Quite simply, the poor are also looking for happiness. (Daniel Cohen – HOMO ECONOMICUS)

Quite simply, the poor are also looking for happiness. (Daniel Cohen – HOMO ECONOMICUS)

Looking at the impressive growth figures of emerging countries, it is easy to forget the immense destitution that the peoples of the planet suffer. Half of humans live on less than two euros a day. The enrichment of the south is an indisputable fact, but this is an average. Even in cases that are a priori most favourable, the situation is distressing. If the east coast of China has become the new workshop of the world, 800 million poor peasants remain waiting for the right to come and live there. India is a country where more than half the population still does not know how to read and write. The new urban middle class in India may have reached perhaps 300 million people. But they live alongside 700 million villagers stuck in poverty. Peasants who kill themselves because they cannot pay their debts have never been so numerous. Between 1997 and 2008, almost 200,000 ruined Indian farmers committed suicide. The old cycle of debt, usury and dependency continues to strike the most vulnerable.

To understand poverty today does not mean understanding another race, that of the poor, but understanding how the human species struggles when it is deprived of all the goods that have become ordinary in rich countries. Abijit Banerjee and Esther Duflo have offered a staggering study that goes much further than previous research. While some economists are tempted to see in poverty a failure of the poor themselves, they show that it reveals human rationality when deprived of the support of competent and legitimate institutions to help people to decide what to do.

Two theories – one might say two ideologies – have long been confronting each other over the answer to these questions. The first is the ‘Victorian’ theory of poverty, named after Queen Victoria, under whose reign the idea was developed. People are poor because they are indigent. It is vain to try to encourage them to do what is good for them: they are poor precisely because they do not want what is good for them. At the other pole, the ‘progressive’ theory argues exactly the contrary. It is poverty itself that is responsible for the indigence of those who suffer from it. It is not because they are different that the poor fail. They are subject to the same difficulties, but do not possess the resources that would enable them to face them.

The problem that Banerjee and Duflo point out is that, yes, the poor do not possess an adequate framework for acting effectively, but that, no, the resources that are lacking are not just financial. In a rich country, a household does not ask about whether to vaccinate or educate its children, to set aside money for retirement, or know that you have to take out home and car insurance. Almost everything is taken charge of by society, and in the West the state is the memory of history.

It is social institutions like those for health, education and social security that decide that you have to vaccinate children and educate them.

The inhabitant of a poor country must bear everything himself, and the burden often crushes him – or her. He would like to invest in fertilizer, for example, but the time is too long between the harvest and the next planting. When one offers farmers the chance to buy coupons after the harvest to pre-pay for fertilizer for the next planting, then they do so immediately. But saving is very complicated when secure financial instruments are lacking, when the pressure of current needs is constant. Not that the poor are especially more indigent than the inhabitants of rich countries.

The poor spend a lot of money to maintain their human capital, especially taking care of their health, which sometimes absorbs a considerable share of their revenue.

Still, it is very difficult to pay for preventive measures when meagre resources are constantly required for other needs. Like sugared tea, an old television set in poor repair gives a pleasure that trumps any investment whose return is uncertain and deferred. Quite simply, the poor are also looking for happiness.

In any case, a lesson leaps out from these studies: the cultural explanations of poverty seem quite removed from the reality. In effect, the poor person is a rich one left to fend for him or herself, without the support of institutions that help the person to take ‘good’ decisions. As proof, when the opportunities are presented, as is the case in Asia today, they are seized immediately.

 

 

 

 

 

Homo Economicus: The (Lost) Prophet of Modern Times
Daniel Cohen



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