WEBVTT NOTE duration:"01:05:53.0900000" NOTE language:en-us NOTE Confidence: 0.824601948261261 1af1b455-0b4b-4820-a8fa-dbf38df62dc6 00:00:00.030 --> 00:00:04.910 Hello, I'm Professor Fitz, or "Proffitz," from Economics. Let me NOTE Confidence: 0.824601948261261 9e5a6005-6d44-4f28-b26c-15e8af7b2f76 00:00:04.910 --> 00:00:10.278 start by presenting a question that a recent survey asked to NOTE Confidence: 0.824601948261261 7e365041-8e2e-49df-936d-cf6197e32444 00:00:10.278 --> 00:00:12.718 people all over the world. NOTE Confidence: 0.879296481609344 80a8c6d2-d29e-411e-af6e-a47f23f310fc 00:00:12.980 --> 00:00:16.490 In the last 30 years, the proportion of the world NOTE Confidence: 0.879296481609344 400cb30f-23f9-4c4e-a339-f7252a75a251 00:00:16.490 --> 00:00:18.947 population living in extreme poverty has: increased; NOTE Confidence: 0.879296481609344 1d7b1095-f278-4c7a-a786-1ba994d0a70b 00:00:18.947 --> 00:00:21.755 remained more or less the same; or decreased. NOTE Confidence: 0.866619169712067 23797764-e503-4f8e-a027-40d45fb5e959 00:00:22.860 --> 00:00:29.010 Turns out we don't do very well. This is a sample of some of the NOTE Confidence: 0.866619169712067 cf4af3f5-57b3-4506-a637-b2ab16b164bc 00:00:29.010 --> 00:00:33.520 answers. 55% say that the share of the global population in NOTE Confidence: 0.866619169712067 3136344f-f3f0-46cc-9464-bf6bfadc202d 00:00:33.520 --> 00:00:38.030 extreme poverty has increased. Another 33% say that it  NOTE Confidence: 0.866619169712067 c88f573b-b7b3-480c-9187-50ca2762904d 00:00:38.030 --> 00:00:40.490 has remained more or less the NOTE Confidence: 0.847457945346832 34f0581e-dab2-490a-9a66-1a819cc8c8df 00:00:40.490 --> 00:00:44.260 same. Thus, 88% get this question NOTE Confidence: 0.899750351905823 65fc37cd-11d5-43fb-b4a4-9ce54555affd 00:00:44.260 --> 00:00:47.150 wrong. Only 12% get the correct NOTE Confidence: 0.843762636184692 bd9ef78b-ca60-4737-909a-c90de44bfd34 00:00:47.150 --> 00:00:49.331 answer: the proportion has NOTE Confidence: 0.863535404205322 c7026bdc-f0ec-40bc-9506-bd08f2a2dbd1 00:00:49.331 --> 00:00:53.248 decreased. Please note that randomly guessing means that NOTE Confidence: 0.863535404205322 2d2d3f6e-0440-424f-9773-4f8ee93afa94 00:00:53.248 --> 00:00:58.370 you'd be right 33% of the time. We don't just get this question NOTE Confidence: 0.863535404205322 03431d28-e26b-4c9c-938f-ba02af4858ee 00:00:58.370 --> 00:01:00.340 wrong. We get this question NOTE Confidence: 0.876998960971832 90f80192-d567-48af-8f30-4f02c72ea0a2 00:01:00.340 --> 00:01:03.946 systematically wrong. And not only is the proportion NOTE Confidence: 0.876998960971832 c70fd2fb-8fa9-49bc-98ba-2bf76c2218ce 00:01:03.946 --> 00:01:06.634 decreasing, it's decreasing faster than it has ever NOTE Confidence: 0.876998960971832 713d69cd-a76b-4553-b86d-a002437a1479 00:01:06.634 --> 00:01:11.002 decreased ever before in all of human history. If we look at the NOTE Confidence: 0.876998960971832 1807bae5-9aa9-4622-992b-80dc3e9ddf09 00:01:11.002 --> 00:01:14.362 share of the world population living in extreme poverty, it NOTE Confidence: 0.876998960971832 96931e51-dd7b-41aa-b1a0-5764fdf24ae0 00:01:14.362 --> 00:01:17.386 was over 80% of all people throughout the 1800s. NOTE Confidence: 0.874673902988434 710b361a-8997-4485-af5c-daf270f79534 00:01:17.980 --> 00:01:22.380 As of 1980, not that long ago, the share was 44%. NOTE Confidence: 0.870357215404511 b40adc9b-de0d-45bf-9535-063225a14961 00:01:23.010 --> 00:01:27.590 In 1990, 37% of the world's population lived in NOTE Confidence: 0.870357215404511 0ceb91ce-3a0d-4de7-856e-f1299a850616 00:01:27.590 --> 00:01:32.628 extreme poverty. By 2015, this fell to under 10%. We've never NOTE Confidence: 0.870357215404511 131cfca7-50d9-4586-b43a-37a938fc21ea 00:01:32.628 --> 00:01:34.918 seen such a rapid fall. NOTE Confidence: 0.873472332954407 713093be-4e06-46c9-b634-75bad2dd2787 00:01:37.130 --> 00:01:40.530 Note that not only is the proportion decreasing, the total NOTE Confidence: 0.873472332954407 505ef9cf-c392-454b-ada5-b47e06a1b54a 00:01:40.530 --> 00:01:44.610 number is falling as well. Here we see the total number of NOTE Confidence: 0.873472332954407 3a4662e6-58e1-4f2b-9b8f-ac825171c409 00:01:44.610 --> 00:01:47.670 people living in extreme poverty, the red bar, and NOTE Confidence: 0.873472332954407 bf56f47b-552b-47e9-bf31-d9c5641ced0a 00:01:47.670 --> 00:01:51.410 everyone who's not an extreme poverty, the green bar. In the NOTE Confidence: 0.873472332954407 b14928b1-b199-4a55-a120-0fdae67e89f9 00:01:51.410 --> 00:01:55.150 1800s, there were about 1 billion people in the world. The vast NOTE Confidence: 0.873472332954407 e0d5a931-c740-4304-913c-1e86b7f95183 00:01:55.150 --> 00:01:58.550 majority lived in extreme poverty. In the 1980s, the number NOTE Confidence: 0.873472332954407 69921bcb-8c30-4b97-8021-d5402e05204d 00:01:58.550 --> 00:02:02.290 of people in extreme poverty peaked at just shy of two NOTE Confidence: 0.873472332954407 6dc98e7b-1bf8-4295-b476-3f847daa3c97 00:02:02.290 --> 00:02:05.350 billion people. Since then, we see a rapid, unprecedented NOTE Confidence: 0.912413775920868 3b40475d-5ad5-4d04-aad9-f71185600abb 00:02:05.350 --> 00:02:10.343 decline, with the number being just around 700 million people NOTE Confidence: 0.912413775920868 125846d5-e7b7-4027-9d06-1136d69f0b48 00:02:10.343 --> 00:02:12.578 living in extreme poverty today. NOTE Confidence: 0.841276109218597 548ed9c9-a6b0-420f-a2e8-f5fddd77a6ff 00:02:13.970 --> 00:02:17.880 This is incredibly important. First, extreme poverty is one of NOTE Confidence: 0.841276109218597 7b4e0595-f416-45d2-b710-c3642dcc5ed3 00:02:17.880 --> 00:02:21.399 the most important problems we face as the world. NOTE Confidence: 0.890511751174927 4926e9a3-5b71-4fd3-a749-6068a2cf0f3e 00:02:22.280 --> 00:02:25.520 700 million people living in extreme poverty is a terrible NOTE Confidence: 0.890511751174927 c96393ef-24f4-490b-9af9-8b99360fe1ea 00:02:25.520 --> 00:02:29.084 thing. It's something that we should continue to fight as much NOTE Confidence: 0.889357089996338 195852ef-719b-4c88-bf43-e5d7aba99064 00:02:29.084 --> 00:02:32.964 as possible. Second, however, at the same time, there's been NOTE Confidence: 0.889357089996338 a3e0c8ff-efd5-4dbe-bbb5-cbd288ebe168 00:02:32.964 --> 00:02:35.736 dramatic progress in the fight against extreme poverty. This NOTE Confidence: 0.889357089996338 56cbe8c0-f856-437f-a594-120000721241 00:02:35.736 --> 00:02:39.432 progress gives me hope, and it also makes me curious to learn NOTE Confidence: 0.889357089996338 a202afb5-55ae-4771-b8a2-4b96fd719d30 00:02:39.432 --> 00:02:43.436 how this has happened, so that we can make sure that we continue NOTE Confidence: 0.889357089996338 61bce863-8c4a-4d4f-8324-7d9f44a3aa1e 00:02:43.436 --> 00:02:47.132 to make progress and continue to see declines in the number of NOTE Confidence: 0.889357089996338 5b663326-90dc-4ee0-bde1-942135047d2b 00:02:47.132 --> 00:02:48.364 people living in extreme NOTE Confidence: 0.853061318397522 41c7a59e-8a79-4e46-a82c-425d6f57b714 00:02:48.364 --> 00:02:52.450 poverty. As Banerjee and Duflo note early in the book, talking NOTE Confidence: 0.853061318397522 8ffb8cc0-da04-4611-ba09-b7b1f4efa01b 00:02:52.450 --> 00:02:55.620 about the problems of the world without talking about some NOTE Confidence: 0.853061318397522 8d107ecc-d5b7-4dac-9e26-f8e286a15009 00:02:55.620 --> 00:02:58.473 accessible solutions is the way to paralysis rather than NOTE Confidence: 0.853061318397522 298b2304-9de6-4bb4-a614-5359215b28e2 00:02:58.473 --> 00:03:02.277 progress. It's important to know this so that we can continue to NOTE Confidence: 0.853061318397522 36ce4da9-2645-4018-8c1b-7e5dadcf940e 00:03:02.277 --> 00:03:05.447 have hope and continue to be motivated to do more. NOTE Confidence: 0.868859827518463 d215ee04-64fa-4393-b3eb-2a0dd8937cb8 00:03:06.020 --> 00:03:09.224 If you are like me, these statistics both devastate NOTE Confidence: 0.868859827518463 d0f0f3dd-73a9-481e-9eec-fb281da50ebd 00:03:09.224 --> 00:03:10.292 and inspire you. NOTE Confidence: 0.886537194252014 bcb00a2b-447a-419c-9c39-a6dbb35f1ad3 00:03:11.410 --> 00:03:14.533 Unfortunately, this year it is estimated that the number of NOTE Confidence: 0.886537194252014 94bdf6f8-91ef-4142-b732-fd12b393769f 00:03:14.533 --> 00:03:18.350 people living in extreme poverty will increase by NOTE Confidence: 0.886537194252014 4d1027b6-8ee6-41c6-a241-eda321994452 00:03:18.350 --> 00:03:20.085 upwards of 100 million people. NOTE Confidence: 0.839047908782959 d112cbcf-831e-41b7-85d5-c28ba97c7338 00:03:20.830 --> 00:03:23.958 Though this rare increase breaks within otherwise decreasing NOTE Confidence: 0.839047908782959 6cad2ba4-bf33-4dca-a9ed-e9fc817f00ed 00:03:23.958 --> 00:03:28.259 trend, it also is a nice reminder that this decrease is NOTE Confidence: 0.839047908782959 b1369fd4-e496-473a-9ef1-ac4066d6d73d 00:03:28.259 --> 00:03:32.169 not guaranteed. It's something that we have to keep fighting NOTE Confidence: 0.839047908782959 8a5b277f-9a7a-4423-808f-5fa840dabdbc 00:03:32.169 --> 00:03:33.733 for and working for. NOTE Confidence: 0.876874446868896 b8bfcfe5-e9c0-4b95-a008-b848dcf8f522 00:03:35.270 --> 00:03:37.726 As one illustration of our need to collectively NOTE Confidence: 0.876874446868896 d2f48570-5d09-4d49-89c5-675b81a03c58 00:03:37.726 --> 00:03:39.261 do more to fight poverty:  NOTE Confidence: 0.869568347930908 0dbd1cba-4480-41a0-adf9-4c0252e9925d 00:03:40.820 --> 00:03:44.628 today, about 5.4 million children under five die NOTE Confidence: 0.879510760307312 98779753-611f-4dbc-a31c-191b2515d08a 00:03:45.140 --> 00:03:51.170 each year. 15,000 children die every day, 625 by the time my  NOTE Confidence: 0.879510760307312 4095c47c-a209-404e-8546-529a402b5aa1 00:03:51.170 --> 00:03:55.310 talk ends. This number includes 500,000 (half a million) children NOTE Confidence: 0.879510760307312 74eac62e-0ca4-4780-9c36-9357aa283a43 00:03:55.310 --> 00:03:59.864 who die from diarrhea every year. This is something we know NOTE Confidence: 0.879510760307312 a3337adc-61e9-481f-abd5-0e2349b862a9 00:03:59.864 --> 00:04:02.348 how to both prevent and treat. NOTE Confidence: 0.878749430179596 5c5b7ba6-df33-4b44-80e6-745368e9c785 00:04:03.320 --> 00:04:07.764 It's also useful to pause and reflect on the geography of NOTE Confidence: 0.894494414329529 00f50e87-392b-4dea-b4d0-dfb82a190fe0 00:04:07.764 --> 00:04:13.733 extreme poverty. Take a slice of the world in 2013. There were 746 NOTE Confidence: 0.894494414329529 6351202a-43e0-4d60-b141-d0e0a55b0d8b 00:04:13.733 --> 00:04:15.345 million people in extreme NOTE Confidence: 0.867831289768219 8267990d-ec1a-4697-aa7c-59d57dbffe0a 00:04:15.345 --> 00:04:20.430 poverty. This shows where the poor lived by country, with each NOTE Confidence: 0.867831289768219 3d24e70b-36e9-4c7b-9249-8ae23b1f1bc3 00:04:20.430 --> 00:04:23.230 section proportional to the number of poor. NOTE Confidence: 0.855626940727234 38914edc-723f-4015-9c92-7c26a7362c3b 00:04:23.740 --> 00:04:27.205 We can see that while sub-Saharan Africa has the most NOTE Confidence: 0.855626940727234 2994a46d-492a-442f-acf3-17d023f7cf41 00:04:27.205 --> 00:04:30.355 poor by region, India is the country with the most NOTE Confidence: 0.855626940727234 eb452f06-cef4-4a9c-a7ba-eb928c0352f5 00:04:30.355 --> 00:04:32.875 in poverty, largely because of the large population. NOTE Confidence: 0.81830245256424 9e0463b3-8f69-4b40-b7d0-43fd840b9130 00:04:34.060 --> 00:04:38.896 That is one reason why so many of the studies in Poor Economics  NOTE Confidence: 0.81830245256424 6f345289-a9f3-4c96-9e2c-a8af16f49a94 00:04:38.896 --> 00:04:40.012 focus on India. NOTE Confidence: 0.86339545249939 b1dbfe1b-cbc7-448b-9df2-ed8fc700e620 00:04:40.560 --> 00:04:44.915 I also recommend that you take a look at the following. The first  NOTE Confidence: 0.86339545249939 75c4225b-683b-4843-bc73-9f631c63b5f4 00:04:44.915 --> 00:04:48.935 is a display of the world income distribution. Here you NOTE Confidence: 0.86339545249939 0e54c2a0-2b0a-4c3c-9599-bbc9664f26d6 00:04:48.935 --> 00:04:53.625 can see that that most of the world falls in the middle of the NOTE Confidence: 0.86339545249939 8ffda53d-bb1a-4ca0-958a-7cba07b5249d 00:04:53.625 --> 00:04:56.305 income distribution. Thus, fighting extreme poverty is just NOTE Confidence: 0.86339545249939 cbbefdf3-995a-421d-9f05-6eb43bd97a11 00:04:56.305 --> 00:05:00.325 the first step, not the end goal. Second, you can use a second NOTE Confidence: 0.86339545249939 b4984bd4-e4c3-4f3e-a163-9d9ee92eabc8 00:05:00.325 --> 00:05:04.680 link to look at how rich you are by global standards. It's often NOTE Confidence: 0.86339545249939 fb188b10-ba6f-4b0c-b2bf-5b7ad3359e1b 00:05:04.680 --> 00:05:07.695 interesting to note, and according to Lawrence's data,  NOTE Confidence: 0.86339545249939 5c074511-8fd5-4e38-bdb0-68db9f40abec 00:05:07.695 --> 00:05:11.380 the median income of a recent Lawrence graduate as a single NOTE Confidence: 0.832337319850922 e417e901-febb-4e71-88fd-7d019ec9b117 00:05:11.380 --> 00:05:14.688 adult puts you in the top 3% of earners globally. NOTE Confidence: 0.855489432811737 1d4640aa-3cff-4e78-9804-4cdf19b9280a 00:05:17.700 --> 00:05:22.367 So what should we do? How should we respond to the deaths of NOTE Confidence: 0.855489432811737 7eb59049-4619-418a-8210-5bef986dca02 00:05:22.367 --> 00:05:24.162 children and suffering tied to NOTE Confidence: 0.852575540542603 01bae55f-e946-4d59-8c84-e190ac37efad 00:05:24.162 --> 00:05:28.426 extreme poverty? Let me cite Adam Smith, the father of economics, NOTE Confidence: 0.852575540542603 1b3e7d3c-7ed8-45e7-bb7b-7fe54193e0c9 00:05:28.426 --> 00:05:31.990 to make two quick arguments that will help motivate my talk. NOTE Confidence: 0.852575540542603 f10098fe-dcaa-4b4d-a839-c3fa11e93767 00:05:31.990 --> 00:05:35.230 First, we need to fight poverty collectively. As Adam Smith NOTE Confidence: 0.852575540542603 cdc5b742-9cc8-4a88-b90d-a68956212533 00:05:35.230 --> 00:05:38.794 wrote, "No society can surely be flourishing and happy, of which NOTE Confidence: 0.852575540542603 4d0c0100-2a8a-4faa-8136-8561dd6445bc 00:05:38.794 --> 00:05:42.358 the far greater part of its members are poor and miserable." NOTE Confidence: 0.852575540542603 c41cf34e-80ae-4ad8-9a17-f7dc54f80454 00:05:42.358 --> 00:05:45.274 It's a social responsibility to fight poverty, and it's something that NOTE Confidence: 0.852575540542603 27919cdd-6692-44a7-a9c4-a4ad6c4eba4f 00:05:45.274 --> 00:05:49.162 we need to do collectively. As Smith argued, we also don't want NOTE Confidence: 0.852575540542603 f81b2bc8-1437-47a3-8f59-1653b5430348 00:05:49.162 --> 00:05:53.374 to just put a band aid on poverty. We want to provide ways NOTE Confidence: 0.852575540542603 df482aa2-b4ef-4f89-87ba-beafbe83f4bd 00:05:53.374 --> 00:05:57.262 to help the poor escape poverty and to better their lives, to NOTE Confidence: 0.827861666679382 d17d6241-f019-450f-b02f-1c44be5b14ef 00:05:57.262 --> 