14.73x The Challenges of Global PovertySyllabus

Abhijit V. Banerjee Esther Duflo

Spring 2013

1 Administration• Instructors Esther Duflo (eduflo@mit.edu) and Abhijit Banerjee (banerjee@mit.edu)

[on video], and Esther Duflo [staffing the on-line course]

• Course Web site: https://www.edx.org/courses/MITx/14.73x/2013Spring/info

2 Course DescriptionThis is a course for those who are interested in the challenge posed by massive andpersistent world poverty, and are hopeful that economists might have something useful tosay about this challenge. The questions we will take up include: Is extreme poverty a thingof the past? What is economic life like when living under a dollar per day? Are the pooralways hungry? How do we make schools work for poor citizens? How do we deal withthe disease burden? Is microfinance invaluable or overrated? Without property rights, islife destined to be “nasty, brutish and short”? Should we leave economic development tothe market? Should we leave economic development to non-governmental organizations(NGOs)? Does foreign aid help or hinder? Where is the best place to intervene? Andmany others. At the end of this course, you should have a good sense of the key questionsasked by scholars interested in poverty today, and hopefully a few answers as well.

3 PrerequisitesNo prerequisites. But economics is a mathematical science, so math will appear, in smalldoses, in two forms. First, this course is empirically-oriented, so almost all of the requiredreadings and lectures will, at times, use elementary statistics to describe the world. Inaddition, a handful of the required readings will use more advanced statistical tools (suchas correlations and regressions) to dig deeper into the data. Second, the lectures willoccasionally discuss simple mathematical models that economists find helpful to describe

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some aspects of the data. The intuition behind these models will, however, always bemade clear, and can be used as a substitute (for the purposes of your understanding, andwhen answering assignment questions) for mathematics.

4 LecturesThe material for each topic will be posted weekly, and you should keep pace with the restof the class. There will be about two lectures per week. You will have access to videosof the lecture, presented in short segments (8-10 minutes, on average), followed by fingerexercises. You will also have access to the lectures notes and presentation slides.

5 Time comitmentThe minimum commitment will likely be 6 hours per week for watching the lectures, doingthe readings, and completing the assignments.

6 Text, Readings, additional videoThe required text for this class is Poor Economics: A Radical Rethinking of the Way toFight Global Poverty. We will also rely on articles and chapters from other books that youcan access online, either through the edx course website or elsewhere. Required readingsare starred and need to be read before the lecture that they are listed under. Additionalreadings are not required, but will aid your understanding of the lecture material. Inorder to motivate some of the issues discussed in the lectures and readings, we will askyou to watch short films (all publicly available on the Internet).

7 Assignments and grading schemeAt the end of each week, there will be a homework which will challenge you through thematerial in the course for the week. The homework for each week should be completed nolater than one week after the class (see the calendar for further information). Grades foredx students will be based on the nine weekly homeworks (75%) and the finger exercises(25%).

8 Calendar with readings1. WEEK 1: Introduction

(a) Introduction I: What this class is about!

(b) Introduction II: What is a poverty Trap

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• * Poor Economics: Chapter I AND pages 19-22 in Chapter 2

(c) Introduction III: Learning what works: the role of experiments

• * EXTERNAL VIDEO TO WATCH IN ADVANCE: Esther Duflo’s TEDTalk "Social Experiments to fight poverty"

• * Post and Discussion by Mead Over from Dani Rodrik’s blog on January15, 2008 (“Jeff Sachs Vindicated”/ "Jeff Sachs not vindicated")

2. WEEK 2: FOOD

• Food II: Is there a nutrition based poverty trap–The demand for food andcalories

– * Poor economics: Chapter 2: pages 22-28– *The Indiana Jones of Economics, Part I, II, III (Freakonomics Blog post

by Robert Jensen on his work on Giffen goods).

• Food III: Is there a nutrition based poverty trap–The hidden trap.

– * Poor economics: Chapter 2: Pages 28-40

3. WEEK 3: HEALTH

• Health I: Delivering Healthcare, a Case Study from India NB: No lecture videofor this class: instead, watch the documentary film, and answer some questions.

– * Udaipur Case Study– Film: The Name of the Disease (2006). Edited by Sumit Ghosh. Directed

by Abhijit Banerjee, Arundhati Banerjee and Bappa Sen.

• Health II: Low Hanging fruit: Understanding health care behavior in develop-ing countries?

– * Poor Economics: Chapter 3

4. WEEK 4:EDUCATION

• Education I: Setting the stage

– * Easterly, William (2002), “Educated for What?”, Chapter 4 in The Elu-sive Quest for Growth: Economists’ Adventures and Misadventures in theTropics, MIT Press

– * Case, Anne, “The Primacy of Education”, Chapter 18 in UnderstandingPoverty

• Education II: How to Make Schools Work for the Poor: Pratham’s experience

– * Banerjee, Abhijit, Shawn Cole, Esther Duflo and Leigh Linden (2007),“Remedying Education: Evidence from Two Randomized Experiments inIndia,” Quarterly Journal of Economics, 122(3), pp 1235-64.

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• Education III: Beyond Supply and Demand wars...

– * Poor Economics: Chapter 4

5. WEEK 5: FAMILY

• Family I: What drives Fertility decisions?

– *Poor economics: Chapter 5. Pages 103-123

• Family II: Household model and discrimination against girls

– * Poor Economics: Chapter 5. pages 123-129– * Amartya Sen "100 million missing women" New York Review of Books

6. WEEK 6: Risk and Insurance

• Risk and Insurance I

– * Besley, Timothy, “Nonmarket Institutions for Credit and Risk Sharing inLow Income Countries,” Journal of Economic Perspectives, 9, pp 115-127.

• Risk and Insurance II

– * Poor Econonomics: Chapter 6

7. WEEK 7: CREDIT

• Credit I: The not so simple economics of lending to the poor [lecture 17]

– * Poor Economics: Chapter 7 Pages 157-168

• Credit II: peril and promises of microfinance [lecture 19]

– Newpaper articles on microcredit : Financial Times ("Microcredit is notthe ennemy")-The economist ("Big Troubles for Microfinance" -New Yorktimes Yunus Oped "Sacrificing Microcredit for Megaprofits")

• *Poor economics: Chapter 7 Pages 168-180

– Banerjee, Abhijit, Esther Duflo, Rachel Glennerster and Cynthia Kinnan(2009), “The Miracle of Microfinance? Evidence from a Randomized Eval-uation,” working paper, MIT.

8. WEEK 8: SAVINGS:

• Savings I

– *Poor economics: Chapter 8

• Savings II

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9. WEEK 9: THE POOR AND THEIR BUSINESSES

• The poor and their businesses

– *Poor economics: Chapter 9

10. WEEK 10: INSTITUTIONS

• Institutions

• Policy, politics

– * Poor economics: chapter 10

11. WEEK 11: CONCLUSION

• In place of a sweeping conclusion

– * Poor economics, conclusion

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