstrates the opposing interests of the two sectors regarding public policy, some of the most relevant in 2016 being economic policies. Perhaps the main explanation for Trump’s victory was the large showing of rural voters who did not feel protected or advocated for in Washington, and believed Trump would change this for them. This begs the questions of why rural voters felt left behind the in the first place, and I would contend that it is partially due to human capital investments directed at the urban sector and lack of priority placed on small-scale agriculture and rural communities. In order to de-align voters across sectors, policymakers must offer economic solutions that promote the advancement of both sectors and reduce urban bias in the U.S.

Danh Nguyen

Schultz’s article emphasizes the importance of investments in human capital and the rural areas. Schultz made some interesting claims about treating the entirety of the labor force as a homogenous group and how the urban bias can be detrimental to the general population and the country’s economic growth.
By criticizing the practice of treating the entirety of the labor force as a homogenous group, Schultz is challenging the whole field of Economics as we know it. As we have read in “The Fall and Rise of Development Economics”, the field of Economics is justified by simplified economic models. By “simplified”, Rodrik meant that economists cannot account for the individual predicament of each person, but instead treat them as a group with similar traits. Schultz argue that each and every person has a different set of traits and backgrounds that cannot be generalized with each other. Both Rodrik and Schultz have their points, and I am conflicted as to picking a side. However, if we seek to understand economic dynamics on a micro-level to design a set of policies for a specific country, I will lean towards Schultz practices. If we seek to understand development economics as a whole, I will lean towards Rodrik. Yet, I feel that there is something about the fields of Economics that I think people should redefine or at least take a deeper look into: the definition of Rational Decision-making. I recently watched a video about rational addiction, which is addiction through the views of some economists, and I found that particularly disturbing. Decision-making in poor households may seem “irrational” from an elitist standpoint yet is completely rational in their point of view. The definition of rationality is thus should be tailored for each considered group.
What I am not sure about is Schultz’s claim about urban bias. From an altruistic standpoint, urban bias is a problematic practice as it discriminates against the agricultural sector where a large proportion of the poor concentrates. From an economic standpoint, a country may feel pressured into pushing economic growth in the short-run while making gradually making progress to alleviate poverty in the long run, resulting in urban bias and greater divergence between the rich and the poor. I feel conflicted between the pros and cons of urban bias, and I hope to find an answer for myself as I dig deeper into the field of Development Economics.


Theodore Schultz’s Nobel Lecture “The Economics of Being Poor” took a very Senian approach to development that relates well to what we have covered in this course so far. Specifically, Schultz emphasizes the importance of the quality of human agents. The mention of “agency” reminded me of Sen’s distinction of the well-being of women in poverty into two categories: agency and treatment. Even though Sen was talking about women in this scenario, I believe that the agency argument can be applied to poor farmers (including the vast amount of whom are women). Increased agency through political participation, labor market participation, and education, has the potential to improve the treatment of the poor involved in agriculture by working to overcome the “urban bias.”

I thought it was very interesting how Schultz framed farmers’ struggles through a lens focused on the distorted incentives that farmers face. Schultz notes how farmers haven’t made the necessary technological investments either due to a lack of information or a lack of incentives. Oftentimes, governments keep the price of produce artificially low to satisfy the urban population who values cheap produce and supposedly contributes more to the growth of a nation. Through more agency, poor farmers would be able to lobby more effectively for fair prices that justify the work that they are contributing, therefore improving the treatment of poor farmers.

The point of agency and treatment inherently ties in well with Schultz’s main argument, which is that “the decisive factors of production in improving the welfare of poor people are not space, energy, and cropland; the decisive factor is the improvement in population quality.” At first I was confused by this seemingly contradictory argument. I thought that it just fed into the "urban bias" even more. It started to make sense as he went on, though, and I began to see that as the returns of quality (returns to education, healthcare, etc.) increase and eventually begin to exceed the costs of quality, quality will be demanded more than quantity. This substitution for quality over quantity will ultimately help poor farmers by increasing their agency to lobby for fair prices which will then enable them to invest in better technology/farming methods. Overall, Schultz makes an intriguing argument which makes me wonder why more development projects aren't geared toward this way of thinking.