00:05:59.341 live more rich. free, and full NOTE Confidence: 0.811796188354492 492bd11a-226f-4d0d-8679-e531ff11a8b3 00:05:59.341 --> 00:06:03.338 lives. Second, we need to fight poverty individually. As Smith NOTE Confidence: 0.811796188354492 ac597b32-fa86-4264-bffb-f739b31b73df 00:06:03.338 --> 00:06:07.100 wrote, "We are but one in the multitude, in no respect  NOTE Confidence: 0.811796188354492 a0c8bfd3-7286-4c60-b60b-f1bf77636639 00:06:07.100 --> 00:06:10.862 better than any other in it; and that when we prefer NOTE Confidence: 0.811796188354492 7e381365-5af7-43bd-91c7-d98258c13d2e 00:06:10.862 --> 00:06:14.282 ourselves so shamefully and so blindly to others, we become NOTE Confidence: 0.811796188354492 026249ff-6014-49b2-a23e-404d51f145b6 00:06:14.282 --> 00:06:16.676 the proper objects of resentment, abhorrence, and  NOTE Confidence: 0.811796188354492 a89523ce-a0c7-4207-be75-bbd38b1ee696 00:06:16.676 --> 00:06:17.018 execration." NOTE Confidence: 0.859272420406342 b5a2ffb6-92c0-43a7-b8cd-55b7895f28d7 00:06:20.310 --> 00:06:23.480 There is a need for further reductions in extreme poverty, NOTE Confidence: 0.859272420406342 a2001ca8-a6e3-4a5e-9ca3-cdd5c7086e5d 00:06:23.480 --> 00:06:26.650 and I believe that we have both collective and individual NOTE Confidence: 0.859272420406342 81f00527-0faa-4ff9-b047-5307b2902e7d 00:06:26.650 --> 00:06:29.186 responsibilities to continue fighting extreme poverty. If you NOTE Confidence: 0.859272420406342 db56b79c-a154-4df9-94e5-2eb6eda17120 00:06:29.186 --> 00:06:33.307 only take one idea for my talk today -- which is kind of a silly NOTE Confidence: 0.859272420406342 b338fe0e-59d6-4560-adf1-c9bf9b2fef45 00:06:33.307 --> 00:06:37.428 idea, because it's recorded, so you can watch this as many times as NOTE Confidence: 0.859272420406342 eccb6c2c-6cf6-4449-b027-a531fbb1e3e6 00:06:37.428 --> 00:06:40.598 you want, you can memorize and soliloquize, you can create NOTE Confidence: 0.859272420406342 8e6042e0-9799-42cf-9dc2-91394dd70447 00:06:40.598 --> 00:06:44.402 instrumental tracks for it, you can do whatever you want, you can NOTE Confidence: 0.859272420406342 ae417c8a-e513-4cb6-b01d-952f427866c8 00:06:44.402 --> 00:06:49.157 get many lessons -- but if you do only get one, let it be the NOTE Confidence: 0.859272420406342 5a1fbd24-d1ec-455a-b81e-7dc9fd1803a6 00:06:49.157 --> 00:06:50.425 following argument. First, through NOTE Confidence: 0.895898640155792 30d9bfeb-19b8-45c2-8875-970bce42dce4 00:06:50.425 --> 00:06:53.820 careful analysis, we can learn about the causes of the fall in NOTE Confidence: 0.816553771495819 5f9c2412-083a-4394-8e4d-c44ea5a6b575 00:06:53.820 --> 00:06:58.405 extreme poverty. Two, part of that fall is explained by the NOTE Confidence: 0.816553771495819 3bd1d772-8cda-457c-ac48-2389ee96653e 00:06:58.405 --> 00:07:01.325 types of specific, small policy interventions discussed by NOTE Confidence: 0.816553771495819 0a087539-895d-4c7b-af2b-f776b2b0f116 00:07:01.325 --> 00:07:02.420 Banerjee and Duflo. NOTE Confidence: 0.862122416496277 e28c3aff-f38c-44fc-bcf9-f7e6963518fb 00:07:03.790 --> 00:07:07.343 Thinking small is part of the reason for the fall in extreme NOTE Confidence: 0.862122416496277 44278331-58c6-4c6d-96b7-23af26165ed6 00:07:07.343 --> 00:07:09.927 poverty. Third, because small actions can produce important NOTE Confidence: 0.862122416496277 9b832188-c842-4493-b611-9315a6f3f276 00:07:09.927 --> 00:07:13.480 gains, that means that you, as an individual, can help fight NOTE Confidence: 0.862122416496277 44038ac0-94f9-40af-8c0e-9c979690b31c 00:07:13.480 --> 00:07:16.387 poverty. If you donate through the most cost effective NOTE Confidence: 0.862122416496277 a2f860c2-3774-435c-815f-899fa2d332cb 00:07:16.387 --> 00:07:19.940 organizations, you can save a life for every two or three NOTE Confidence: 0.862122416496277 ffb0f056-55ae-484a-932a-f919d489ba2a 00:07:19.940 --> 00:07:21.555 thousand dollars that you donate through NOTE Confidence: 0.851311028003693 25f0d837-a212-41f0-9841-d6735be5192a 00:07:21.555 --> 00:07:25.510 your lifetimes. Poor Economics is an important work, and thank NOTE Confidence: 0.851311028003693 95e7e782-5e72-4340-a52b-62f9549311d4 00:07:25.510 --> 00:07:28.660 you for reading it carefully and for listening today, I NOTE Confidence: 0.851311028003693 f211c9bb-121e-4239-80ed-6c9fcd5621d5 00:07:28.660 --> 00:07:31.810 hope that the work sparks a lifetime of interest and  NOTE Confidence: 0.851311028003693 8d3e3295-93b4-43fd-9859-f39e93ad7b47 00:07:31.810 --> 00:07:34.960 inquiry into the ways that you can help fight extreme NOTE Confidence: 0.851311028003693 a7944581-c0ba-4d75-b64a-4654dad8eb6d 00:07:34.960 --> 00:07:35.275 poverty. NOTE Confidence: 0.868313491344452 c790225d-026b-4dce-9b90-9902b2898efd 00:07:36.520 --> 00:07:40.865 Brief outline for the remainder of my talk. First, I will NOTE Confidence: 0.868313491344452 2ea800d4-053c-4890-915d-31a0718a3fa7 00:07:40.865 --> 00:07:43.630 introduce economics as a discipline, highlighting the NOTE Confidence: 0.868313491344452 ae9b4a3d-1e10-4858-9753-598228f3af92 00:07:43.630 --> 00:07:47.185 goals of understanding and improving the world, while also NOTE Confidence: 0.868313491344452 9e2be50e-97e7-4e9e-80da-31dd972207f1 00:07:47.185 --> 00:07:51.925 emphasizing the need to use both theory and evidence or data to NOTE Confidence: 0.868313491344452 bbeb34d3-53b1-4331-a175-4fbe65f320ec 00:07:51.925 --> 00:07:53.900 do both of those goals. NOTE Confidence: 0.858110547065735 a56374e6-02b6-4ea6-a2c5-78d2466c8873 00:07:54.660 --> 00:07:57.420 Second, I'll provide a brief public service announcement on what NOTE Confidence: 0.858110547065735 be3f3763-87ed-4ad7-bef4-c7cbd29cce1a 00:07:57.420 --> 00:08:01.008 makes a good First-Year Studies paper, with some tips on how to NOTE Confidence: 0.858110547065735 6bd0a342-fb6b-40d3-8d59-4e5d2bd321b2 00:08:01.008 --> 00:08:03.768 write better papers this term, focusing on the importance of NOTE Confidence: 0.858110547065735 f1787157-3ea7-4563-b8f4-f0f22292c954 00:08:03.768 --> 00:08:06.804 making concessions when needed and being open to a range of NOTE Confidence: 0.855566382408142 f38cc265-3e92-47ce-a405-722743e63ff2 00:08:06.804 --> 00:08:10.464 evidence. Third, I'll talk about microcredit as a specific NOTE Confidence: 0.855566382408142 c7221943-751a-4f25-9298-2108d8cbd69f 00:08:10.464 --> 00:08:13.944 example to make some of these points. The history of NOTE Confidence: 0.855566382408142 8d039ea0-c778-4de0-b7ae-ed56570ece28 00:08:13.944 --> 00:08:16.032 microcredit powerfully illustrates the importance of NOTE Confidence: 0.855566382408142 bbd302b0-189a-4836-95aa-4f2b6510e98e 00:08:16.032 --> 00:08:17.772 testing our ideas with data  NOTE Confidence: 0.806100785732269 43d30b18-4ae8-46a3-a7ac-f6f19fe4321a 00:08:18.290 --> 00:08:22.214 and also using theory to guide our conclusions, and so it NOTE Confidence: 0.806100785732269 14fb6e69-4c9d-42b7-987e-4347f0eb9518 00:08:22.214 --> 00:08:25.811 provides a really strong example of the importance of data and NOTE Confidence: 0.806100785732269 e942249e-3ebc-477d-b844-f0e727ae60d8 00:08:25.811 --> 00:08:29.408 theory. I'll draw on recent research and go a bit beyond NOTE Confidence: 0.856072783470154 7d928b2f-e84c-4983-a4c3-f3a40e80ec74 00:08:29.408 --> 00:08:33.604 what's in Poor Economics. Fourth, I'm going to talk about more of NOTE Confidence: 0.856072783470154 397a84a4-8a54-4124-a0b7-98609dc7ce3f 00:08:33.604 --> 00:08:37.322 the reasons for the reduction in poverty that we just saw, NOTE Confidence: 0.856072783470154 d8f15e9a-46a8-4b9d-bb36-66f87106db2d 00:08:37.322 --> 00:08:40.702 arguing that both thinking small and thinking big are important. NOTE Confidence: 0.856072783470154 8f24877a-3669-4087-b7fd-23e748aef2b7 00:08:40.702 --> 00:08:42.392 Both help us achieve reductions NOTE Confidence: 0.89187628030777 b86695c8-fe25-43ea-9d4a-2d06c179150f 00:08:42.392 --> 00:08:46.104 in poverty. Finally, I'll argue that you can help fight NOTE Confidence: 0.89187628030777 003d80ca-26e3-4e00-9798-efa7c98b9c3a 00:08:46.104 --> 00:08:49.547 extreme poverty and ask you to reflect on your desire and NOTE Confidence: 0.89187628030777 23156076-c743-412d-aa98-9b0125f5c353 00:08:49.547 --> 00:08:52.677 ability to do so, as you continue your education and NOTE Confidence: 0.89187628030777 162acb7a-d4cf-46d3-a064-17c2dbf60ec9 00:08:52.677 --> 00:08:54.242 the rest of your life. NOTE Confidence: 0.884804368019104 a1770f1f-985b-4224-89d4-61aaf5bfb842 00:08:55.490 --> 00:09:00.898 So first, what is economics? For many of you, this is your first NOTE Confidence: 0.884804368019104 d52cc53d-ae67-40cd-864f-1ae0029525c9 00:09:00.898 --> 00:09:02.146 introduction to economics. NOTE Confidence: 0.841524660587311 0d396251-957d-4f02-a177-9bfb9ef67deb 00:09:02.720 --> 00:09:05.080 This is a discipline with a lot of misconceptions about NOTE Confidence: 0.841524660587311 95bfe2e1-d4e3-466c-86b7-d8dd067ba14e 00:09:05.080 --> 00:09:07.440 what it is and it is a difficult discipline to NOTE Confidence: 0.841524660587311 d0e0445f-a152-4f21-9519-d0d511ef27b7 00:09:07.440 --> 00:09:10.508 define, so I want to take a few minutes to talk about it. NOTE Confidence: 0.853126049041748 493abe40-3818-4c8d-8db4-231c0619a868 00:09:12.090 --> 00:09:15.700 What is economics? One definition I really like is by NOTE Confidence: 0.853126049041748 b08ab6f6-8f86-4061-84dc-36e7bb5644ba 00:09:15.700 --> 00:09:19.310 Dasgupta, who says: "Economics in great measure tries to NOTE Confidence: 0.853126049041748 dd0db908-e9d7-4a22-9aa9-022981eeb3cc 00:09:19.310 --> 00:09:22.198 uncover the processes that influence how people's lives NOTE Confidence: 0.853126049041748 4f97a31d-046c-4054-927e-88c86ed7a665 00:09:22.198 --> 00:09:26.169 come to be what they are. The discipline also tries to NOTE Confidence: 0.853126049041748 4b1efe76-0f21-43fb-a157-00caee95e465 00:09:26.169 --> 00:09:30.140 identify ways to influence those very processes so as to improve NOTE Confidence: 0.853126049041748 3c9ed002-7ccf-468b-be99-7df1bf621a53 00:09:30.140 --> 00:09:34.111 the prospects of those who are hugely constrained in what they NOTE Confidence: 0.853126049041748 f17c8527-8517-4ecf-aadd-56a8f5448ef3 00:09:34.111 --> 00:09:35.555 can be and do. NOTE Confidence: 0.85439395904541 de30e5fe-ad6f-4c84-9561-373b2f9d8276 00:09:36.240 --> 00:09:39.072 The former activity involves finding explanations, while the NOTE Confidence: 0.85439395904541 aa698790-8b09-441c-bb62-59b5d2be42bc 00:09:39.072 --> 00:09:41.904 latter tries to identify policy prescriptions." Thus, economists NOTE Confidence: 0.85439395904541 8df1de73-d3bf-4e5a-a116-7f9840c5cec5 00:09:41.904 --> 00:09:46.152 try to explain and understand the world so that we can provide NOTE Confidence: 0.85439395904541 e0146a57-4213-4734-ac33-4dccedf01bf3 00:09:46.152 --> 00:09:50.754 guidance on how to make the world a better place to live in. NOTE Confidence: 0.85439395904541 49eeeb2d-dfa1-48c6-8260-91132e2280da 00:09:50.754 --> 00:09:53.232 For example, understanding the world  involves NOTE Confidence: 0.85439395904541 31441ab2-5380-4d26-be41-1b78efeaa85d 00:09:53.232 --> 00:09:57.126 determining whether the poor face an S-shaped curve, like the NOTE Confidence: 0.85439395904541 22a36cb5-02d5-4b83-94a4-65d15121f800 00:09:57.126 --> 00:10:01.728 book, or an inverted L-shaped curve, like you also saw in the NOTE Confidence: 0.86168360710144 858a33ee-55f3-4ada-aebe-0ceb983de375 00:10:01.728 --> 00:10:04.130 book. This understanding influences the effectiveness of NOTE Confidence: 0.86168360710144 6fff67d6-6284-403f-a13d-eaf78d198b8e 00:10:04.130 --> 00:10:07.650 possible social policies. For example, if the poor face an S- NOTE Confidence: 0.86168360710144 2b256819-aae0-4057-b56a-abd4404bf1c8 00:10:07.650 --> 00:10:11.170 shaped curve, then giving them more money may allow them to NOTE Confidence: 0.86168360710144 227589d1-ce8e-4b3c-9ddd-31eaede2751e 00:10:11.170 --> 00:10:15.330 make a jump out of poverty. It can help them escape the poverty NOTE Confidence: 0.934279024600983 eb45c78d-4877-48a3-87d3-b8bd59579d33 00:10:15.330 --> 00:10:17.510 trap zone. In contrast,  NOTE Confidence: 0.842835009098053 91678996-11bd-4f8c-8462-ec837b32bd27 00:10:18.260 --> 00:10:21.813 if the poor face an inverted L-shaped world, then giving NOTE Confidence: 0.842835009098053 ea451f74-b353-40fb-a996-0f7c11dc0f7d 00:10:21.813 --> 00:10:25.043 them more money will only provide short run benefits. To NOTE Confidence: 0.842835009098053 c096900d-0ae0-4129-b651-c051ff336624 00:10:25.043 --> 00:10:28.273 help the poor escape from poverty, we need to think NOTE Confidence: 0.842835009098053 d018d237-d134-4b41-b4ad-e9e1d9c19c16 00:10:28.273 --> 00:10:30.211 about other, larger, more structural policies. NOTE Confidence: 0.877790212631226 f8cf0042-888f-406a-ad2c-da85425be3ef 00:10:34.590 --> 00:10:38.630 Economics, like other academic disciplines, combines theory and NOTE Confidence: 0.877790212631226 51489325-1c76-464e-a9c9-42db9d180877 00:10:38.630 --> 00:10:44.185 evidence. In order to explain and understand the world, we need NOTE Confidence: 0.877790212631226 7ad72dcc-c5ec-4546-a9f0-71c56d6eff46 00:10:44.185 --> 00:10:47.215 both, and both need to be NOTE Confidence: 0.821787416934967 2738afe1-a800-4a4e-809f-72f2f1bc18b2 00:10:47.215 --> 00:10:51.355 integrated. For example, think of the surveys from the 18 NOTE Confidence: 0.821787416934967 7686e241-b370-4bd4-a201-c6b170459454 00:10:51.355 --> 00:10:54.460 countries that Banerjee and Duflo use to describe and NOTE Confidence: 0.821787416934967 f47989c2-f2e4-42e2-944a-ebe02e8985a7 00:10:54.460 --> 00:10:56.185 understand the lives of the NOTE Confidence: 0.863912463188171 d702610f-bc57-4397-9ebb-4c74eb9dddf4 00:10:56.185 --> 00:11:00.845 poor. Next we need theories to help us explain the data and NOTE Confidence: 0.863912463188171 7d2f87d6-2d9e-4ae4-9f07-25c2c95f9ff7 00:11:00.845 --> 00:11:04.310 what we observe in the data. Once we've combined data and NOTE Confidence: 0.863912463188171 0b5b10fc-63ac-4f82-a989-0b514b2bc2d1 00:11:04.310 --> 00:11:07.460 theory to explain the real world, then we make predictions NOTE Confidence: 0.863912463188171 84d41243-304d-4ced-824b-106e328a47bd 00:11:07.460 --> 00:11:10.295 and help design policies to improve the world. These NOTE Confidence: 0.863912463188171 299ec1c3-920d-4612-85e8-f931cc9ccf40 00:11:10.295 --> 00:11:13.445 policies themselves then need to be further evaluated with new NOTE Confidence: 0.863912463188171 14740675-826f-4700-b24b-87bb13bb160a 00:11:13.445 --> 00:11:16.595 data. For this you can think about the randomized control NOTE Confidence: 0.863912463188171 a7b016c3-25e0-4d62-919e-20ebff05cd55 00:11:16.595 --> 00:11:19.430 trials and the other empirical studies in Poor Economics. NOTE Confidence: 0.82008683681488 22ac57a1-b1a3-4b44-858d-7166936807a5 00:11:20.140 --> 00:11:23.220 We then modify and improve our theories based on these NOTE Confidence: 0.82008683681488 