A Critical Review of the Book “Poor Economics”

Poor Economics analyzes the economic behavior of the poor. It is an application of behavioral economics to the economics of poverty and it seeks to provide an innovative solution to eight issues: hunger, health, schooling, population, risk, loans, savings and entrepreneurship of the poor using randomized control experiments. Although the book offers a new way to combat poverty, the book's evaluation shows that the limitations of the randomized control trial have not been addressed. Improving the performance of the poor without institutional reform has limited impact. There are no conclusions and suggestions for the eight issues discussed. With the marginal actions that this book suggests to improve the lives of the poor, the problem of poverty of about two billion people in the world cannot be solved. The impact of culture on the motivation and behavior of the poor has not been discussed, though the poor are heavily influenced by cultural beliefs and norms.