I found “The Economics of Being Poor” to be relieving and clarifying because up until now, I thought the readings were a bit too assumptive about people in the agricultural sector. For example, the Lewis two-sector growth model just assumes that several people on the farm have a marginal product of zero, and without any investing in human or physical capital, these people can move to the manufacturing sector without any hinderance on the agricultural sector. I know I do not live in anything close to a developing country, but my friends from home who live on farms have extremely high marginal products and it is an “all hands-on deck” mentality to complete all the tasks on the farm. Therefore, I found Schulz’s point that investment in the agricultural sector has high returns on average, in India it was even 40%, to be interesting. This is a highly important finding when considering Shultz’s point that most of the world is poor and earn their living from agriculture. To me, this signals the opportunity of agricultural investment, and once this investment is completed and human/physical capital becomes more effective on farms, maybe then the Lewis two-sector model and others like it can begin to take effect. It also signals to me the problem of the urban bias mentioned in the article, because if most of the poor people are farmers, there certainly needs to be policy that invests in the agricultural sector just as much as the urban sector.
I also enjoyed how much this article related to the other discussions in the course so far, especially the ones from last week. One of the positives that comes out of Shultz’s proposition to invest more in “population quality” is the improvements in life expectancy. As soon as I read that, I thought of our discussion about how women have shorter life expectancy in developing countries and thus receive less investment in their human capital because it has less returns due to not being in the labor force for as much time and less pay for the same occupations. Sure enough, Schultz immediately discussed the improved investment in human capital as life expectancy increased, which creates a positive feedback loop between life expectancy and human capital, which will most definitely increase people’s capabilities in developing countries. There were several other points in the article that related to last weeks discussion of gender as increased investment in human capital also lowered the birth rate as the “quality” of each child became more important than the quantity of children. It sounds harsh to say, but this relates to our discussion that as children become more of a liability than an asset from an economic perspective, the birth rate decreases, which has many positive effects on the outcome of women and helps with the population problem that Shultz alludes to.

Kristina Lozinskaya

Theodore W. Schultz, a prominent American economist who won the Nobel Prize for his contributions in the field of economics of agriculture while also promulgating the importance of educational capital, in his lecture focused on the idea that to understand the economics of being poor, we need to understand the economics of agriculture since it is how the world’s poor earn their living along with recognizing that it is the improvement in population quality that drives the improvement of the welfare of (poor) people. Overall, I found the lecture very compelling. Schultz throughout his talk emphasizes that economists overrate land and underrate the quality of human agents which leads him to call on economists to acknowledge the fact that because humans have the ability to lessen their dependence on agriculture granted by intelligence, low-income countries (which Schultz says are actually tremendously resourceful) should focus on investing in research as well as health and education rather than directing all their efforts towards conventional farming. He makes an interesting assertion that to enhance development, economists need to pay attention to the economic history which demonstrates that certain resources can be substantially augmented by advances in knowledge which have already allowed us to make land a “vastly more productive resource” and successfully find substitutes for cropland (I doubt one can ever appreciate America’s capacity to produce corn). Despite those achievements, government, it seems, remains the one to blame for the fact that agriculture is still a “highly decentralized sector of the economy” due to the political bias favoring urban population at the expense of rural people as well as industrialization at the expense of agriculture. Shultz accuses the government of preventing the farmers from utilizing their “entrepreneurial talent,” which hinders their important allocative roles. Besides, governments simply cannot “perform efficiently the function of farm entrepreneurs,” not to mention how they contribute to market price distortions and lack of profitable incentives preventing farmers from making the necessary investments to increase their productivity which is the primary cause of the unrealized economic potential of agriculture in low-income countries.

The second part of Schultz’s lecture devoted to the question of human capital was even more interesting for me (I have to admit that it is first and foremost the social-scientific part of economics that sparks my interest since I consider myself to be a very social person). Shultz’s approach to treating population quality as a scarce resource that has an economic value and entails a cost of acquisition was particularly fascinating to me since it allowed him to formulate a peculiar supply-demand relationship in investment behavior – something I’ve never thought about in this way, and I am referring specifically to Schultz’s conclusion that “quality and quantity are substitutes and the reduction in demand for quantity favors having and rearing fewer children, …. [so] the movement toward quality contributes to the solution of the population ‘problem’”. The statistics on the improvements in health (life expectancy at birth 40% increase in low-income countries since the 50s) and all the positive spillovers from the increased life expectancy (incentive for education acquisition, more investment in children, better productivity, and less “sick time” especially among others) are very inspiring as well. If possible, I would like to talk more about and learn how Usher came up with the theory to measure the utility that people derive from increases in life expectancy. Schultz mentions that Usher’s empirical analysis indicates that the additional utility increases the value of personal income substantially, and I thought that it is very interesting considering how it seems to be related to how Sen defines the difference between income-earning and income-using ability and the inherent problems of the disadvantaged people associated with the conversion of the earned income into capabilities and into “living well”.