8b55d90a-2aeb-4a65-8873-7c024b48c6f6 00:11:23.220 --> 00:11:25.684 findings. Banerjee and Duflo mostly present theories that NOTE Confidence: 0.82008683681488 331530f9-f907-4dc9-817b-4f9a8753b483 00:11:25.684 --> 00:11:29.688 have withstood the test of time and some that don't, as I'm sure NOTE Confidence: 0.868081569671631 32dce996-c2d6-417b-8967-0c372c930a52 00:11:29.688 --> 00:11:34.518 you're seeing. Theory or ideas or beliefs and evidence or NOTE Confidence: 0.868081569671631 08854be7-3bd4-44f7-8e2c-882a56fc1227 00:11:34.518 --> 00:11:38.352 experiences or data are essential in economics and life NOTE Confidence: 0.883192300796509 4bf6ce3a-9457-4d3e-a552-b58eb1c3b082 00:11:38.352 --> 00:11:42.036 generally. As you progress through college and life, I NOTE Confidence: 0.883192300796509 aca2aa33-e1f9-450b-adbc-07581d8bd5dd 00:11:42.036 --> 00:11:46.352 implore you to explore the world with an open mind. If you want NOTE Confidence: 0.883192300796509 4493aa21-4740-4bb0-a081-477d0ac49d03 00:11:46.352 --> 00:11:50.336 to understand the world and its people, you need to listen to NOTE Confidence: 0.883192300796509 7bd41540-5e86-4d31-83ab-debb75aa10ed 00:11:50.336 --> 00:11:52.992 others, attempt to understand their perspectives, and engage NOTE Confidence: 0.883192300796509 e1ef864b-a9c5-4324-bf4d-8b5aca469fba 00:11:52.992 --> 00:11:55.316 with their reasoning and experiences seriously. The NOTE Confidence: 0.883192300796509 52b321b4-9ddf-44f1-bd62-6732341a6fb1 00:11:55.316 --> 00:11:59.632 world is complicated and it is rarely as simple as we want to NOTE Confidence: 0.883192300796509 fd80ab9f-22f2-4e4e-83ef-ee917297bb66 00:11:59.632 --> 00:12:03.284 think it is. Seeking out more facts and more data provides NOTE Confidence: 0.883192300796509 ed0fcd5e-09fd-4210-8cb6-7fe4684f34f3 00:12:03.284 --> 00:12:06.604 information on how commonly the real world supports or opposes NOTE Confidence: 0.846399903297424 8ebf6ad8-dc33-409c-a8d4-436c97f39ca8 00:12:06.604 --> 00:12:11.357 our viewpoints. In my opinion, some of the worst moments in NOTE Confidence: 0.846399903297424 dd4e6d30-2c14-4f5e-8a87-24e14df62cc2 00:12:11.357 --> 00:12:14.341 economics have come when economists ignored important data NOTE Confidence: 0.846399903297424 533e4750-a55a-4baf-9ee3-f7aeb23e6ef3 00:12:14.341 --> 00:12:17.325 or stubbornly held on to simplistic theories. Alan NOTE Confidence: 0.846399903297424 c9443056-e547-42d9-b7a9-e31ce1d982d8 00:12:17.325 --> 00:12:20.682 Greenspan's stubborn belief in the self-correcting behavior of NOTE Confidence: 0.846399903297424 9a2d6b71-8eac-4e8b-970b-133d2bb2b40f 00:12:20.682 --> 00:12:23.666 financial markets is a devastating example that helped NOTE Confidence: 0.846399903297424 4e6979bf-323f-4326-a12c-b74e78bbd48d 00:12:23.666 --> 00:12:25.158 cause the Great Recession. NOTE Confidence: 0.864086031913757 c03a17f4-c191-45d4-aa70-5885a39ac7fb 00:12:25.860 --> 00:12:29.400 At its best, an openness to evidence and surprising results NOTE Confidence: 0.864086031913757 959af9e0-857a-4180-a97e-e891cad607fa 00:12:29.400 --> 00:12:32.586 can benefit humanity. Finding that cheap deworming pills are NOTE Confidence: 0.864086031913757 dc4d0834-b64b-4328-91ab-d39c608eddb5 00:12:32.586 --> 00:12:36.834 one of the most cost-effective ways to boost education is a NOTE Confidence: 0.864086031913757 a184206a-cb70-48e8-a139-6fb4c74a6c5e 00:12:36.834 --> 00:12:39.666 surprising finding, and it's something that's helping make NOTE Confidence: 0.864086031913757 2cb61ca9-45a3-4de7-b3e9-47ad82a8dea3 00:12:39.666 --> 00:12:42.852 the world better. It inspired governments and organizations to NOTE Confidence: 0.864086031913757 e48f9b4d-337c-434d-a5bc-9c2b114fe26f 00:12:42.852 --> 00:12:46.038 provide deworming pills to hundreds of millions of children NOTE Confidence: 0.864086031913757 2c2683c0-a7a1-4732-b8d5-c8371c6f3501 00:12:46.038 --> 00:12:48.162 every year. It's having a huge NOTE Confidence: 0.847999274730682 9d6bad4c-4fdb-4d73-b9fe-012470423036 00:12:48.162 --> 00:12:52.390 impact. I respect Banerjee and Duflo's open mindedness to NOTE Confidence: 0.847999274730682 b8b7b578-4769-4092-90d6-fb3a0e7af999 00:12:52.390 --> 00:12:56.350 various ideas and experiences. First of all, one of the core NOTE Confidence: 0.847999274730682 147db372-370f-4349-92af-a599b28da508 00:12:56.350 --> 00:13:01.390 ideas of Poor Economics is that we need to listen to the poor and NOTE Confidence: 0.847999274730682 2a65672b-c2a3-41d2-9cbf-893f31aec757 00:13:01.390 --> 00:13:04.270 the reasons behind their decisions, which often make NOTE Confidence: 0.847999274730682 2fd97421-1fea-4185-83ee-7e7c4a5bce80 00:13:04.270 --> 00:13:08.230 perfect sense if we take time to understand their contexts, their NOTE Confidence: 0.847999274730682 b2a8eabb-f95c-49f8-a031-7ebdb7bdb964 00:13:08.230 --> 00:13:09.670 goals, and their challenges. NOTE Confidence: 0.811455905437469 5b96e7d0-ecf3-4ef6-a015-53803cbf7fbe 00:13:10.270 --> 00:13:13.960 Second, Banerjee and Duflo take other ideas and theories NOTE Confidence: 0.811455905437469 6d5e5269-5962-443b-8886-7cd44a1238ca 00:13:13.960 --> 00:13:18.060 seriously. In many ways, each chapter of Poor Economics starts  NOTE Confidence: 0.811455905437469 86447064-2e92-44dd-acda-4e23b55894ed 00:13:18.060 --> 00:13:21.340 with some surprising fact, some shocking statistics, some NOTE Confidence: 0.811455905437469 f878dc92-f7f5-4fd6-9f5b-b1ad5eaf072d 00:13:21.340 --> 00:13:24.210 puzzling anecdotes, or some conventionally held wisdom. NOTE Confidence: 0.811455905437469 47cb4d27-b7aa-46e5-8692-9b1c6ce1a937 00:13:24.210 --> 00:13:27.080 Banerjee and Duflo then investigate multiple possible NOTE Confidence: 0.811455905437469 932e531e-15c8-4d3f-96cf-783ba528c04b 00:13:27.080 --> 00:13:30.770 theories that might help answer the puzzle. Generally, they NOTE Confidence: 0.811455905437469 064e4417-afbc-45da-9857-22ce42021f4b 00:13:30.770 --> 00:13:34.050 present these theories as reasonably as possible, giving NOTE Confidence: 0.811455905437469 549808d6-01fc-4741-b387-2301966ac120 00:13:34.050 --> 00:13:38.560 them the benefit of the doubt and trying to provide plausible NOTE Confidence: 0.811455905437469 ac58a3fa-9cf9-40e9-89b6-d1582b02f962 00:13:38.560 --> 00:13:40.200 explanations according to these NOTE Confidence: 0.849600911140442 310523ca-fbdb-46ce-8a21-dae1320ba3c1 00:13:40.200 --> 00:13:44.993 theories. Then, for each theory, they present evidence both for NOTE Confidence: 0.849600911140442 b523c97d-de7c-4fab-847a-4f748e2fdc0e 00:13:44.993 --> 00:13:46.701 and against the theory. NOTE Confidence: 0.852677166461945 8d6923ab-5d29-4b59-87b0-bdc9dbd84871 00:13:47.540 --> 00:13:50.540 This open mindedness to multiple theories helps us understand the NOTE Confidence: 0.852677166461945 bac24109-b598-48ef-bdc0-2c38754845e8 00:13:50.540 --> 00:13:53.240 world better and I appreciate that open mindedness. Although NOTE Confidence: 0.852677166461945 44d13456-3c79-475d-bbd1-859dbb31b3f4 00:13:53.240 --> 00:13:55.940 there are a few glaring exceptions, exceptions as I'm NOTE Confidence: 0.852677166461945 be90dd25-3b9e-4ff5-acb5-279fb21f1392 00:13:55.940 --> 00:13:57.140 sure you are experiencing. NOTE Confidence: 0.861226499080658 f781ef2d-fed4-480f-83d5-4d5e1cb724eb 00:13:58.320 --> 00:14:01.380 This approach demands a close reading, noticing the changes in NOTE Confidence: 0.861226499080658 72c724c5-f920-4a19-996f-6b1e1ff79224 00:14:01.380 --> 00:14:04.134 perspective and noticing how exactly the evidence supports or NOTE Confidence: 0.861226499080658 cba72148-57db-49f7-b629-4abbe01b0a3c 00:14:04.134 --> 00:14:07.500 challenges a given idea is difficult, and it takes a close NOTE Confidence: 0.861226499080658 63102824-85ac-4c84-8815-27ec6ce4ef8b 00:14:07.500 --> 00:14:10.866 reading. It is useful to pay attention to when you are NOTE Confidence: 0.861226499080658 a4e03cfe-5b8c-4c29-a716-15ffd7e71348 00:14:10.866 --> 00:14:14.232 reading the ideas of Banerjee and Duflo, and when you are NOTE Confidence: 0.861226499080658 c0e7ce6e-f8ae-4164-a5a1-2f0d45c46456 00:14:14.232 --> 00:14:15.762 reading the beliefs of others. NOTE Confidence: 0.856500864028931 877d213d-5ecc-4273-a25e-f673f7ee7f2e 00:14:16.830 --> 00:14:20.270 To a large degree, Poor Economics is a critique of NOTE Confidence: 0.856500864028931 edf08153-bf3a-4b30-a665-9fcc6c3e8281 00:14:20.270 --> 00:14:23.022 development policy, including its reliance on ideology and NOTE Confidence: 0.856500864028931 cd4f498c-ca48-4457-976b-5daa4bbf7f2e 00:14:23.022 --> 00:14:26.118 resistance to evidence about what works. By testing NOTE Confidence: 0.856500864028931 ffee83ca-0cd8-4e83-aa16-fe800ca9b3e5 00:14:26.118 --> 00:14:29.214 ideas empirically, we can discover what works and what NOTE Confidence: 0.856500864028931 f17137a7-ec20-42b5-9006-71e62d779bea 00:14:29.214 --> 00:14:32.998 doesn't. Poor Economics is a book written for the public, and NOTE Confidence: 0.856500864028931 f80ef3e2-5fe8-410f-8efc-58c19265d97e 00:14:32.998 --> 00:14:37.126 in my view, it is largely written to make this case to NOTE Confidence: 0.856500864028931 86193afe-b19f-4cb2-b332-ce5231159c1e 00:14:37.126 --> 00:14:40.566 voters and development workers so that we can better mobilize NOTE Confidence: 0.856500864028931 8de6cf6c-2cb8-4a1a-9f71-26b526216495 00:14:40.566 --> 00:14:44.006 our resources to do more to fight poverty more successfully. NOTE Confidence: 0.854214072227478 77a131e8-50bf-48ab-86a9-5f7e7871b582 00:14:45.920 --> 00:14:50.960 So that's a bit about what economics is. What is economics NOTE Confidence: 0.868603110313416 b68c388c-de26-4c84-baf4-522bea37c0dc 00:14:50.960 --> 00:14:54.615 not? First of all, economics is NOTE Confidence: 0.897785544395447 f1e192ca-eca4-44a7-9010-4dcd3ad1b77e 00:14:54.615 --> 00:14:57.270 not business. Secondly, NOTE Confidence: 0.795087993144989 89f626e6-c9e6-413d-ac8b-2b92cbef562a 00:14:58.300 --> 00:15:04.760 There we go, sorry NOTE Confidence: 0.795087993144989 4a5eb359-9b47-4ebf-b376-49af2cb21eba 00:15:04.760 --> 00:15:09.605 about that. Secondly, NOTE Confidence: 0.856427848339081 f2927c46-ff2a-4f18-878f-7cd2e44deaae 00:15:10.790 --> 00:15:14.624 economics is often criticized for just promoting free markets NOTE Confidence: 0.856427848339081 cb2c216c-24c0-4d9a-8a3a-7d78e81abe1e 00:15:14.624 --> 00:15:16.754 and the sanctity of individual NOTE Confidence: 0.867104053497314 acbd7c7a-1472-40af-93c8-b076ab23ecac 00:15:16.754 --> 00:15:21.590 choice. The commonly cited "invisible hand" of Adam Smith NOTE Confidence: 0.867104053497314 8498e3e3-df8a-447f-8e1d-75479e5cb0a5 00:15:21.590 --> 00:15:25.310 described how, in certain contexts, individuals acting in NOTE Confidence: 0.867104053497314 bc7546bb-bd83-4e7d-87b9-72f75db638be 00:15:25.310 --> 00:15:29.960 their own self interest results in socially good or efficient NOTE Confidence: 0.822471678256989 47b27bdb-cc9a-4964-821c-176eaedb4248 00:15:29.960 --> 00:15:34.510 outcomes. In this case, markets make the pie as large as NOTE Confidence: 0.822471678256989 28e27481-077d-4f38-8dd7-fc8904dd6f73 00:15:34.510 --> 00:15:38.020 possible, but this doesn't say anything about fairness, and thus NOTE Confidence: 0.822471678256989 25faef0a-cc7d-4af4-ba07-dd7088025ef7 00:15:38.020 --> 00:15:40.828 we should rarely let markets just operate alone. NOTE Confidence: 0.855646729469299 5cdde961-74c9-42a1-b269-2a967aef6b03 00:15:41.390 --> 00:15:44.428 We have to think about efficiency alongside NOTE Confidence: 0.855646729469299 b45fc554-ab61-4a0f-8e25-d6c8261f252e 00:15:44.428 --> 00:15:45.730 other important goals. NOTE Confidence: 0.84242856502533 72fbcd16-267d-447f-b3ab-97ace8497686 00:15:47.180 --> 00:15:49.900 But among the important conditions that must be NOTE Confidence: 0.84242856502533 f9d786dc-f238-4411-833e-2c74c88c74a8 00:15:49.900 --> 00:15:53.640 satisfied for markets to be efficient are:  First of all, for NOTE Confidence: 0.84242856502533 3cb440a4-d802-4f5c-86f9-e5f471982775 00:15:53.640 --> 00:15:57.380 markets to be efficient, there need to be lots of firms NOTE Confidence: 0.84242856502533 0963476e-15e3-4bd2-8221-330131393037 00:15:57.380 --> 00:16:00.100 selling a good. This creates essential competition that NOTE Confidence: 0.84242856502533 be476be0-a525-48fc-80c2-6a02163af65c 00:16:00.100 --> 00:16:01.120 drives down prices. NOTE Confidence: 0.834165215492249 a2c571af-6639-41db-8b9d-2bd827e51a7c 00:16:01.660 --> 00:16:06.434 This condition is violated, for example by AT&T or Microsoft or NOTE Confidence: 0.834165215492249 73d327ef-59be-44d4-949d-564728c3cef4 00:16:06.434 --> 00:16:10.774 rural lenders as described in Poor Economics. In these cases, NOTE Confidence: 0.834165215492249 fa238ccb-a527-4d36-aec4-4ba06be68236 00:16:10.774 --> 00:16:15.114 firms operate in . . . sorry. In these NOTE Confidence: 0.834165215492249 3c1cefa9-6ab6-495b-ba85-c8f603e68e0d 00:16:15.114 --> 00:16:17.284 cases, firms operate as single NOTE Confidence: 0.852060198783875 08a807ee-c672-43bf-a172-0e3f4e653a6b 00:16:17.284 --> 00:16:21.460 firms, in markets that are not efficient. This is one reason NOTE Confidence: 0.852060198783875 fce60c0a-6791-461e-b707-212801ec7fdc 00:16:21.460 --> 00:16:25.490 why lending to the rural poor is so difficult and why these rural NOTE Confidence: 0.852060198783875 fb4b22f7-a55e-4236-90ee-b2978e38bdd2 00:16:25.490 --> 00:16:28.280 credit markets and insurance markets rarely work very well. NOTE Confidence: 0.864961683750153 c86921b0-fdce-44b5-a5fd-0fa0a86ae0dc 00:16:28.820 --> 00:16:31.532 Secondly, for markets to be efficient, an individual's NOTE Confidence: 0.864961683750153 a9cc93aa-59ff-48d6-9b88-ec258133df48 00:16:31.532 --> 00:16:34.922 choices cannot impact others. The market for flu shots and NOTE Confidence: 0.864961683750153 1f43e0e1-7946-4a63-a92b-b34d3c66460b 00:16:34.922 --> 00:16:38.312 vaccines is not efficient as a free market. When choosing NOTE Confidence: 0.864961683750153 5876aaa9-5f1e-407e-bbc0-ddd034c85626 00:16:38.312 --> 00:16:42.719 whether to get a flu shot, I might ignore the impact of my NOTE Confidence: 0.864961683750153 4a1cd2d4-35fe-43db-9a67-036285cd669e 00:16:42.719 --> 00:16:46.787 flu shot on my family, my friends, or my neighbors, or my NOTE Confidence: 0.767987191677094 73d24810-88fc-48cf-aa2c-f8c4b447e5b7 00:16:46.787 --> 00:16:50.515 co-workers. The same holds for bed nets, as described by NOTE Confidence: 0.910885393619537 5656af92-379d-4560-8f3a-651fb245db5f 00:16:50.515 --> 00:16:54.998 Banerjee and Duflo. We see similar concerns and challenges NOTE Confidence: 0.910885393619537 5f0f3ca4-7c8d-4808-bb01-100645542049 00:16:54.998 --> 00:16:58.822 today with coronavirus and discussions about our individual NOTE Confidence: 0.910885393619537 2d902325-bf66-42d9-82e0-51328e01837c 00:16:58.822 --> 00:17:02.168 behaviors and choices and vaccinations as well. NOTE Confidence: 0.857713401317596 0ec57272-41c8-472b-8431-9ad5f93b9ec6 00:17:02.860 --> 00:17:06.435 Third, for markets to be