Wednesday, May 11, 2011

Using Economics to Help the World’s Poor

Mr. Banerjee and Ms. Duflo have pushed anti-poverty programs in developing countries to become more serious about evaluating whether they are actually improving people’s lives. (New York Times Economix blog)
Since they will no doubt want more specific suggestions, here are two policies that I think every poor country should implement. A small universal cash grant to everyone over 12, based on biometric identification. This guarantees that no one has to face the humiliation of being totally indigent, and from our evidence, makes people more productive as well. Making it universal is important, so that they do not attempt to identify the poor (which is very difficult to do effectively in poor countries).
Rigorous identity management techniques are crucial to the success of programs designed to help lift the world's most vulnerable people.

First, they are important to establishing the scientific validity of a given approach.

Second, they are necessary to prevent the corruption that de-legitimizes social programs.