Sofia G. Cuadra

Schultz’s “The Economics of Being Poor,” argues the importance of investing in human capital, especially in the context of building skills and knowledge. This lecture given in 1979 might as well have been given today, as the issues it discusses remain highly important and often go underrated in the public policy debate. Studies predict that by 2050, the world population will reach 9 billion people and the demand for food will be higher than ever before. This statistic does raise some alarm as it questions how low-income countries can sustain development when their own population can't even feed themselves, but however, Schultz points to a solution for this limited, finite amount of land available to grow more food. His solution helps paint a brighter, more positive picture of the future. As he quotes, “the future of mankind is open ended,” human beings currently possess the means to overcome any supposedly, foreordained limitations set out by nature. Accordingly, investments in agricultural research can produce the needed technology to increase productivity and food output. This is not just some hypothesis that has yet to be tested, but rather this is a tried and true fact as soils that were once low in quality and unproductive have been transformed into productive resources with the introduction of cropland substitutes provided by agricultural research. One can look at Finland, Japan, and even the dramatic rise in corn production as a cropland substitute for examples of the transformation and hope for the future.

Consequently, with the issue of limited land as an overrated issue, the focus needs to turn back to investing in human agents through health and education. As the lecture discusses, these investments provide a direct means for poor people to improve their lot in society, where they can have a chance at living a life they value. Poor people are no less rationale than their affluent peers, and they have no less incentive to prosper in life for both their own selves and their children. If a person is healthier, he or she has more energy and time to work, consume goods, and manage their land and household effectively. Instead of feeling sick and fighting off highly debilitating diseases, productivity emerges as return to the initial investment in health and education, and thus helps manifest the importance of investing in human capital.


While Reading the article, "The Economics of Being Poor" I kept thinking back to our earlier reading of "Economic Lives of the Poor" which described how poverty stricken societies spent their money. Both touched on how half of the money is spent on food which is a necessity along with these families having more people to feed.
Shcultz says, "I shall then point out that most observers overrate the economic importance of land and greatly underrate the importance of the quality of human agents". This idea was very interesting to me because he was saying land is overrated. Technology is taking over even when it comes to the farmland. He says "mankind is not foreordained by ... cropland, It will be determined by the intelligent evolution of humanity." This idea goes along with his idea of investing in human capital. Knowledge and technology are drivers of economic growth even for the poor.
Schultz says, "Child care, home and work experience, the acquisition of information and skills through schooling and in other ways consisting primarily of investment in health and schooling, can improve population quality". Improving population quality will directly benefit the economy and even in underdeveloped areas people are responding well to opportunities. Investing in people ultimately will lead to economic prosperity in even the poorest countries. People just need a chance and when we give them a chance they respond according to Schultz. Health and Education are drivers for this and if the emphasis worldwide turns to investing in health and education and in people the overall economy will benefit.
Schultz also talked about investing in population quality which is what we have been talking about in class a lot. If the life expectancies of people worldwide increase their will be a direct correlation to economic growth.

Anne Riter

In Schultz's "The Economics of Being Poor," he makes the claim that the misconceptions economists have about the poor in less developed/lower-income countries leads to issues when trying to improve development. He further claims that the economic importance of land is overrated and the importance of the quality of human agents is underrated. I find it interesting that he says that land is of less importance, because this could lead to the marginalization of agricultural needs when looking at policies that could improve quality of live and economic development over all.
When talking about the importance (or lack thereof) of land, Schultz mentions the improved research and technology in developed countries. European countries were able to transform their land into a more productive resource while research has developed substitutes for cropland. It seems to me that modern economists ignore these technological advancements. If it is possible for developed countries to develop these ideas and put them into practice successfully, it should be possible for that same technology to apply to lower-income countries who are struggling with perhaps more arid climates. I can see how governments would take this to mean that it is not important to focus on the agricultural sector of a developing country and subsequently implement policies that focus on improving the urban sector, which further advances the urban bias in many countries.
Schultz also talks about improving the quality of human capital. This seems like an obvious claim, since an improvement in health and education goes a long way to improving work productivity and quality. He uses the example of life span, stating that the increased life span over the past few years provides more incentives to get more education. Parents then invest more in their children, on-the-job training becomes worthwhile, and as a result people are able to participate in the labor force for longer and their productivity increases. This is a clear result of improving the quality of human capital, and serves to further Schultz's claim that we need to focus more on the quality of human capital instead of just land.
Schultz takes issue with the neglect of economic history, which I agree is a mistake when looking at economic trends. At one point, every developed country was in the same position: they were primarily agricultural and were developing. The conditions early economists dealt with were similar to those that are in low income countries today. It seems to me that modern economists don't acknowledge the fact that developed countries were at one point developing countries. Schultz maintains that knowledge is the most important factor in development, and ignoring the history of developed countries reminds me of the movement of ignorance, when processes became more precise so things that were "common knowledge" were ignored. My big take away is that we cannot ignore where developed countries came from and how they became developed, and it's important to focus on improving quality of life.