efficient, there needs to be perfect NOTE Confidence: 0.857713401317596 022b9eb9-268c-4a09-8236-4cec56e66264 00:17:06.435 --> 00:17:08.060 information about what you are NOTE Confidence: 0.864517629146576 65524ec1-683a-4999-b1d2-9306724138a9 00:17:08.060 --> 00:17:12.349 buying or selling. Insurance and credit markets often fail, for NOTE Confidence: 0.864517629146576 8a8c1cbf-a70c-4a20-be60-fe9a9416bd74 00:17:12.349 --> 00:17:15.525 example, because providers cannot observe the actions and NOTE Confidence: 0.864517629146576 88b46288-fe20-48a3-b606-cf7d3c2e7566 00:17:15.525 --> 00:17:19.098 choices of others. Insurance and credit markets rarely work NOTE Confidence: 0.864517629146576 4b5c02a1-e500-46cc-afdd-3efbbb272c97 00:17:19.098 --> 00:17:22.671 perfectly, and even in the United States, they require NOTE Confidence: 0.864517629146576 def4cc04-5ccc-4b83-96ad-e6ebbdaff8f0 00:17:22.671 --> 00:17:26.244 strong institutions to support them. Consider a few examples. NOTE Confidence: 0.911103188991547 2bf294c3-cbf5-4371-b881-660d498767d2 00:17:26.790 --> 00:17:28.850 Individuals are required to get NOTE Confidence: 0.872137784957886 20f6d160-2aa8-425f-b64a-72d2056e89e0 00:17:28.850 --> 00:17:32.095 driver's insurance. Government-supported businesses Fannie Mae NOTE Confidence: 0.872137784957886 ad752a26-8bcb-4a9c-a8d5-4305a7c3058d 00:17:32.095 --> 00:17:35.542 and Freddie Mac are used to encourage homeownership through NOTE Confidence: 0.872137784957886 189c9617-6936-4636-8f6b-0bd9d9dafaae 00:17:35.542 --> 00:17:38.606 the purchase of trillions of dollars of mortgages. NOTE Confidence: 0.782286643981934 3da88e48-578e-4be2-b5de-a7383066c62c 00:17:39.240 --> 00:17:41.670 The FDIC insures savings in NOTE Confidence: 0.828308880329132 0320d382-c2b3-4ba0-90ff-71808808ae7d 00:17:41.670 --> 00:17:46.274 banks. It seems like perhaps it's difficult for governments to NOTE Confidence: 0.828308880329132 5f0e2525-c77b-40e7-a524-08fca4ee18d6 00:17:46.274 --> 00:17:47.588 design healthcare systems. NOTE Confidence: 0.875974297523499 cd790998-33ef-4c6a-9536-1fd296221130 00:17:48.230 --> 00:17:50.727 And many more requirements, but these are some of the most NOTE Confidence: 0.85967630147934 bea80447-de53-423a-be7c-355eeb50b54e 00:17:50.727 --> 00:17:53.440 important. Unfortunately, the conditions required for NOTE Confidence: 0.85967630147934 cd26be7e-04f4-433a-8da3-38bb4e3035d4 00:17:53.440 --> 00:17:57.092 efficient markets often and can fail to hold, and many markets NOTE Confidence: 0.85967630147934 676bcf0b-f2d9-41cb-b406-cab5a46ac1b4 00:17:57.092 --> 00:17:59.416 that function relatively efficiently in rich countries NOTE Confidence: 0.85967630147934 418e1f61-c57e-4bcd-9e81-2caed3b9590d 00:17:59.416 --> 00:18:02.072 fail to meet these requirements in developing ones. NOTE Confidence: 0.85967630147934 41252146-872e-4773-8a2f-765b42310018 00:18:02.072 --> 00:18:05.724 In fact, according to economic theory, most of the markets in NOTE Confidence: 0.85967630147934 48a6c43b-7f50-45a7-bdf0-7801cd923ab5 00:18:05.724 --> 00:18:09.376 Poor Economics are ones that do not work particularly well as NOTE Confidence: 0.85967630147934 2005757b-dc40-418c-b7f3-134d6feebbc0 00:18:09.376 --> 00:18:13.360 free markets. It requires a lot of work to create these markets NOTE Confidence: 0.85967630147934 fa6103d9-338f-44e3-a6db-368fe82b22b2 00:18:13.360 --> 00:18:16.680 that can function and to support their their performance and NOTE Confidence: 0.840478420257568 3a6a088d-4710-4dcd-b8aa-5b0409f71628 00:18:16.680 --> 00:18:20.780 efficiency. I'll focus today on some examples from credit and NOTE Confidence: 0.840478420257568 6c1271f8-6c63-46c6-9695-ebec4383311e 00:18:20.780 --> 00:18:21.860 microcredit in particular. NOTE Confidence: 0.837499022483826 872c0698-5fc1-4161-8d86-8c4558af6e7a 00:18:22.940 --> 00:18:27.584 Second goal: What makes a good First-Year Studies paper? Here I want NOTE Confidence: 0.837499022483826 aa6f3aa5-de0f-4dc3-8a5c-5dbbcda5a292 00:18:27.584 --> 00:18:31.067 to briefly provide a few suggestions about writing better NOTE Confidence: 0.837499022483826 f48c92f2-6cc3-4551-b3d9-a6ebb47eb686 00:18:31.067 --> 00:18:32.228 papers this term. NOTE Confidence: 0.892338812351227 d259b82d-cbbf-43be-936f-c4a577e86861 00:18:32.940 --> 00:18:36.229 One goal is to encourage you to make stronger, more nuanced NOTE Confidence: 0.839751720428467 3f1688fd-4196-446b-bc8d-679948696609 00:18:36.229 --> 00:18:40.390 arguments. Second, Duflo's main belief is that we need to NOTE Confidence: 0.839751720428467 aae451bc-5bf4-4bde-b9b7-7ee17e02cfa5 00:18:40.390 --> 00:18:43.405 evaluate and test our ideas. I'll provide a useful NOTE Confidence: 0.839751720428467 f612c283-f923-4917-a8a1-113c6b4799bf 00:18:43.405 --> 00:18:46.085 framework for thinking through evidence both for and NOTE Confidence: 0.839751720428467 5d2b8161-0cc1-4674-b8c8-1d935e04e91f 00:18:46.085 --> 00:18:48.430 against your arguments. I'll focus on microcredit NOTE Confidence: 0.839751720428467 9b936c5b-e60a-4db1-8ba7-f2a8377f4aaf 00:18:48.430 --> 00:18:51.445 examples, which I'll then return to in the next NOTE Confidence: 0.839751720428467 0bfd3d8d-c891-4015-a50a-efcc4b528036 00:18:51.445 --> 00:18:51.780 section. NOTE Confidence: 0.815632045269012 d2320e37-d40d-4bda-9666-60294aaaac72 00:18:52.990 --> 00:18:57.478 What makes a good First-Year Studies paper? Here are two of NOTE Confidence: 0.815632045269012 f38ba7a5-ef70-4289-b260-6102b47cdfd8 00:18:57.478 --> 00:19:00.844 our writing goals.  Writing goal three: "Students compose sharp NOTE Confidence: 0.815632045269012 c43167d0-7728-46c5-8d46-4b5d7366f295 00:19:00.844 --> 00:19:04.584 theses that make specific, non obvious claims grounded in the NOTE Confidence: 0.815632045269012 79d5c5eb-52df-4be8-8441-bb629a234038 00:19:04.584 --> 00:19:07.576 particularities of a work." And writing goal four:  "Students NOTE Confidence: 0.815632045269012 84bb59a8-19cf-4974-a864-d14453dbebde 00:19:07.576 --> 00:19:11.316 provide and evaluate textual evidence in support of a thesis." NOTE Confidence: 0.815632045269012 7f88fa80-330b-4076-a2bd-f7e30acb7997 00:19:11.316 --> 00:19:16.552 So the first steps in writing a good paper are the following. Have a NOTE Confidence: 0.815632045269012 00024f8b-79b5-426b-a708-8ff6240a3e81 00:19:16.552 --> 00:19:19.918 solid thesis and then find evidence to support your NOTE Confidence: 0.840692818164825 9a307169-b7de-4e04-a9e6-84bac203cbd2 00:19:19.918 --> 00:19:23.968 argument. That's good. Let me present two specific examples NOTE Confidence: 0.840692818164825 d4c10b17-cb0a-4e17-b894-e574a208dc2f 00:19:23.968 --> 00:19:25.923 based on the microcredit  NOTE Confidence: 0.871559977531433 1ba0051e-06ec-481a-b384-16343064d6ce 00:19:25.923 --> 00:19:30.570 sections. Thesis A could be: "By enabling the poor to become NOTE Confidence: 0.871559977531433 ff71286d-06dd-4053-9c89-4447ab8f3b77 00:19:30.570 --> 00:19:33.210 entrepreneurs, microcredit enables them to break out of NOTE Confidence: 0.849017262458801 063acaa1-e25f-451e-b5bd-aeaec20fac84 00:19:33.210 --> 00:19:37.558 poverty traps." Thesis A. To defend your thesis, you might NOTE Confidence: 0.849017262458801 79d6c3b2-5c31-4e9c-ba1c-0da901f39d60 00:19:37.558 --> 00:19:39.882 look for cases where microfinance enabled households NOTE Confidence: 0.849017262458801 b1501228-7580-46ce-8b0b-ac992cbf2c1b 00:19:39.882 --> 00:19:43.202 to escape extreme poverty by starting a small business that NOTE Confidence: 0.849017262458801 1ac115d5-5164-498f-958d-dffe52611599 00:19:43.202 --> 00:19:46.522 expanded into a larger and more profitable one. For NOTE Confidence: 0.849017262458801 81468a93-cdb4-4ffc-ab83-7ca8900e1dc1 00:19:46.522 --> 00:19:49.842 example, you might highlight some of the case studies and NOTE Confidence: 0.849017262458801 833c3fd3-5c09-4a03-8ef5-df28ed7c0374 00:19:49.842 --> 00:19:51.170 stories in Chapter 7. NOTE Confidence: 0.838769435882568 072c0618-cb23-4479-a85b-996a4b2b357e 00:19:51.940 --> 00:19:55.190 However, a few case studies aren't that helpful. We don't NOTE Confidence: 0.838769435882568 f7286cdb-6477-499c-b13c-70905d945f38 00:19:55.190 --> 00:19:57.465 know how common or representative these stories NOTE Confidence: 0.838769435882568 12ec8402-abb3-4bcf-8189-8cf5cdad48aa 00:19:57.465 --> 00:20:01.040 are. How many individuals got loans but didn't break out of NOTE Confidence: 0.838769435882568 f680c68d-135a-428a-9787-f5c099f97195 00:20:01.040 --> 00:20:04.615 poverty? And also, how do we know that the microloans caused NOTE Confidence: 0.838769435882568 c479eab3-c754-4801-99a4-a456f8bae4cd 00:20:04.615 --> 00:20:08.190 that escape from poverty? How can we tell these things from NOTE Confidence: 0.838769435882568 640da384-1143-4839-b986-db909c0498f9 00:20:08.190 --> 00:20:09.815 the stories? Would they have NOTE Confidence: 0.824723839759827 27c8d11a-16b6-4098-a5c2-10685f81aa78 00:20:09.815 --> 00:20:13.415 escaped without microloans? In contrast, another student might NOTE Confidence: 0.824723839759827 c58035bb-de0d-472f-8e71-3d36d196ae44 00:20:13.415 --> 00:20:17.345 present the following.  Thesis B:  NOTE Confidence: 0.824723839759827 d25c3c61-1057-471d-acfe-0313da79304b 00:20:17.345 --> 00:20:19.703 NOTE Confidence: 0.824723839759827 860c8062-f1b7-43ff-bbe2-d37522635648 00:20:19.703 --> 00:20:21.275 NOTE Confidence: 0.787433326244354 31dac839-cb7c-4e86-83c5-c304bc934f3c 00:20:21.860 --> 00:20:25.250 "By forcing the poor to repay debt at high interest NOTE Confidence: 0.787433326244354 c7b9d722-93f8-4682-a0d5-a23da2ef34e5 00:20:25.250 --> 00:20:28.301 rates, microcredit traps the poor in cycles of debt NOTE Confidence: 0.787433326244354 8f2d06c3-097a-4df8-b99b-535f2c571b00 00:20:28.301 --> 00:20:29.657 and imposes massive harm." NOTE Confidence: 0.811764419078827 8a8d96a5-3a42-47f5-a75c-f67a2da3aa7c 00:20:30.680 --> 00:20:33.760 To defend this thesis, you might refer to the tragic farmer NOTE Confidence: 0.811764419078827 8c4d4cdb-21f4-412a-9b55-943c84847f50 00:20:33.760 --> 00:20:35.160 suicides described in the book. NOTE Confidence: 0.871787309646606 f5ecc81c-bdfa-493c-8bc4-d2ed9b9d7da2 00:20:35.780 --> 00:20:39.596 However, similar concerns again hold about these stories. NOTE Confidence: 0.871096432209015 8b5d7e70-8f92-47e0-8240-56af8bbd59d0 00:20:40.110 --> 00:20:41.570 These are interesting ideas. NOTE Confidence: 0.913736760616302 b7a45119-5715-4ac3-8473-146818b2471d 00:20:43.080 --> 00:20:44.610 But they need to be qualified . . . NOTE Confidence: 0.813467800617218 d813ff5b-2e38-4a06-8882-7eeaa122700a 00:20:46.900 --> 00:20:53.588 Okay, sorry. But they need to be qualified NOTE Confidence: 0.813467800617218 a9ee61ff-50a7-4d6e-8187-2cec29122ddd 00:20:53.588 --> 00:20:56.932 and their conclusions and . . . NOTE Confidence: 0.828976571559906 8a642966-20b2-4350-928b-2a09269642aa 00:20:57.850 --> 00:21:01.010 These are interesting ideas, but they need to qualify their NOTE Confidence: 0.828976571559906 087160ca-9c15-4db2-9ccd-95ba7810afb9 00:21:01.010 --> 00:21:03.538 conclusions and address the limitations of these arguments. NOTE Confidence: 0.828976571559906 0d1b9aa6-5d84-4e9d-8a90-fa76ed1ee333 00:21:03.538 --> 00:21:06.382 Is your evidence consistent with other theories which might be NOTE Confidence: 0.828976571559906 fad53587-7728-4025-acb2-9af76ad47776 00:21:06.382 --> 00:21:08.910 plausible? Can you discuss evidence that challenges your NOTE Confidence: 0.828976571559906 e7b6770d-d901-4ca9-b8c7-2e596db9d46e 00:21:08.910 --> 00:21:13.018 argument and try to explain it as well as possible? This is the NOTE Confidence: 0.828976571559906 0370290b-62bf-414e-bedb-4baffd713137 00:21:13.018 --> 00:21:16.494 seventh and final writing goal for First-Year Studies and something NOTE Confidence: 0.828976571559906 022e850a-6541-4ed8-962f-082e5aa6a7d2 00:21:16.494 --> 00:21:17.758 to emphasize this term: NOTE Confidence: 0.879265785217285 931c47ec-56c1-492c-b94f-69cfc6473a0a 00:21:18.470 --> 00:21:21.838 "Students can anticipate and answer possible objections to NOTE Confidence: 0.867020070552826 f3758226-84a5-47ac-b034-489e53dec89f 00:21:21.838 --> 00:21:24.800 their arguments. They make concessions when appropriate, NOTE Confidence: 0.867020070552826 7ea40834-4638-4c63-a2ac-d59fdc4b6d33 00:21:24.800 --> 00:21:28.276 and they confront evidence that might seem to point in a NOTE Confidence: 0.867020070552826 933a5373-a25b-4b56-86c8-9a72149599eb 00:21:28.276 --> 00:21:28.908 different direction." NOTE Confidence: 0.858841717243195 7fca27be-7b14-463b-99ca-a2f54c951e75 00:21:30.210 --> 00:21:34.564 To help you with this, let me propose a useful two by two grid for NOTE Confidence: 0.858841717243195 47bee646-f23e-4b8c-8adc-b5bfe28edaf7 00:21:34.564 --> 00:21:37.363 thinking through many arguments. Here, we're interested in whether NOTE Confidence: 0.858841717243195 91707891-f96d-4e14-9b1d-5cbbec65d319 00:21:37.363 --> 00:21:40.784 or not people receive microcredit. So the top row is NOTE Confidence: 0.858841717243195 01f6d914-f9a4-4745-bed5-9bd36edc0f55 00:21:40.784 --> 00:21:43.272 individuals who receive microcredit. The bottom row. NOTE Confidence: 0.858841717243195 824db7b2-81b7-4fce-ae50-ab42e67f0c53 00:21:43.272 --> 00:21:44.827 Individuals who do not receive NOTE Confidence: 0.863610148429871 4a6015d0-34e9-48aa-9e30-3f32f915ff82 00:21:44.827 --> 00:21:48.084 microcredit. And then we're interested in whether they NOTE Confidence: 0.863610148429871 5718e52b-7f8d-48fe-b6b8-1d0722e59272 00:21:48.084 --> 00:21:51.186 remain trapped in poverty or whether they are able to escape NOTE Confidence: 0.863610148429871 cbb9cc56-434a-479d-91ee-4afb753b5290 00:21:51.186 --> 00:21:54.288 poverty. So we have the column on whether they remain in NOTE Confidence: 0.863610148429871 96166ce5-9005-49e0-a352-57a1a94f08f0 00:21:54.288 --> 00:21:57.108 extreme poverty or whether they escape out of extreme poverty. NOTE Confidence: 0.803422033786774 1cbfc9b1-0274-4cc5-a4dd-0106d92e9bbd 00:21:57.700 --> 00:22:01.297 Many of us hold some prior belief about microloans, and we NOTE Confidence: 0.803422033786774 dd557ab4-76f4-4ef6-965c-8843f30d8744 00:22:01.297 --> 00:22:05.221 might also seek out evidence to support our view. Thesis A  NOTE Confidence: 0.803422033786774 6b856477-0535-46a1-bafe-404002d44cb1 00:22:05.221 --> 00:22:08.491 might only focus on this upper right quadrant. Thesis B NOTE Confidence: 0.803422033786774 9cd9946f-9362-4eb8-b44c-b01823d0bd50 00:22:08.491 --> 00:22:10.126 focuses on the upper left NOTE Confidence: 0.882663190364838 3f6b1912-a37b-4e3d-bc8d-8ee178f1eef0 00:22:10.126 --> 00:22:14.500 quadrant. You should think about all four sections of this table. NOTE Confidence: 0.882663190364838 cf45f8cf-182e-4d06-b255-16fba54078a4 00:22:14.500 --> 00:22:18.208 Doing so forces you to engage evidence both for and against a NOTE Confidence: 0.882663190364838 286b5710-dd40-4c40-abe4-c3a0f18be5e2 00:22:18.208 --> 00:22:19.444 given point of view. NOTE Confidence: 0.877894878387451 078be03a-26e9-4a72-9399-8e36b063f623 00:22:20.000 --> 00:22:23.600 What explains the success of microcredit when it occurs? The NOTE Confidence: 0.877894878387451 c5967b5a-261b-4885-89d6-abbc3163408e 00:22:23.600 --> 00:22:24.680 top right corner. NOTE Confidence: 0.861709177494049 bab040da-f7f4-402f-87ac-c29062fd13aa 00:22:25.300 --> 00:22:27.556 What explains the ineffectiveness of microcredit NOTE Confidence: 0.861709177494049 39f4531b-d374-43bb-81de-67cbca67acd4 00:22:27.556 --> 00:22:29.812 when it's not effective? The top NOTE Confidence: 0.873178541660309 cf1470e6-a09b-43e4-a2d2-026680ce38f0 00:22:29.812 --> 00:22:33.258 left. What allows some individuals to break out of NOTE Confidence: 0.873178541660309 64216170-aabd-4556-b2da-4d2648c8e8ea 00:22:33.258 --> 00:22:35.746 poverty despite not having microcredit? The bottom right. NOTE Confidence: 0.873178541660309 744dfa5e-cd3b-4381-922a-fd19b97b9963 00:22:35.746 --> 00:22:39.167 You can think through all these scenarios as a way to NOTE Confidence: 0.873178541660309 3e889ad7-4e1e-4175-9e88-df71cf5bcd69 00:22:39.167 --> 00:22:41.966 develop more nuanced arguments and to make concessions as NOTE Confidence: 0.873178541660309 e8accbf8-a91c-45a6-b6ae-1bf67dd2a29c 00:22:41.966 --> 00:22:45.387 needed to understand that all of these are outcomes that we NOTE Confidence: 0.873178541660309 7419cb10-3ad7-4e45-ac44-13b6054ac21f 00:22:45.387 --> 00:22:48.808 observe and what we're trying to do is observe what explains NOTE Confidence: 0.873178541660309 b4b55f1e-2e51-431e-bad7-a7618053f9f8 00:22:48.808 --> 00:22:51.296 these different outcomes and how common these different NOTE Confidence: 0.873178541660309 113007cf-10ef-4835-9563-585c11d243a8 00:22:51.296 --> 00:22:51.918 outcomes are. NOTE Confidence: 0.761184990406036 9b6b19e9-dc71-4d7d-be27-8bd9bf567db4 00:22:53.330 --> 00:22:58.126 I'll use this framework to explore the evidence of microcredit a NOTE Confidence: 0.761184990406036 1b648927-a632-47c0-b8f9-d6c8036d42a5 00:22:58.126 --> 00:23:02.050 bit more in the next section . . . NOTE Confidence: 0.708737194538116 b98f08ba-b08e-4b8a-8395-5115c973bd55 00:23:03.220 --> 00:23:05.860 Section 3: An example from NOTE Confidence: 0.789619505405426 0070d8e5-1d4f-4e6a-bd7a-0e6dcbcb6ff6 00:23:05.860 --> 00:23:10.878 microcredit. The switching on and off isn't going so smoothly. NOTE Confidence: 0.789619505405426 cb30734b-e2a8-425d-abeb-964d10cb31ec 00:23:10.878 --> 00:23:15.844 But I'm going to stick with it! Many of you will soon begin the NOTE Confidence: 0.789619505405426 0d541279-733c-4dc5-8bfe-cd576819f6ec 00:23:15.844 --> 00:23:18.518 section of Poor Economics on microfinance, including NOTE Confidence: 0.789619505405426 00049757-1253-4109-9de8-4690d20c15a9 00:23:18.518 --> 00:23:20.046 microcredit, micro savings and NOTE Confidence: 0.847856998443604 ea15fcbe-e9c4-444c-b5ec-6bc1af9b3f58 00:23:20.046 --> 00:23:23.732 micro insurance. In many ways, this section of the book is NOTE Confidence: 0.847856998443604 55b0b141-4d6a-4faf-b67d-ce59d60cd860 00:23:23.732 --> 00:23:26.680 broadly about the incomes and financial lives of the poor. You NOTE Confidence: 0.847856998443604 b1fd3545-e787-4e8d-a4e6-44305417079f 00:23:26.680 --> 00:23:29.896 will learn about how the poor earned income and why the poor NOTE Confidence: 0.847856998443604 f277855a-2646-464a-a329-f42b8ae5cef9 00:23:29.896 --> 00:23:30.968 face so much risk,  NOTE Confidence: 0.863786339759827 a4f1ea09-8229-47a8-ad57-e65db259f3a3 00:23:32.030 --> 00:23:34.712 why providing credit or insurance is so challenging, and NOTE Confidence: 0.863786339759827 fc55315a-a7ef-4ec6-a8cb-e478f48b5456 00:23:34.712 --> 00:23:38.586 why saving is so important but so difficult for so many of us. NOTE Confidence: 0.863786339759827 f9219aa3-ab4c-41f3-920a-d102ca6bcf72 00:23:38.586 --> 00:23:42.460 I plan to discuss microcredit in a bit of detail while making NOTE Confidence: 0.848206758499146 68f1b08d-3517-4bf1-885e-464da8e6ac98 00:23:42.460 --> 00:23:47.467 two general points. First, both theory and evidence are crucial. NOTE Confidence: 0.848113715648651 7ec73fab-b68d-496d-9e36-eac1e940fc12 00:23:48.440 --> 00:23:51.668 Here I will go into more detail NOTE Confidence: 0.848113715648651 c4752a45-454c-48d9-8fd3-7d912e08380f 00:23:51.668 --> 00:23:54.627 regarding both the theory and the evidence than what is done NOTE Confidence: 0.848113715648651 eb20f780-7939-4b3a-95f2-6417cf8ff7d6 00:23:54.627 --> 00:23:57.855 in Poor Economics. I assume that Banerjee and Duflo tried to keep NOTE Confidence: 0.848113715648651 afb5ffd8-1183-424a-8fec-8f0d7a1c46ca 00:23:57.855 --> 00:24:00.814 things as simple as possible for the general readers this book's NOTE Confidence: 0.848113715648651 3a6da13b-3308-494c-8903-e4f34353b6aa 00:24:00.814 --> 00:24:04.580 intended for, but I think that here we can go a bit beyond that NOTE Confidence: 0.848113715648651 ab588b87-c28a-48f1-a4b5-fba1f4aaefba 00:24:04.580 --> 00:24:07.539 and I think it's incredibly useful to see both the theory NOTE Confidence: 0.848113715648651 db793f4f-a396-46a4-8227-a345525d3891 00:24:07.539 --> 00:24:10.229 and the evidence. Doing so allows us to understand the NOTE Confidence: 0.848113715648651 9d022d34-cf27-40b5-b6b3-d98b2521091a 00:24:10.229 --> 00:24:11.574 effects of microcredit much more NOTE Confidence: 0.843850135803223 0e23734c-03de-4a8f-9e21-eeee21d07ed6 00:24:11.574 --> 00:24:15.408 clearly. So goal number one, this really illustrates the NOTE Confidence: 0.843850135803223 28d4e44d-4963-4ec3-bc69-587d5d812e4d 00:24:15.408 --> 00:24:18.968 importance of both theory and evidence, goal number two: an NOTE Confidence: 0.843850135803223 3d7e573a-9c28-485e-9b3f-5e13d134ef1a 00:24:18.968 --> 00:24:22.172 openness to different ideas and evidence is essential, since NOTE Confidence: 0.843850135803223 610b1502-e231-4d05-a15a-7230294d6689 00:24:22.172 --> 00:24:23.596 many distinct outcomes are NOTE Confidence: 0.867609739303589 69b1828e-ade9-4e33-b180-42d04550eb71 00:24:23.596 --> 00:24:25.818 possible. As we just argued, NOTE Confidence: 0.883728504180908 9e102807-10e8-404c-b801-a5e0960dfc85 00:24:26.390 --> 00:24:30.530 we need to be open to the ideas and experiences of NOTE Confidence: 0.883728504180908 73975620-d522-4305-81bc-40c1a4d5d8a9 00:24:30.530 --> 00:24:33.635 others, and there are many possible outcomes that we NOTE Confidence: 0.883728504180908 a4dc5313-3957-4518-b514-eb4ff520bcc0 00:24:33.635 --> 00:24:37.085 observe among different people, and we want to try to NOTE Confidence: 0.883728504180908 f66fcdcd-3264-4065-90fc-9e271132657c 00:24:37.085 --> 00:24:39.845 understand this range of possible outcomes. Here, we'll NOTE Confidence: 0.883728504180908 92708dd2-271f-40e2-988f-ca026b33f498 00:24:39.845 --> 00:24:43.640 see how the careful use of theory and evidence help us NOTE Confidence: 0.883728504180908 7c2aa37c-e886-4621-b6b4-baddba0d282d 00:24:43.640 --> 00:24:47.090 explain a range of outcomes. There isn't a single, NOTE Confidence: 0.883728504180908 13080833-5e80-4354-a20c-e276cbb9e153 00:24:47.090 --> 00:24:50.195 simple effect of microcredit. Its impact depends on several NOTE Confidence: 0.883728504180908 15325337-c1de-49bf-b471-9cf18f7f05ce 00:24:50.195 --> 00:24:50.885 key factors. NOTE Confidence: 0.855203032493591 0f933567-f3f7-41f2-8927-29a4897bbc22 00:24:53.140 --> 00:24:55.970 It's also really important to note that the poor are often NOTE Confidence: 0.855203032493591 a1e4be12-fe77-481b-867c-76fecd45cc93 00:24:55.970 --> 00:24:59.366 excluded from financial markets. It is costly for banks to make a NOTE Confidence: 0.855203032493591 0813c74d-11ad-4709-ac77-3d622d353b40 00:24:59.366 --> 00:25:02.762 lot of small loans, and the poor lack collateral to help minimize NOTE Confidence: 0.855203032493591 a5e34629-d79b-4ec8-a54a-a889d67902e5 00:25:02.762 --> 00:25:06.158 the risk involved in lending. It is hard to convince the lender NOTE Confidence: 0.855203032493591 46da6fdb-f609-49b5-b4c8-9fe6c3f065c4 00:25:06.158 --> 00:25:07.573 that you are a reliable borrower, NOTE Confidence: 0.841518223285675 9cbb80f6-b802-4ad6-90cd-3f68d4fc4d7c 00:25:08.150 --> 00:25:11.483 even more so if you lack collateral and you have no NOTE Confidence: 0.841518223285675 7b59d5cb-925f-4312-a88f-c458d41b2f96 00:25:11.483 --> 00:25:14.816 history of formal borrowing. This means that the poor NOTE Confidence: 0.841518223285675 ed6d21b4-daf0-4418-8204-273b2f06bca1 00:25:14.816 --> 00:25:18.149 generally generally cannot get loans or can only get loans at NOTE Confidence: 0.841518223285675 67314db7-5388-4949-a264-d0e721eb1e7a 00:25:18.149 --> 00:25:19.361 extremely high interest rates. NOTE Confidence: 0.821520984172821 bb150b91-9060-4438-8654-4f3067f8f777 00:25:19.920 --> 00:25:23.592 Even when they have highly profitable investments to make, NOTE Confidence: 0.821520984172821 8d819863-6144-40b5-9692-d52ef810a637 00:25:23.592 --> 00:25:27.264 they can't convince lenders to lend to them. Microcredit NOTE Confidence: 0.821520984172821 c3914fb0-e540-451f-afd8-9cf36dbf601d 00:25:27.264 --> 00:25:31.752 transformed this view, proving that lending to the poor was not NOTE Confidence: 0.821520984172821 b19de758-5d67-4ad6-a083-8a4499a962f7 00:25:31.752 --> 00:25:35.424 only possible, but also profitable. The poor repay at NOTE Confidence: 0.821520984172821 6563d41f-a1c7-4d17-ad50-8815bd74f5a7 00:25:35.424 --> 00:25:39.096 high repayment rates, and often at shockingly high interest NOTE Confidence: 0.815869212150574 557fef6e-3d1a-4600-81c8-26dec60b7bdf 00:25:39.096 --> 00:25:42.828 rates. In large part Muhammad Yunus and Grameen Bank pioneered NOTE Confidence: 0.815869212150574 49283aa5-c7d5-4eaf-86c8-eb237dd79e01 00:25:42.828 --> 00:25:46.524 this work through an innovative system in lending in which:  one, NOTE Confidence: 0.821330368518829 88338c07-4082-4ce1-891f-7b5534b68924 00:25:47.330 --> 00:25:51.750 poor individuals receive small loans, often $25 or a few NOTE Confidence: 0.821330368518829 2d4ebb4b-7889-4761-98fa-2b82e7d26da8 00:25:51.750 --> 00:25:56.612 hundred dollars. As you repay loans and verify your reliability as a NOTE Confidence: 0.821330368518829 50c6e5a2-6620-4ec0-9071-f551e3757803 00:25:56.612 --> 00:26:00.590 borrower, you can quickly qualify for larger loans, but NOTE Confidence: 0.821330368518829 228975eb-0f30-4139-a6ea-16c4a4c79a81 00:26:00.590 --> 00:26:04.568 otherwise, these put the "micro" in "microloans." Repayments NOTE Confidence: 0.821330368518829 89879777-474b-4977-9ec4-4205813974aa 00:26:04.568 --> 00:26:07.662 begin almost immediately and involve weekly regular NOTE Confidence: 0.821330368518829 2fd21788-7859-42ce-8af3-89a18c81b55a 00:26:07.662 --> 00:26:10.756 repayments. So, feature number two: repayments begin almost NOTE Confidence: 0.821330368518829 0d94d344-b916-4fa3-86a7-d180fd6dbd37 00:26:10.756 --> 00:26:13.408 immediately and involve regular weekly repayments. NOTE Confidence: 0.853397727012634 7d623b08-f4d2-4aae-9834-79ecf2800cb5 00:26:15.160 --> 00:26:19.197 No interest payments for 12 months!  Wait, no -- seven days, no NOTE Confidence: 0.853397727012634 91a3994e-3100-463a-bad3-0eff13aca7ad 00:26:19.197 --> 00:26:20.665 interest payments for seven NOTE Confidence: 0.797242403030396 dfac6b49-9b80-4e97-bb1e-9f42d9742154 00:26:20.665 --> 00:26:24.593 days!  Third, loans are made to groups, with group members NOTE Confidence: 0.797242403030396 0aeb9be8-d1d7-458c-911f-8d406c7bdffc 00:26:24.593 --> 00:26:27.536 responsible for the repayment of each other's loans. Individual NOTE Confidence: 0.797242403030396 119b7ce4-ee2a-4e77-a692-8e27b16ba0d2 00:26:27.536 --> 00:26:30.806 loans -- Act now, be responsible for your group as well! NOTE Confidence: 0.865117073059082 c3f4cc91-b9e9-4c45-a6a3-a791b8e9985a 00:26:32.590 --> 00:26:36.478 I have not been hired as a PR consultant yet . . .   NOTE Confidence: 0.733662962913513 1fa4b70e-8a55-45ec-8af8-19b55bdd2ced 00:26:37.740 --> 00:26:40.620 Grameen Bank NOTE Confidence: 0.873304426670074 a376c10b-8fbd-4088-91ff-b4840b3250b2 00:26:40.620 --> 00:26:45.596 believed that the poor are natural entrepreneurs who just NOTE Confidence: 0.873304426670074 cbc786df-9f6b-4bee-8bf8-0f5d89d29a92 00:26:45.596 --> 00:26:46.984 lack access to credit. NOTE Confidence: 0.837174236774445 91571e46-2c2c-42dc-8b49-58a840aa0c91 00:26:47.950 --> 00:26:51.740 So this is Muhammad Yunus of Grameen Bank. With credit, they NOTE Confidence: 0.837174236774445 9603ab08-cce6-4731-a2f0-f2ba22dc0e56 00:26:51.740 --> 00:26:55.151 can unleash a new wave of innovation and entrepreneurship NOTE Confidence: 0.837174236774445 97c5843b-dfca-4dac-b5e1-c219220f41f4 00:26:55.151 --> 00:26:58.941 that ends poverty. With this design that I just described, NOTE Confidence: 0.837174236774445 72754fa8-558c-4407-98b7-f0a92de7622b 00:26:58.941 --> 00:27:02.352 microcredit was proven as possible and became a darling NOTE Confidence: 0.837174236774445 ff21e513-7ef1-4f64-8a19-39a56dfdae06 00:27:02.352 --> 00:27:06.521 of the 2000s. Here a few examples to provide the context NOTE Confidence: 0.837174236774445 72b6cc8d-6d68-4578-a287-d397b91abd07 00:27:06.521 --> 00:27:10.690 that Banerjee and Duflo are referring to.  First, by 2010 there were NOTE Confidence: 0.837174236774445 20745897-0d51-48c9-9836-170309956c53 00:27:10.690 --> 00:27:13.343 about 200 million borrowers of microcredit globally. NOTE Confidence: 0.849895834922791 528a101c-e6ef-409a-9d15-700ed71cd8aa 00:27:17.030 --> 00:27:21.045 In 2006, Muhammad Yunus won the Nobel Peace Prize, not for NOTE Confidence: 0.849895834922791 7e2aae0d-afb1-42b9-ad80-28968fbb7438 00:27:21.045 --> 00:27:23.965 Economics -- for peace. This indicates how popular microcredit NOTE Confidence: 0.849895834922791 817c51ec-7f01-423b-86f9-ec3122734e59 00:27:23.965 --> 00:27:28.345 was and how much hope it held for transforming the lives NOTE Confidence: 0.849895834922791 6e7c2ea5-bda3-41bf-bdcf-a688a3370a79 00:27:28.345 --> 00:27:29.440 of the poor. NOTE Confidence: 0.85716724395752 372d9b57-160f-4ecd-a1b1-96f21dbcb751 00:27:30.330 --> 00:27:33.990 Bill and Hillary Clinton were longtime and very strong NOTE Confidence: 0.85716724395752 c2695e30-b1ba-490c-99f9-e442ebd97a7f 00:27:33.990 --> 00:27:35.088 advocates of microcredit. NOTE Confidence: 0.865970432758331 fb66ec2f-a246-4e38-a40b-ee8384e03972 00:27:35.710 --> 00:27:38.986 In a 1992 Rolling Stone interview while running for NOTE Confidence: 0.865970432758331 965b2077-b585-4808-b48b-ac3f5fa01ac9 00:27:38.986 --> 00:27:42.262 President, Bill Clinton stated that quote, "I think Muhammad NOTE Confidence: 0.865970432758331 3a4d4ec4-9d17-47fb-b40c-4ce63b6896c5 00:27:42.262 --> 00:27:46.266 Yunus should be given a Nobel Prize. He made enterprise work. NOTE Confidence: 0.865970432758331 c4df2cc1-d621-4fb7-92d3-0351d4d839d2 00:27:46.266 --> 00:27:49.906 He promoted independence, not dependence. I mean, I just loved NOTE Confidence: 0.865970432758331 8effc984-a83b-46b2-9edd-98539c791db6 00:27:49.906 --> 00:27:51.726 it. I just loved it." NOTE Confidence: 0.77505898475647 fa001f9a-24f6-45b4-b758-6cbe7ad39c85 00:27:53.910 --> 00:27:57.726 Bono, the lead singer from U2, engages in pro-bono work NOTE Confidence: 0.77505898475647 aedf3bf1-e98c-4fb1-abaa-b971ee8b82e7 00:27:57.726 --> 00:28:01.224 fighting extreme poverty when he isn't making hit after hit of NOTE Confidence: 0.845399260520935 6d442d7e-8af6-49a4-91eb-218d8e468c52 00:28:01.224 --> 00:28:05.066 similar sounding songs. In 2005, he wrote that microcredit provides NOTE Confidence: 0.845399260520935 87de8c7a-9700-4643-86d0-d6a343b7e189 00:28:05.066 --> 00:28:10.019 quote "cash and dignity side by side."  