Caroline Florence

In “The Economics of Being Poor,” Theodore Shultz argues that in economics, land is often overrated while the quality of the people is underrated. Shultz emphasizes the importance of investing in people and their knowledge, particularly in the agricultural sector, where much of the world’s poor reside. I find this argument compelling and relevant. Last year, I took a class called Ecology of Place where we visited farms in Lexington and learned about agriculture in the Rockbridge area. As Shultz explains, the farmers we talked to were innovative and responsive to incentives. I think that if we invest more in farmers and create the right incentives, they will be able to further innovate. In particular, I think we need to start incentivizing farmers in both the US and developing countries to adopt sustainable farming practices such as no-till farming. Carbon farming improves soil quality while drawing carbon from the atmosphere into the soil. We could incentivize farmers to adopt these practices by creating a compensation system or by educating farmers of the benefits to the soil. We can improve the “quality” of farmers by having them address the issue of climate change in addition to food production.

I think it is unfortunate that governments often exploit poor farmers and gear policy toward improving urban populations. Farmers are major contributors to our economies and should be treated as such. We should start to view farmers and innovators who have the potential to help solve the problem of climate change. The agricultural industry represents a major opportunity and I think it is time for governments around the world to see this.

Prakriti Panthi

My favorite line from "The Economics of Being Poor" is "In agriculture poor people do respond to better opportunities." This article reiterates a theme that we have seen in the past papers we have read: just because people are poor, it doesn't mean that they are any less rational. If given the right opportunities, if people could pull themselves out of poverty, they would. But there are things prohibiting them from doing so.
One of the inhibiting factors that Schultz mentions is government distortions that "reduce the economic contribution that agriculture is capable of making". We have read a little about how urban bias is a problem when it comes to development and Schultz reiterates this too. The government promotes urban growth at the expense of the poor people working in the agricultural sector. It is sad that the hard work that people do is not being valued, and in place of giving farmers incentive and opportunities to expand their entrepreneurial talent. I wonder how exactly the incentives are distorted?
Another thing I found striking in this piece by Schultz was him stating that land was overrated, and the potential of finding substitutes. I don't know how long the substitutes would sustain us for and how far we can develop technology.


Theodore Shultz’s Prize Lecture was a great synthesis of a number that we have learned so far in the course. He talks how in order to understand the economics of being poor is synonymous with understanding the economics of their lifestyles, agricultural. His main argument discusses how the quality of people and the quality of human capitol is certainly important. He says “While land per se is not a critical factor in being poor, the human agent is: investment in improving population quality can significantly enhance the economic prospects and the welfare of poor people.”
The quality of people do matter. As we have mentioned many times in class, investments in education and healthcare are paramount for increasing welfare and growth for poor nations. As Shultz puts numbers on these education and healthcare investments, he shows they really do help the economy as longer lifespans lead to more working hours and higher productivity. Many of the investments for creating a higher quality population go hand in hand with each other. As healthcare increases, there is more incentive to invest in education and there a number of effects that trickle on down the line. The evidence is clear that these investments are beneficial and rational and should be made (should be made because that’s the right thing to do and education and healthcare should be accessible to everyone).
I found the agricultural land example to be quite interesting. Shultz talks about how as we improve technology, farming techniques, and famers quality, its no doubt that yields become more efficient. He notes, “The corn acreage harvested in the United States in 1970 was 33 million acres less than in 1932. Yet the 7.59 billion bushels produced in 1979 was three times the amount produced in 1932.” Shultz uses this to point out that we overvalue land and that we do have enough land to feed the ever growing population. I understand that we can become more and more efficient in our farming techniques, but to say that we overvalue land seems a bit of a stretch to me -given the state of the environment and climate currently. Is it possible for the world to stop deforestation in addition to making the existing farmland that much more productive? According to Shultz, it will depend on “the intelligent evolution of humanity.”