And, "Give a man a fish,  NOTE Confidence: 0.845399260520935 76d77729-519b-4a9c-9c80-104e0586b8bf 00:28:10.019 --> 00:28:14.210 he'll eat for a day. Give a woman microcredit, she, her NOTE Confidence: 0.845399260520935 e827e154-ec74-46f6-9868-45d11a982ed3 00:28:14.210 --> 00:28:18.401 husband, her children, and her extended family will eat for a NOTE Confidence: 0.875922679901123 dd0a6fe5-6bbc-45ed-90e1-d33755d347cf 00:28:18.401 --> 00:28:21.450 lifetime." Unfortunately, many microcredit recipients still NOTE Confidence: 0.875922679901123 d8ed41c0-5d4e-4f01-bb7e-96d619f8ccd6 00:28:21.450 --> 00:28:23.170 haven't found what they're NOTE Confidence: 0.842847228050232 6b7f158d-512c-49be-87da-e63940729e57 00:28:23.170 --> 00:28:28.663 looking for. What wasn't to love? Whether on the left or the right NOTE Confidence: 0.842847228050232 95d20e8f-2234-4661-b23d-41e1d3b5584f 00:28:28.663 --> 00:28:32.293 of the political spectrum, microcredit got a wide range of NOTE Confidence: 0.842847228050232 6aa5063c-8288-4212-bb16-cf929f672828 00:28:32.293 --> 00:28:35.197 supporters. Private investors thought that they could end NOTE Confidence: 0.842847228050232 c367158f-405c-4fab-90d2-14780d6a4c3d 00:28:35.197 --> 00:28:37.375 poverty while profiting themselves. Nonprofits thought NOTE Confidence: 0.842847228050232 43665783-b8dd-43f3-be49-91148367c6fa 00:28:37.375 --> 00:28:40.642 that they could end poverty while not profiting themselves. NOTE Confidence: 0.842847228050232 4ecdc03a-a81e-4815-af67-24fe710fc48d 00:28:40.642 --> 00:28:41.731 Everybody was happy. NOTE Confidence: 0.809567213058472 d874461d-cf57-4670-ae17-f3e44c5fc30f 00:28:42.370 --> 00:28:45.506 Musicians, politicians, Nobel Peace Prize committees were all NOTE Confidence: 0.809567213058472 73537352-759a-43f2-9e73-cf9ec3563cde 00:28:45.506 --> 00:28:50.210 on board. We read our kids two children's books based on these NOTE Confidence: 0.809567213058472 506eeb5a-ba3e-4034-bfbe-9572423b1ff3 00:28:50.210 --> 00:28:54.522 ideas. "Beatrice's Goat" and "One Hen." They both present very, NOTE Confidence: 0.809567213058472 75efb32d-5b21-4b7a-8a2d-fd6be06f4ae2 00:28:54.522 --> 00:28:55.698 very interesting stories. NOTE Confidence: 0.854960203170776 548abfdb-5a16-4605-aaef-90873b9ae665 00:28:58.180 --> 00:29:01.900 In short, this view argued that the world looked like this. The NOTE Confidence: 0.854960203170776 3853abe4-d3ee-4c41-9849-bbd6920a4ffc 00:29:01.900 --> 00:29:03.450 belief of the Nobel Prize NOTE Confidence: 0.785265147686005 a44f5927-56b2-4f27-88a1-9f4883aabd1e 00:29:03.450 --> 00:29:06.901 Committee, Bono, the Clintons, argued that microcredit would NOTE Confidence: 0.785265147686005 10225872-a93f-4ae4-9eab-8485c7c92dbe 00:29:06.901 --> 00:29:10.631 enable the poor to escape poverty. It was very optimistic. NOTE Confidence: 0.805033981800079 32b63ce2-d6b6-4fed-bcda-7816f73a3b17 00:29:11.500 --> 00:29:16.764 But then several controversies arose. Tragically, 57 borrowers NOTE Confidence: 0.805033981800079 65ef3941-c577-4d04-b07a-a5982af92b6d 00:29:16.764 --> 00:29:19.396 in India committed suicide, NOTE Confidence: 0.799433410167694 7a2edce7-8d12-4428-935f-bd17d00254a7 00:29:20.000 --> 00:29:23.381 presumably because of insurmountable debt tied to NOTE Confidence: 0.848371207714081 ff294984-7ad1-4d4f-a644-a5b5d1b8e660 00:29:23.381 --> 00:29:28.370 repeated microloans. You can read more about that in Poor NOTE Confidence: 0.848371207714081 224102b0-8b15-48d8-8578-1c5e738611bf 00:29:28.370 --> 00:29:31.030 Economics. These powerful anecdotes resulted in many NOTE Confidence: 0.848371207714081 84e4c1db-9cdd-4152-ba98-d3ba2226811a 00:29:31.030 --> 00:29:34.450 criticisms. Rather than being the cure to poverty. microcredit NOTE Confidence: 0.848371207714081 f8e8611d-7f9c-4508-84d0-b1897ee9271c 00:29:34.450 --> 00:29:37.870 trapped individuals in debt. Poverty is terrible, but poverty NOTE Confidence: 0.848371207714081 60efca7c-66ba-40c4-bc6a-9bfd42666851 00:29:37.870 --> 00:29:39.770 with debt is even worse. NOTE Confidence: 0.862330853939056 f833adc3-7759-48ee-9d13-7b172bbae63b 00:29:40.320 --> 00:29:42.840 Basically, these views highlighted the upper left NOTE Confidence: 0.871189653873444 511b6398-5f2f-411f-aa3b-e1ae8476d174 00:29:42.840 --> 00:29:47.146 quadrant here. These stories are all important to know, but NOTE Confidence: 0.871189653873444 875f8e61-d5d3-4c45-a217-1e26d46e191c 00:29:47.146 --> 00:29:50.179 how representative are they? What are the effects of NOTE Confidence: 0.871189653873444 92e99183-07e8-4e96-a29e-5fbc95f9c3d2 00:29:50.179 --> 00:29:53.886 microcredit? Is it great? Is it terrible? How do we know NOTE Confidence: 0.871189653873444 d710d6ba-25dd-4e82-be47-fc30aad56cb3 00:29:53.886 --> 00:29:55.908 what causes what in this table? NOTE Confidence: 0.830151498317719 e4455551-aaef-4994-a986-f38f6e8ae9bb 00:29:57.570 --> 00:30:00.132 What influences whether microcredit helps individuals NOTE Confidence: 0.830151498317719 40fa98b1-df5f-4ebf-947a-d6f97ca21ab7 00:30:00.132 --> 00:30:01.840 escape poverty or not? NOTE Confidence: 0.828471601009369 1930d0ea-f841-4d55-a83f-2d7ff472f45d 00:30:02.570 --> 00:30:06.658 Here falls the biggest contribution of economics to NOTE Confidence: 0.828471601009369 82ee502b-5002-42d0-b90f-d56a9d8c46e4 00:30:06.658 --> 00:30:10.746 this area. Microcredit expanded without reliable evidence that NOTE Confidence: 0.828471601009369 26488677-8877-4f68-bb81-34d7bd468494 00:30:10.746 --> 00:30:15.345 it either worked great or that it worked terribly. NOTE Confidence: 0.856492638587952 5492d55a-7faf-464c-8ce3-e995ed4a6f80 00:30:15.850 --> 00:30:19.792 Individual stories are useful and they are often powerful and NOTE Confidence: 0.856492638587952 23e91efe-8bcc-4972-bf14-19a81e936763 00:30:19.792 --> 00:30:22.858 illuminating. But individual stories also have limits. NOTE Confidence: 0.88126415014267 8ccb0c1e-3224-4034-a630-bf5f9ab12e81 00:30:23.600 --> 00:30:28.856 If we want to understand the world, we also want to aggregate NOTE Confidence: 0.88126415014267 5f53dba5-2a21-4ce0-9ed6-18860c2b2e76 00:30:28.856 --> 00:30:32.360 lots of individual stories into broader, more representative NOTE Confidence: 0.812990307807922 39b51fe5-b904-4163-b0d0-416fecc057a3 00:30:32.360 --> 00:30:35.285 information. This is fundamentally difficult, but NOTE Confidence: 0.812990307807922 8bc31a9c-1f21-48e0-8c26-08b8c51798fc 00:30:35.285 --> 00:30:38.445 also fundamentally important. How do Banerjee and Duflo NOTE Confidence: 0.812990307807922 dab8b38f-9f1c-402a-9ba3-f938e4cdbdac 00:30:38.445 --> 00:30:41.210 represent the aggregate voices of the poor? NOTE Confidence: 0.865531980991364 01f2a4e7-1ae0-4471-9fec-1ce179f4760c 00:30:41.890 --> 00:30:45.994 Their microcredit study presents a nice example of how NOTE Confidence: 0.865531980991364 7eeddedc-4ffd-4deb-856e-3178eeba0108 00:30:45.994 --> 00:30:50.098 this is done through a randomized control trial. First, NOTE Confidence: 0.865531980991364 8218570d-21ee-432e-8426-ea878cf2a7b6 00:30:50.098 --> 00:30:54.658 they selected 6850 households. With an average size of five NOTE Confidence: 0.865531980991364 984c9e8e-0136-4bed-9ac5-3d8db05ea7a3 00:30:54.658 --> 00:30:58.306 people per household, this survey represents 35,000 people. NOTE Confidence: 0.865531980991364 131fa6e9-5158-4237-a559-d92165e4c71e 00:30:58.306 --> 00:31:01.954 Importantly, some of these households receive microcredit. NOTE Confidence: 0.849177539348602 472ab1cd-a263-4f03-8087-8eaf075b1019 00:31:03.290 --> 00:31:06.300 That can help us explore the effects of microcredit among NOTE Confidence: 0.849177539348602 3084ad48-8070-4bb6-b589-047e97b65d87 00:31:06.300 --> 00:31:08.708 these households. But also, crucially, some households are NOTE Confidence: 0.849177539348602 61d3bc62-32a9-4f34-9f0e-8b5cf2e739d9 00:31:08.708 --> 00:31:12.019 the control. They do not receive micro credit. They provide a NOTE Confidence: 0.849177539348602 182de2cb-3253-4c92-a4d5-6fea647f7127 00:31:12.019 --> 00:31:13.825 counterfactual that we can then NOTE Confidence: 0.834206521511078 6c126c88-4d2b-4644-b2f4-9596e50dfc1d 00:31:13.825 --> 00:31:18.244 use to evaluate. How can we then represent these households? A NOTE Confidence: 0.834206521511078 a5a69817-f2b6-4955-b4bd-520c5db3c892 00:31:18.244 --> 00:31:21.524 team of local enumerators or census takers meet with each NOTE Confidence: 0.834206521511078 ef71e780-1aea-487a-adde-bae3792f1b04 00:31:21.524 --> 00:31:25.132 household. In many cases, the interview takes half a day or NOTE Confidence: 0.834206521511078 500313fa-c6b7-48b1-90fb-230baeaf3444 00:31:25.132 --> 00:31:28.740 more. Who lives in the household? Do they go to school? NOTE Confidence: 0.834206521511078 cb432433-d828-49e7-b3fd-c346ca0b793c 00:31:28.740 --> 00:31:32.348 What health problems do they face? Do you have enough food? NOTE Confidence: 0.834206521511078 0ecce065-c121-4575-b29d-e680e38b88c5 00:31:32.348 --> 00:31:35.956 What is your quality of life? Did you receive microcredit? NOTE Confidence: 0.834206521511078 3ac36995-02c1-4698-b420-68ff25f896cf 00:31:35.956 --> 00:31:37.268 Why or why not? NOTE Confidence: 0.834473848342896 fe651a80-5225-4cd7-b6e5-fc0c905df26b 00:31:38.070 --> 00:31:41.440 Through these surveys, the study cited in Poor Economics summarized NOTE Confidence: 0.834473848342896 97107743-06fd-4d6e-b010-5d11a034c386 00:31:41.440 --> 00:31:44.810 the voices of thousands or hundreds of thousands of the NOTE Confidence: 0.834473848342896 2afbf49d-f77f-4080-9d4e-ac169ff77fc1 00:31:44.810 --> 00:31:47.506 poor, with their experiences aggregated into larger measures  NOTE Confidence: 0.85382491350174 381a0cec-a03f-4eac-bed4-8a1b29883d47 00:31:48.020 --> 00:31:50.738 that help us understand the world and uncover trends. NOTE Confidence: 0.86008632183075 47188daf-6133-4ce9-80ed-75b46908580d 00:31:51.380 --> 00:31:54.098 You can think about parallels with individual voters or NOTE Confidence: 0.86008632183075 245456b1-2bb5-4ec1-921b-c3ec431b085d 00:31:54.098 --> 00:31:56.514 individual votes being aggregated into the will of NOTE Confidence: 0.86008632183075 e66949a3-6c33-43ec-a381-92b86fab326c 00:31:56.514 --> 00:31:59.836 the people, or how a single puzzle piece can puzzle you NOTE Confidence: 0.86008632183075 be681dcb-2821-40e6-8a47-163f81be31ad 00:31:59.836 --> 00:32:03.158 until you see how it fits in with a broader pattern. NOTE Confidence: 0.821495950222015 c98694eb-f523-4d38-a23a-bdb36c8449d1 00:32:04.440 --> 00:32:07.340 Except for some of our toddler puzzles.  That's pretty clearly NOTE Confidence: 0.862416803836823 410514a5-426c-4283-88a6-5e6308f21442 00:32:07.340 --> 00:32:11.315 an owl. Furthermore, this interview happens multiple NOTE Confidence: 0.862416803836823 cf5f47c9-7ad5-41bc-8eee-024c71fa90f3 00:32:11.315 --> 00:32:16.885 times, generally once before a new policy is introduced and NOTE Confidence: 0.862416803836823 a865de57-e5b2-4872-b0ed-56745259f819 00:32:16.885 --> 00:32:20.227 once after a period of time. NOTE Confidence: 0.880553305149078 0f07b6f4-765f-4635-b4bd-a39b4b56d54f 00:32:21.060 --> 00:32:24.261 This particular study that I'll talk about in a minute involves NOTE Confidence: 0.880553305149078 a065358a-c719-4dff-82e0-549c01793087 00:32:24.261 --> 00:32:26.880 four rounds of interviews over an eight-year period. NOTE Confidence: 0.859126031398773 8a49f004-8acb-401d-934e-3546293dd400 00:32:27.580 --> 00:32:30.900 We can uncover who remains trapped in poverty, with or NOTE Confidence: 0.859126031398773 976a04fd-45ae-4f9a-8032-ec0d7a7b065d 00:32:30.900 --> 00:32:33.556 without microcredit, through these follow-up surveys. NOTE Confidence: 0.838129222393036 0d7373e9-30d5-4e48-8f44-94ec6eb2e971 00:32:34.360 --> 00:32:37.288 Using these methods, Banerjee and Duflo present empirical NOTE Confidence: 0.838129222393036 c533dc55-308c-4f8d-8781-491d02e10e7a 00:32:37.288 --> 00:32:42.046 results from a range of careful studies. I'll leave it to you to NOTE Confidence: 0.838129222393036 54011350-dbc1-44b6-bae4-096f4387f5b0 00:32:42.046 --> 00:32:46.072 read Chapter 7 and interpret these results. Think of how the NOTE Confidence: 0.838129222393036 8d09f0cb-b33c-4e6e-86ac-23c396ffbff0 00:32:46.072 --> 00:32:49.732 microloan model was designed to make lending to the poor NOTE Confidence: 0.838129222393036 0998f155-4125-4f38-87df-331b9507df57 00:32:49.732 --> 00:32:53.392 possible, but also think about how the design of microcredit NOTE Confidence: 0.838129222393036 2fd3b04a-7be2-472c-b260-b078e79d49a3 00:32:53.392 --> 00:32:56.320 also limits its effectiveness in some important ways. NOTE Confidence: 0.819807410240173 948625c2-9b03-4b40-8cd2-4d68d1c81833 00:32:57.500 --> 00:33:01.280 Today I'll discuss a recent working paper by Banerjee and NOTE Confidence: 0.819807410240173 c7ff9c0f-3fc6-478b-8252-87fa9506b3aa 00:33:01.280 --> 00:33:05.060 Duflo and two co-authors as well. It's called, "Can  NOTE Confidence: 0.819807410240173 ac9e6bde-8251-46cc-b94d-827c95f1fe8a 00:33:05.060 --> 00:33:08.084 microfinance unlock a poverty trap for some entrepreneurs?" NOTE Confidence: 0.899480998516083 8d90524c-2a4d-49d8-9fc5-3b77591440af 00:33:09.130 --> 00:33:13.300 Before discussing the results, I want to emphasize how difficult NOTE Confidence: 0.899480998516083 d9b3969e-1d0c-41fa-96ac-f7f87352cbd8 00:33:13.300 --> 00:33:15.802 it is to identify poverty traps NOTE Confidence: 0.838803827762604 77ed7ee1-9a76-4f47-9afc-e95f8abc6120 00:33:15.802 --> 00:33:19.827 empirically. Do microcredit recipients face the S-shaped NOTE Confidence: 0.838803827762604 a097e491-eac3-4aa6-8443-39d2765250a9 00:33:19.827 --> 00:33:24.037 curve or the inverted L-shaped curve? It's incredibly difficult NOTE Confidence: 0.838803827762604 7582d30b-378b-46bd-86fc-a2e8e6f16cb6 00:33:24.037 --> 00:33:28.668 to tell. Most importantly, we don't just need data to evaluate NOTE Confidence: 0.838803827762604 51a03247-6f94-496f-9eba-78eb9dd0eae1 00:33:28.668 --> 00:33:33.299 poverty traps. We need really good data. This curve here, the  NOTE Confidence: 0.838803827762604 afd08615-f212-4344-9c56-28f95f0526f7 00:33:33.299 --> 00:33:34.562 S-shaped poverty trap, NOTE Confidence: 0.869037270545959 80ba1f89-5f8c-4733-8915-de4b8ea61840 00:33:35.290 --> 00:33:39.151 it's about change through time. It relates income today on the NOTE Confidence: 0.869037270545959 7d2abdd0-e02f-4d94-8c3d-3d72785fda8a 00:33:39.151 --> 00:33:43.012 horizontal axis with income in the future on the vertical axis. NOTE Confidence: 0.869037270545959 736b9ba5-9212-46d7-9d8b-ad5756285087 00:33:43.012 --> 00:33:44.767 So it's about change through NOTE Confidence: 0.909422814846039 0420acd5-a297-467e-b657-e7356b291f29 00:33:44.767 --> 00:33:48.188 time. To identify this relationship, I need data from NOTE Confidence: 0.909422814846039 6ae9a458-acd0-48e6-a484-45153558caea 00:33:48.188 --> 00:33:51.860 at least two points in time. That way I can see if NOTE Confidence: 0.909422814846039 5fe63358-410d-45a5-8f29-d577d7e696f7 00:33:51.860 --> 00:33:55.226 individuals are moving, if their income is going up or down,  NOTE Confidence: 0.879327774047852 90a8c2e3-aad0-4307-a63d-7c0b52fd23ec 00:33:55.730 --> 00:33:59.630 and also those two points in time should be far enough apart NOTE Confidence: 0.879327774047852 08c810e7-233a-4fb5-9e4e-767b87903721 00:33:59.630 --> 00:34:03.530 that we can observe that change -- and how big the change is. How NOTE Confidence: 0.879327774047852 df9158ea-bd52-487c-806d-8101425a5acf 00:34:03.530 --> 00:34:07.755 much is income going up, or how big is income going down? This NOTE Confidence: 0.879327774047852 a88abe3f-eaa6-4979-b3c6-0806e846818b 00:34:07.755 --> 00:34:11.655 is incredibly difficult, and this new study uses a fourth round of NOTE Confidence: 0.879327774047852 0c9322f1-ed97-4d66-a166-b065168691c6 00:34:11.655 --> 00:34:15.230 data that was collected more recently, and that new data helps NOTE Confidence: 0.879327774047852 fca5fba5-758b-48c4-aebb-60490d4325d9 00:34:15.230 --> 00:34:17.830 them unlock some really interesting results with clear NOTE Confidence: 0.867406249046326 9c68c0a9-2f8a-4f89-8dc5-61b0432b18f1 00:34:17.830 --> 00:34:21.215 theoretical intuition. However, these results weren't observable NOTE Confidence: 0.867406249046326 31a59c23-ced8-40f2-8b9e-34bca0644d05 00:34:21.215 --> 00:34:25.265 until this additional time had passed. Here's a brief overview NOTE Confidence: 0.867406249046326 9db4dd1f-83b5-4e53-9d24-0a03b81842f3 00:34:25.265 --> 00:34:26.480 of their findings. NOTE Confidence: 0.800179958343506 b2b747db-b373-49e5-af5d-325f9bf52bee 00:34:27.710 --> 00:34:31.320 First, individuals either want loans or they don't. This is NOTE Confidence: 0.800179958343506 c0febd31-aa67-4a41-86f1-b761fcc07697 00:34:31.320 --> 00:34:35.291 described in Poor Economics, where in some studies only a quarter of NOTE Confidence: 0.800179958343506 b0d4a674-41f6-4bff-890c-fed4164792c3 00:34:35.291 --> 00:34:38.540 people wanted microloans. So many people don't even want NOTE Confidence: 0.800179958343506 620cfe7c-d030-4a4a-ac78-dedfd9f3f84c 00:34:38.540 --> 00:34:39.984 microloans to begin with. NOTE Confidence: 0.759969294071198 e9c4f5cf-b127-4731-bd65-5a5a93976861 00:34:40.880 --> 00:34:44.848 Second, Banerjee and Duflo identified two types of NOTE Confidence: 0.759969294071198 d39db3d7-3f95-4dc1-9abd-c24269cfcb18 00:34:44.848 --> 00:34:50.304 borrowers. So, among borrowers, we have some that consume, and some NOTE Confidence: 0.759969294071198 72c8f3a6-0daf-491b-b5c5-5916438d1f31 00:34:50.304 --> 00:34:51.792 that invest the loan. NOTE Confidence: 0.858579754829407 8879da7f-e980-45a2-acaa-b6254355ab2b 00:34:52.540 --> 00:34:55.303 Some households borrow money for consumption, say, purchasing a NOTE Confidence: 0.858579754829407 6b0caae7-73db-4d9d-b026-5e9fee8471ed 00:34:55.303 --> 00:34:58.987 new durable household appliance, but they do not use that loan to NOTE Confidence: 0.858579754829407 82b0ffb4-33c1-40a9-a0cb-252058bc2db1 00:34:58.987 --> 00:35:02.364 invest in a business, and they're not going to break out NOTE Confidence: 0.858579754829407 6e0c5f6e-d634-47ac-9144-3d5c84cc69d8 00:35:02.364 --> 00:35:06.048 of a poverty trap as a result. The expected benefits for this NOTE Confidence: 0.858579754829407 d3d2967f-2b5a-4538-ab11-aba8b64d3632 00:35:06.048 --> 00:35:07.276 group are very small. NOTE Confidence: 0.844682812690735 6672b177-e2ac-4648-853d-38e1a18a7c83 00:35:08.040 --> 00:35:12.603 Some households borrow as a way to start or grow a business -- they NOTE Confidence: 0.844682812690735 dca1c688-682e-4f02-9f17-95086f17925d 00:35:12.603 --> 00:35:16.464 invest. They might think of either the food vendors or the NOTE Confidence: 0.844682812690735 5312810b-61d7-4cb9-bfe8-1ea38a0f16af 00:35:16.464 --> 00:35:17.868 sewing examples from Poor NOTE Confidence: 0.803455471992493 e9b7a9dd-3973-4f45-877c-e961d2eef264 00:35:17.868 --> 00:35:21.692 Economics here. Borrowing to consume will not break someone NOTE Confidence: 0.803455471992493 3818eb84-cf39-4f51-a249-a82b5e2f96d8 00:35:21.692 --> 00:35:25.388 out of a poverty trap, but borrowing to invest might. The NOTE Confidence: 0.803455471992493 d341dba0-8051-4b9a-b6d5-86835ec329f1 00:35:25.388 --> 00:35:28.748 key question then becomes, Will the microloan enable someone who NOTE Confidence: 0.803455471992493 1a7a3c13-f522-42c8-8c9f-17aa893df9a0 00:35:28.748 --> 00:35:32.108 invests the loan to break out of the poverty trap? NOTE Confidence: 0.852572202682495 bcc7783e-8e9f-4f80-96ca-568e8aa2d3a9 00:35:33.000 --> 00:35:37.136 Among households that invest, however, we can further NOTE Confidence: 0.852572202682495 31b3a493-504d-4625-85a8-fc084a63c751 00:35:37.136 --> 00:35:38.687 define three subgroups. NOTE Confidence: 0.888978540897369 b2d97e2f-5f7a-48ea-91b4-38968f7061ab 00:35:40.270 --> 00:35:42.846 To do so, let me first return to NOTE Confidence: 0.851077497005463 797ba80d-5143-4410-8216-7ff150240dce 00:35:42.846 --> 00:35:47.424 our S-shaped curve. This graph provides an example of an S- NOTE Confidence: 0.851077497005463 e9a21ba8-e5d3-4eb7-9420-1c9e09200cbc 00:35:47.424 --> 00:35:51.720 shaped curve that corresponds to a poverty trap as found in this NOTE Confidence: 0.851077497005463 eb191da3-1889-45a4-88b7-0575501e5f55 00:35:51.720 --> 00:35:55.300 paper. Here, the poverty trap zone includes anyone with a NOTE Confidence: 0.851077497005463 f70f36ac-de7f-4838-9650-829fde35500b 00:35:55.300 --> 00:35:57.090 wealth level up to $700. NOTE Confidence: 0.857304394245148 ffad36ec-f63c-4f67-9b92-e0c7ad20827e 00:35:57.640 --> 00:36:01.512 As in the book, any household with wealth below $700 ends NOTE Confidence: 0.857304394245148 27570455-14bf-4473-8864-3691e288add3 00:36:01.512 --> 00:36:06.088 up at point A, which involves a wealth level of $50. So this NOTE Confidence: 0.857304394245148 9809f568-f31c-4181-9da6-704f801ad5f2 00:36:06.088 --> 00:36:09.608 is the poverty trap zone -- everything up to $700 in NOTE Confidence: 0.823436319828033 b7d6a7ca-1af7-4fce-8f35-aa39e2ffb133 00:36:09.608 --> 00:36:13.758 wealth. Contrast: households beyond $700 in wealth end up NOTE Confidence: 0.823436319828033 8a7f3132-f19d-4656-b489-31518da113ac 00:36:13.758 --> 00:36:18.210 at point C, a wealth level of $900. What matters in the long NOTE Confidence: 0.823436319828033 40dc15c0-2fb1-45a3-9ce0-81e8df0a5808 00:36:18.210 --> 00:36:22.662 run is whether a household can break out of the poverty trap NOTE Confidence: 0.823436319828033 d9970e59-3b5c-4b2f-8d53-0d9a8f36a3c8 00:36:22.662 --> 00:36:26.001 zone if they can reach the $700 in wealth. NOTE Confidence: 0.829720616340637 eecbbae8-3e99-42f8-bf8e-9ff120ddd894 00:36:28.000 --> 00:36:32.660 However, this line represents the S-shaped curve with no NOTE Confidence: 0.829720616340637 afe5b65b-1224-4c38-a4da-313bf39e09f2 00:36:32.660 --> 00:36:36.854 microloans. Take a second to consider the effects of NOTE Confidence: 0.829720616340637 52154212-9db1-4260-a3bf-f061a58de489 00:36:36.854 --> 00:36:40.582 microloans on this graph. What happens if microloans NOTE Confidence: 0.829720616340637 023a3aa4-c851-4f9d-bc16-f938903bc32f 00:36:40.582 --> 00:36:41.514 become available? NOTE Confidence: 0.825458526611328 518f1ae6-3206-4cfb-bd88-8c76374e5114 00:36:43.420 --> 00:36:47.415 First, microloans provide households with access to more NOTE Confidence: 0.825458526611328 4f6b02d1-981c-4ff3-b6ac-1146a3644ff8 00:36:47.415 --> 00:36:49.290 wealth, since they can borrow NOTE Confidence: 0.866762816905975 7270e398-5f01-4467-b192-ffbe132605b6 00:36:49.290 --> 00:36:53.062 something today. This means that the poverty trap zone should NOTE Confidence: 0.866762816905975 d8259caf-11f2-4cb3-b066-a73f57cd3cde 00:36:53.062 --> 00:36:56.461 fall and more households should be able to break the trap. NOTE Confidence: 0.856355309486389 d30dc628-0dbf-47d2-8d29-93f965a0e17c 00:36:57.950 --> 00:37:01.370 Second, however, these loans are microloans -- they're small. This NOTE Confidence: 0.856355309486389 54dd415f-2af6-4e3c-8024-582daec2e371 00:37:01.370 --> 00:37:05.170 means that not everyone who borrows will break the trap, NOTE Confidence: 0.856355309486389 fcee0220-af75-4cb2-b896-7826017a5204 00:37:05.170 --> 00:37:08.970 only those who are relatively close to the threshold, to NOTE Confidence: 0.856355309486389 6f7cf570-c5bd-482e-a94e-5669a189b056 00:37:08.970 --> 00:37:12.390 $700 in wealth, will be able to escape poverty. NOTE Confidence: 0.83976936340332 aceff167-4c11-4e74-846c-171079722416 00:37:13.290 --> 00:37:17.671 On this new graph, we have two S-shaped curves. The red one NOTE Confidence: 0.83976936340332 babce37b-89c8-4eec-a286-40a870ed5955 00:37:17.671 --> 00:37:21.041 applies when no credit is available, and the blue one NOTE Confidence: 0.83976936340332 8df7e00c-8f05-462f-a82d-a2aa35b6d9a6 00:37:21.041 --> 00:37:22.389 applies when microloans are NOTE Confidence: 0.823283076286316 6a4a8dbd-ef34-4ff4-b2aa-0efb7e2a6002 00:37:22.389 --> 00:37:27.461 available. The key here is that the poverty trap zone went from NOTE Confidence: 0.823283076286316 3ba17c3f-a932-46e0-9102-58433ca990f0 00:37:27.461 --> 00:37:28.945 up to $700 without NOTE Confidence: 0.82349818944931 4786af45-7761-429b-9e8f-021285717bfa 00:37:28.945 --> 00:37:30.929 microloans, as seen here. NOTE Confidence: 0.855869710445404 4bc88765-4c1f-4344-b67d-98f54a9dcefd 00:37:32.220 --> 00:37:35.436 But it only went up to $400 with NOTE Confidence: 0.707358658313751 879f8bae-3854-4e81-8b66-c09b2af21cdb 00:37:35.436 --> 00:37:38.430 microloans available. So microloans cause the poverty NOTE Confidence: 0.707358658313751 214a3c89-83c5-49a2-bf88-13775df60a00 00:37:38.430 --> 00:37:39.782 trap zone to fall. NOTE Confidence: 0.875352799892426 b066676f-5e4c-42e1-915d-3a02952afe09 00:37:40.400 --> 00:37:44.008 There are some households who can now potentially break out of NOTE Confidence: 0.887124240398407 95302282-bdcb-4e6c-b0d6-60841e316d7e 00:37:44.008 --> 00:37:51.305 poverty. Given these values, we can define three groups among NOTE Confidence: 0.800685584545136 b847cdfd-6dce-4c6c-9422-c8a5be4a8384 00:37:51.305 --> 00:37:56.662 the investors. One group is trapped. The individuals in the NOTE Confidence: 0.800685584545136 95981155-a334-47c5-8148-2491fcc2afe3 00:37:56.662 --> 00:37:58.682 poverty trap zone are still NOTE Confidence: 0.849369645118713 fc092f16-9875-4eb1-9f91-536d2edde3ce 00:37:58.682 --> 00:38:02.537 trapped. Individuals with wealth levels below $400 are NOTE Confidence: 0.849369645118713 f6ac83fd-bed8-49f3-82e2-5f8641abf729 00:38:02.537 --> 00:38:05.274 trapped at the lower equilibrium, even with NOTE Confidence: 0.849369645118713 7743738a-103b-4562-ab2a-0cadf0b2e784 00:38:05.274 --> 00:38:09.575 microloans. To break out of the poverty trap, they would need NOTE Confidence: 0.849369645118713 3d184bc0-7fe6-49ab-b1f5-4590806c9916 00:38:09.575 --> 00:38:12.312 bigger loans or some other policy intervention. NOTE Confidence: 0.860308229923248 c395a75c-5b7a-4f48-baea-f449206ffed8 00:38:13.570 --> 00:38:18.300 Second, this middle group is those for whom the loans enable NOTE Confidence: 0.860308229923248 8b8c20ee-5e6f-4400-bd48-aa64bdf57c24 00:38:18.300 --> 00:38:21.740 their escape from extreme poverty. Individuals with wealth NOTE Confidence: 0.860308229923248 50f2ff46-3570-4c3d-8211-71bd40dbe184 00:38:21.740 --> 00:38:23.890 levels below $400 and $700 NOTE Confidence: 0.815256059169769 6f4dbff8-2ebf-4b53-b5b1-629ad26b9313 00:38:24.440 --> 00:38:28.076 break out of poverty with microloans, since their wealth NOTE Confidence: 0.815256059169769 9cbcd615-f7be-40cf-a6ca-8a49d1505cac 00:38:28.076 --> 00:38:29.692 level is above $400. NOTE Confidence: 0.858268260955811 5a0febc0-f8f2-4119-bda3-00632191a3a3 00:38:30.390 --> 00:38:33.909 But not without microloans, since their wealth level is NOTE Confidence: 0.858268260955811 4ed7f42a-542d-43e5-afda-f22f37fded72 00:38:33.909 --> 00:38:38.210 below $700, and so this middle column are those whose wealth NOTE Confidence: 0.858268260955811 e337295a-b31c-442a-8648-620ad1d7db6b 00:38:38.210 --> 00:38:40.165 level falls between 400 NOTE Confidence: 0.825124204158783 2fbca259-ae02-4e58-9a32-aecf5a357140 00:38:40.165 --> 00:38:44.179 and $700.00. And the microloans do enable them to NOTE Confidence: 0.825124204158783 c9d12795-9bd6-41c3-933e-028681dfd14b 00:38:44.179 --> 00:38:45.340 escape extreme poverty. NOTE Confidence: 0.87866872549057 b22b6787-9784-48d4-951d-f7b0571778d0 00:38:46.590 --> 00:38:49.047 This group is only about 10% of NOTE Confidence: 0.832582354545593 7559984a-05d7-4f6d-a091-a28902943117 00:38:49.047 --> 00:38:52.705 borrowers. But they experienced the vast majority of the gains NOTE Confidence: 0.875213444232941 acadd402-9778-4346-9e38-a904faa93f08 00:38:52.705 --> 00:38:57.130 from microcredit. These are the natural entrepreneurs who are NOTE Confidence: 0.875213444232941 c9c8de8a-16df-431a-a7e6-7dc6e2a3d73b 00:38:57.130 --> 00:39:01.860 unleashed by microcredit. But it is a small share of NOTE Confidence: 0.851573884487152 5f56f68c-d791-46ec-b209-3cc113aed46f 00:39:01.860 --> 00:39:06.508 borrowers. The third group, the furthest to the right, escapes NOTE Confidence: 0.851573884487152 ce4e4ae4-9f2e-46dc-abc2-d932093cfa89 00:39:06.508 --> 00:39:09.766 extreme poverty, regardless of whether or not microfinance is NOTE Confidence: 0.851573884487152 b8abdb2c-bb13-417c-9546-c9b7f2b71952 00:39:09.766 --> 00:39:13.024 available. They have wealth levels above $700, and so NOTE Confidence: 0.851573884487152 c3b24e20-60bd-42b0-88f9-d6cca0696b33 00:39:13.024 --> 00:39:14.834 they break out either way. NOTE Confidence: 0.906341552734375 87cd2070-0da7-46ab-81e2-54be6bb9fb30 00:39:15.490 --> 00:39:19.169 In the study, they take out loans so that they can grow their NOTE Confidence: 0.77707713842392 4c68d06a-6a81-4a9b-bc1f-b783bdb089f1 00:39:19.169 --> 00:39:22.838 businesses more rapidly. But they escape poverty, with or NOTE Confidence: 0.756068825721741 bc774eec-8d47-41a6-b90b-08aa7d75de55 00:39:22.838 --> 00:39:27.644 without microloans. Going back to our types of borrowers, I'll NOTE Confidence: 0.756068825721741 eb3f7179-6098-4bbd-aa51-26c8aed06834 00:39:27.644 --> 00:39:32.900 just categorize this as four groups of borrowers. So one are the NOTE Confidence: 0.756068825721741 74445a89-e676-4c98-a261-d755f85abd44 00:39:32.900 --> 00:39:34.214 borrowers who consume. NOTE Confidence: 0.839775562286377 aa7c68ec-109a-4d35-ab72-626e5d1ba63f 00:39:34.900 --> 00:39:38.370 Then we have borrowers who invest but are still trapped --  NOTE Confidence: 0.820451259613037 6a2b9933-b120-41d1-9fb3-7f05225a5d13 00:39:38.370 --> 00:39:43.920 Group 2. Third, we have borrowers who invest and for whom the NOTE Confidence: 0.820451259613037 ea622402-3200-4184-b0e0-e0a9398124f1 00:39:43.920 --> 00:39:47.601 microloans enable them to escape poverty -- Group 3. And then  NOTE Confidence: 0.820451259613037 ab42d7dd-eea4-4463-b4e9-8642c834ec78 00:39:47.601 --> 00:39:51.691 Group 4 are those who escape regardless.  