Julia Moody

My favorite part of Schulz’s lecture, “The Economics of Being Poor,” was his description of the entrepreneurial spirit of farmers and people working in the agricultural sector. I think it is easy for people who grew up in urban areas to subconsciously paint an inaccurate picture of farm life in their heads. The stereotypes of agricultural laborers that come to mind are low-skilled and poorly educated, but Schultz points out that farmers do much more than tend to their crops or livestock; in reality, they are all running their own businesses. He compares them to entrepreneurs and describes how they fine-tune their businesses more efficiently than many other industries. I thought Schulz’s description shed a lot of light on the value farmers bring to society and the economy as a whole, as well as erasing stereotypes readers might subconsciously be believing. I also really appreciated his mention of women as similarly productive and efficient entrepreneurs, running their entire households and contributing to the business of the farm all at once. Women in farming households have a lot of organizational ability and business smarts, which positively influences society in more ways than we see when we are just looking at the agricultural sector or low income families in aggregate.


Shultz drives home the importance of population quality and knowledge in his lecture, “The Economics of Being Poor.” He addresses the multiple misconceptions towards land and the agricultural sector within the field of development economics. He argues that urban bias—or the explicit encouragement of institutions towards industrialization—is direct discrimination against agriculture. Further, he stresses the significance of investment in human capital—specifically that of education, health, skill development, and research. Shultz shows the danger in assuming that all forms of capital are homogeneous. I found it particularly interesting how he discusses treating population quality as a ‘scarce resource.’ His argument essentially promotes the well-being and knowledge of both individuals and governments within low income countries for economic growth.

Recently, in my Economics of Social Issues class with Professor Goldsmith, we read a piece from the Hamilton Project, “The Future of Work in the Age of the Machine.” This paper discussed the growing importance of skill development, education, and training in the age of quickly advancing technology. I found this relatable to Shultz’s view towards industrialization and investment in human capital. Both pieces emphasize that the efficient way to continued growth is through investment in human capital (skills, education). I think it’s important to acknowledge that investment in human skills and education will only bring positive returns and help workers keep meaningful jobs, no matter the sector they participate in. Further, growth in the urban sector can only last for so long before it experiences diminishing returns. Both pieces offer unique approaches from the commonalities of development economics, but deliver justified arguments in the context of trapped low-income countries.

Parker Skinner

Quality over quantity is the mantra of Schultz’s paper “The Economics of Being Poor.” Investments in human capital, mainly through improvements to health and education, yield progress on the development path more so than quantity of resources. This line of thinking is right in line with the thinking outlined by Sen, the textbook, and other economists we have read.
I found the mistakes of past economists to be one of the more interesting parts of Schultz’s paper. The bias of economists’ modeling and hypothesis on the developing world is just one example of how the west does not properly assess these nations. Racial bias or classism most likely play into this bias. Schultz draws the correct comparisons between the agricultural western world of the early 20th century and the agricultural world of developing nations now. It seems that since 1979, these racial or social biases have dissipated in the realm of economics, but they still exist. We have not seen the same level of attention paid to development economics as the economics of the developed world.

Maggie Kidder

Schultz’s article provides an alternative, social-economic view that replaces the natural earth view that suggests there is a virtually fixed amount of space for crop production and the energy supply for tilling that area of land is being depleted. The new alternative view argues people have the ability and intelligence to depend on cropland and traditional agriculture less and the depleting energy supply can reduce food production costs for the increasing world population. However, in order to achieve this, governments must recognize the important of agriculture and terminate their efforts to distort agriculture with internal policies favoring the urban over the rural population.

I read the novel, "Darwin Without Malthus: The Struggle for Existence in Russian Evolutionary Thought," where Daniel P. Todes examines how the varying receptions of Darwinian and Malthusian ideas were deeply shaped by the nature of a particular nation’s cultural, economic, political, and geographic structures throughout the 19th Century.

Malthus was best known for his theory that population size will inevitably exceed the available food supply, leading human beings to compete against one another for survival, and all organisms faced a robust and persistent check on population. Malthus claimed that positive checks, such as wars, famine and epidemics, increased mortality rates and preventative checks, such as, postponement of marriage and childbearing, decreased the birthrate. He believed population checks do not discriminate among socioeconomic status as all human beings are equally likely of undergoing these hardships, but when there is a scarcity of food, Malthus argued the least fortunate members of society will suffer most from this heightened competition.Instead of pursuing social progress and reforms, he advocated for nations to eliminate the obstacles hindering free competition. For instance, Malthus argued that British parish poor laws inefficiently increased population without increasing provisions, which tapered the accessibility of food supplies for the industrious poor and inhibited independence.

I agree with Malthus and the evidence shows that when left to their own devices, the poor population will continue to be the ones who suffer in times of hardship. However, as exemplified by this article, these fundamental Malthusian beliefs discount the ability of human beings to improve their skills through education and knowledge, with the aid of government assistance. If we augment resources by advances in knowledge and utilize the importance of human agents, the poor will be able to improve their livelihoods and will not be faced with this struggle for existence that Malthus confines them to.

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