They're able to NOTE Confidence: 0.820451259613037 a249a7e6-fb0b-4134-95d6-9141c811cca5 00:39:51.691 --> 00:39:54.554 invest and expand their business even without NOTE Confidence: 0.820451259613037 92de610d-9b20-41a6-ad49-7a8518a3235d 00:39:54.554 --> 00:39:54.963 microloans. NOTE Confidence: 0.893243312835693 ea5f6ed7-d8bf-4dd3-a85c-328bac4aebbd 00:39:56.170 --> 00:40:00.286 I can also go back to a two by two table to NOTE Confidence: 0.893243312835693 cdbd04e3-7ab7-4d77-a188-d9fec50364e7 00:40:00.286 --> 00:40:01.658 show these groups here. NOTE Confidence: 0.818811237812042 4a845002-6479-4291-be68-5d514f3ae3c2 00:40:03.260 --> 00:40:07.760 Here we can see that those who consume are trapped in poverty, NOTE Confidence: 0.818811237812042 98d18e05-0535-4f90-8691-444b20058ea5 00:40:07.760 --> 00:40:11.510 with or without microloans. Group two are those who invest, NOTE Confidence: 0.818811237812042 92b2e573-613f-4552-9eeb-0ee1f24e40af 00:40:11.510 --> 00:40:15.260 but are trapped with or without microloans. Group four escapes, NOTE Confidence: 0.818811237812042 95752540-d094-4c55-8ea2-596982b1f922 00:40:15.260 --> 00:40:19.385 regardless whether or not they have microloans.  And it's Group three NOTE Confidence: 0.818811237812042 460d09cb-d745-472b-83ab-3045aa20ab37 00:40:19.385 --> 00:40:23.510 where the effect really falls. Group three are for those for NOTE Confidence: 0.818811237812042 eff4d854-6819-4fbc-bef1-e4d02fff51a1 00:40:23.510 --> 00:40:26.885 whom the loans enable their escape. They're in extreme NOTE Confidence: 0.818811237812042 a7c70208-943d-4c08-ad7f-308e99896c95 00:40:26.885 --> 00:40:28.385 poverty without microloans (the NOTE Confidence: 0.856093108654022 145f2206-bdc2-4bac-ab6d-2250711b7fd5 00:40:28.385 --> 00:40:32.718 bottom left), and if they get access to microloans, they can NOTE Confidence: 0.856093108654022 944bac52-2099-4ded-9473-83b6c7460d7a 00:40:32.718 --> 00:40:36.702 escape poverty (the upper right). So we can see how that's the NOTE Confidence: 0.856093108654022 f9a2564a-0dd3-4cc3-8bc9-5fa80f11c956 00:40:36.702 --> 00:40:39.358 group where the benefits of microloans are concentrated. NOTE Confidence: 0.856093108654022 a5ca066e-0a6f-495b-9f7c-a6330f9fb346 00:40:39.358 --> 00:40:43.342 This paper finds that almost all the effect is among that group. NOTE Confidence: 0.827867686748505 ef245779-4198-4c84-a4c4-abe7e687f073 00:40:43.940 --> 00:40:47.828 Just please note that the values I used to make these NOTE Confidence: 0.827867686748505 14661e35-7fac-4888-930d-33e77189cd9a 00:40:47.828 --> 00:40:51.392 graphs are based on Banerjee and Duflo's new paper, although I NOTE Confidence: 0.827867686748505 99529d00-d814-4b1e-a8c9-b74c0c4d7bfc 00:40:51.392 --> 00:40:54.308 took a few liberties and also simplified their classification NOTE Confidence: 0.827867686748505 6c343662-8f17-405b-b95e-fb75aaf70e32 00:40:54.308 --> 00:40:58.196 of borrowers to make graphs that are just more related to what NOTE Confidence: 0.827867686748505 0815ea97-ce60-4d16-be16-71066a07339a 00:40:58.196 --> 00:41:02.408 you saw in Poor Economics. But still we can see how our theory NOTE Confidence: 0.827867686748505 e0a55a09-4e17-4d90-a7cd-5602fd00914a 00:41:02.408 --> 00:41:05.324 makes clear predictions about which households are likely to NOTE Confidence: 0.827867686748505 67caba18-7a1e-47ab-80a2-aca7647d49de 00:41:05.324 --> 00:41:06.944 benefit from microcredit, which NOTE Confidence: 0.86141449213028 829a7abc-9eb9-45e3-8d37-27707382edff 00:41:06.944 --> 00:41:11.133 the evidence confirms. First, a borrower needs to be interested NOTE Confidence: 0.86141449213028 3d743fe4-e357-4e1b-b796-2d2bf539ecf8 00:41:11.133 --> 00:41:14.723 in starting a business and must have the entrepreneurial ability NOTE Confidence: 0.86141449213028 8bb2cd52-52e3-407f-8f72-a285fefcd096 00:41:14.723 --> 00:41:19.031 to do so. Second, a borrower needs to be close enough to NOTE Confidence: 0.86141449213028 50dc361b-ce71-46a8-aa57-4379f2ec9f3b 00:41:19.031 --> 00:41:23.339 breaking the trap that a small loan enables them to do so. NOTE Confidence: 0.86141449213028 a529b74c-9ca6-4e32-a4b3-2746a4d6aebd 00:41:23.339 --> 00:41:27.288 Almost all of the effect, again, occurs among this group, that's NOTE Confidence: 0.86141449213028 9d73c8d2-a230-41d2-8167-0dc7f4c67d40 00:41:27.288 --> 00:41:30.878 really close to breaking out of poverty, and microcredit enables NOTE Confidence: 0.848937928676605 3aa1169b-32cb-40b1-8242-b219290016e9 00:41:30.878 --> 00:41:35.533 that transition. Third, we do see evidence that the S-shaped NOTE Confidence: 0.848937928676605 5759f4e5-838d-448b-9991-d083216312fa 00:41:35.533 --> 00:41:39.577 poverty trap world can describe these borrowers. It does a good job NOTE Confidence: 0.848937928676605 cc88f264-6880-47fd-a4ee-98c8ddf8d701 00:41:39.577 --> 00:41:42.610 of explaining the effects of microcredit. This paper would NOTE Confidence: 0.848937928676605 fe21c695-a50e-464e-b14b-3e50e4395fd1 00:41:42.610 --> 00:41:45.643 also receive a passing grade in First-Year Studies. NOTE Confidence: 0.840846657752991 77cb58ef-9338-4e48-b04a-1dcd537ce12c 00:41:46.210 --> 00:41:50.445 This is a much more interesting argument, a more sharp thesis. It NOTE Confidence: 0.840846657752991 d6d4fd01-70e2-4687-8965-d4d5d289cfe5 00:41:50.445 --> 00:41:53.525 engages the possibility that microcredit can produce large NOTE Confidence: 0.853965699672699 43334fa8-d3fe-4e13-84e7-2f87609255aa 00:41:53.525 --> 00:41:58.845 gains; and that it can produce no gains or small gains. It NOTE Confidence: 0.853965699672699 97dd1ae1-ef4e-44b0-a4e6-64ed11c67634 00:41:58.845 --> 00:42:02.005 makes concessions when needed and confronts evidence. By NOTE Confidence: 0.853965699672699 c2b5398d-5177-4676-a4c1-92938be8efe6 00:42:02.005 --> 00:42:05.165 doing all of this successfully, it helps us NOTE Confidence: 0.853965699672699 6f01e9b2-7c58-4704-9a56-846c77d2d3d1 00:42:05.165 --> 00:42:07.535 understand microcredit more clearly and more NOTE Confidence: 0.853965699672699 599d2b49-f356-443a-82d5-fce49405ee19 00:42:07.535 --> 00:42:07.930 realistically. NOTE Confidence: 0.814727604389191 9a0da6e3-10a5-47d7-975e-4d72369a7624 00:42:11.830 --> 00:42:15.736 So, section number four: What explains the reduction in NOTE Confidence: 0.814727604389191 657e0b92-bde6-404c-9eb0-dc936b4af20e 00:42:15.736 --> 00:42:21.812 poverty? And here my main goal is to argue we need to both think big NOTE Confidence: 0.814727604389191 635fd0a2-9326-4f49-87c9-19a721f6f852 00:42:21.812 --> 00:42:26.586 and think small. So the microcredit history suggests that one NOTE Confidence: 0.814727604389191 b5337fb9-7222-405d-a50c-e87b43b3aedb 00:42:26.586 --> 00:42:31.360 use of empirical work is arguing against something. It is useful NOTE Confidence: 0.814727604389191 b0f6d46f-71ba-4a2c-8d95-4eeef983daa5 00:42:31.360 --> 00:42:35.700 to know that microcredit isn't terrible overall. It is useful NOTE Confidence: 0.814727604389191 0d7c702c-917c-4d6b-9467-6c5232ecc52e 00:42:35.700 --> 00:42:39.172 to know that microcredit isn't generally transformative either. NOTE Confidence: 0.860772252082825 80f04f98-4823-476c-b409-059d834c5741 00:42:39.720 --> 00:42:43.919 Not much of the fall we see in this chart is explained by NOTE Confidence: 0.882854819297791 d110da2b-6c1d-4aa4-b975-cd09c9bfdfd8 00:42:43.919 --> 00:42:47.705 microcredit. However, this type of knowledge -- what works well or NOTE Confidence: 0.882854819297791 aca5c96d-acbf-41b2-95df-53a890fba945 00:42:47.705 --> 00:42:50.840 what what doesn't work so well to reduce poverty -- isn't so NOTE Confidence: 0.882854819297791 4bcb5bb3-1911-4f3d-a7bd-15c3aa035f8c 00:42:50.840 --> 00:42:53.975 useful unless we also know what does work well to reduce NOTE Confidence: 0.882854819297791 b37fb9d7-de75-4afc-873b-78d07d864335 00:42:53.975 --> 00:42:57.110 poverty. We don't just want to spend less on something that NOTE Confidence: 0.923850893974304 506d52aa-d00d-465c-8e42-754d1462d33c 00:42:57.110 --> 00:43:01.160 doesn't work. We want to spend more on something that does work NOTE Confidence: 0.874193966388702 cffdbd2d-c12d-47af-84d4-5bdf22a1be74 00:43:01.160 --> 00:43:05.735 well. So how can we achieve bigger reductions in poverty? NOTE Confidence: 0.874193966388702 146f6b84-049e-4222-97fb-4123097f1916 00:43:05.735 --> 00:43:08.165 Let's turn to that question now. NOTE Confidence: 0.922356426715851 89e6bc08-5e97-47e3-b3de-831de779e770 00:43:08.810 --> 00:43:12.790 In this section I will first provide a framework for NOTE Confidence: 0.922356426715851 53a868a9-7a9d-450c-a061-51e8945e5b8e 00:43:12.790 --> 00:43:15.974 evaluating what strategies work to improve the world. NOTE Confidence: 0.870919644832611 4414784e-b8bd-4632-afbc-fd751c1295ef 00:43:16.760 --> 00:43:20.310 Second, with this framework, I will argue that both sing NOTE Confidence: 0.870919644832611 0b132c00-b2dd-44bf-a9d4-cddfceac1221 00:43:20.310 --> 00:43:24.215 thinking small and thinking big can make the world better with NOTE Confidence: 0.8929123878479 4f8d5605-fb7c-440b-bc1b-799911e1d351 00:43:24.215 --> 00:43:26.490 less poverty. I'll provide a few NOTE Confidence: 0.849180161952972 d8fabf31-ce05-4f64-932e-e637f66963ad 00:43:26.490 --> 00:43:30.754 examples as well. The main point I want you to think about is the NOTE Confidence: 0.849180161952972 77c9570b-9538-43fc-8bcd-aae22a521dd2 00:43:30.754 --> 00:43:33.040 importance of both thinking small and thinking big. This NOTE Confidence: 0.849180161952972 5e286453-7ce6-4cb6-a342-4a97e27c124b 00:43:33.040 --> 00:43:36.088 differs a bit from the arguments in the book, as you'll find. NOTE Confidence: 0.898958623409271 4238a035-5525-4a77-89ee-7dd5b025362e 00:43:36.740 --> 00:43:39.924 Where should we focus our research and attention? NOTE Confidence: 0.898958623409271 2f53f7a9-c60f-4d43-a364-76f63084762d 00:43:39.924 --> 00:43:43.506 What types of research make the world better by NOTE Confidence: 0.898958623409271 19afac99-bc80-4f80-b864-7c7facb752d1 00:43:43.506 --> 00:43:44.700 reducing extreme poverty? NOTE Confidence: 0.866392254829407 051d5161-f46b-4d6e-a5e9-7e585ab98b20 00:43:45.850 --> 00:43:49.750 To explore this question, let's consider a few linkages between NOTE Confidence: 0.866392254829407 417344a5-7351-4d36-8be8-c002c2f15518 00:43:49.750 --> 00:43:54.040 research and the state of the world. First, does research lead NOTE Confidence: 0.866392254829407 41709626-452b-4f6e-9b78-d0f35a302258 00:43:54.040 --> 00:43:57.940 to more knowledge? Does research give us a better understanding NOTE Confidence: 0.866392254829407 84caaaa1-a9de-4731-bcd2-ccc88755dabb 00:43:57.940 --> 00:43:59.110 of the world? NOTE Confidence: 0.829384207725525 f809e01a-08a7-4b47-a09e-5f6cd35cc4bb 00:43:59.840 --> 00:44:04.488 Second, does more knowledge enable better policy? NOTE Confidence: 0.857463359832764 d864520c-f098-4a00-b6b3-ea8b0fd19d55 00:44:05.260 --> 00:44:09.900 And third, does better policy make the world better? Does it reduce NOTE Confidence: 0.852641046047211 e9f48c6f-766a-4f39-858b-45c5e6ba6894 00:44:09.900 --> 00:44:13.880 extreme poverty? And how much better? How much does extreme NOTE Confidence: 0.892259478569031 0df0b2ad-6e77-4056-8fba-baf654c86142 00:44:13.880 --> 00:44:18.779 poverty fall? You can think of this as a simple theory or model NOTE Confidence: 0.892259478569031 3a590f26-e22f-41d1-92d6-94c99a6bfa5d 00:44:18.779 --> 00:44:20.374 for how research can reduce NOTE Confidence: 0.903687477111816 eecd3b41-1277-4570-a263-9bdfc18b6fbd 00:44:20.374 --> 00:44:24.050 poverty. And it can help make our discussion a bit more NOTE Confidence: 0.879677474498749 f9386a12-d2d2-487b-bb24-63d81cc9a770 00:44:24.050 --> 00:44:27.796 concrete. Alternatively, here's the framework in a fancy table. NOTE Confidence: 0.879677474498749 60301c0a-a080-4c60-8396-f5b91d598351 00:44:27.796 --> 00:44:31.723 In order for research to make the world better, please note NOTE Confidence: 0.879677474498749 ea017cae-36b7-4fe9-8bde-ac34eb4d41f0 00:44:31.723 --> 00:44:34.936 that all three things must happen. For example, research NOTE Confidence: 0.879677474498749 38a1ad17-f2bd-4f1f-bbe8-d839f2bc35c7 00:44:34.936 --> 00:44:38.863 that doesn't result in new policies won't have an impact on NOTE Confidence: 0.879466652870178 d8530630-31e0-4278-a9c3-2878aa5ca0d2 00:44:38.863 --> 00:44:43.018 poverty. Research that does change policies is more likely NOTE Confidence: 0.879466652870178 b9994e84-205a-4297-ac38-6d5db668da20 00:44:43.018 --> 00:44:44.948 to cause reductions in poverty. NOTE Confidence: 0.859096348285675 4d9dfa17-d1b1-48e5-9eaf-3e5a6625f02a 00:44:45.550 --> 00:44:49.720 Mathematically, you can think of these three terms as NOTE Confidence: 0.859096348285675 7409ace5-69e8-46b1-bd79-c06e1702efe1 00:44:49.720 --> 00:44:50.554 being multiplicative. NOTE Confidence: 0.838167607784271 3aec4140-0feb-4f4c-9729-f89ea12a8efa 00:44:51.930 --> 00:44:56.079 Let's use this framework to compare thinking small and NOTE Confidence: 0.838167607784271 b1bbb81e-3718-421e-be76-93ddff0c4ac3 00:44:56.079 --> 00:45:00.228 thinking big. Banerjee and Duflo emphasize the importance of NOTE Confidence: 0.838167607784271 bcd8db1c-965d-45f6-a7e1-a516c10c7690 00:45:00.228 --> 00:45:03.916 randomized control trials and narrowly focused questions that NOTE Confidence: 0.838167607784271 486a455a-337b-4794-ab0d-59ce17e85d85 00:45:03.916 --> 00:45:08.065 are used to evaluate clear evidence based questions and NOTE Confidence: 0.62691855430603 bd5c4859-b704-45a0-968c-d4be99f72248 00:45:08.065 --> 00:45:12.944 answers. The biggest benefit of RCTs is the first row. NOTE Confidence: 0.777332067489624 0945f4da-151c-41c3-ae2e-f8bcdebcca1d 00:45:13.680 --> 00:45:19.740 RCTs provide reliable ways to answer small questions about the NOTE Confidence: 0.846267282962799 9688fbaa-5d69-4c38-ac6e-17d194d96ba6 00:45:19.740 --> 00:45:23.370 world. The first row is strong. NOTE Confidence: 0.871701896190643 4976d8fa-6a2d-4e4b-bf42-f1f9afc20f8a 00:45:24.220 --> 00:45:27.613 By learning more about small questions, policy makers are NOTE Confidence: 0.871701896190643 83700df2-a4f1-4d11-91e8-46dabd9fa80f 00:45:27.613 --> 00:45:31.760 often willing to make small changes in policy, a benefit in NOTE Confidence: 0.871701896190643 bb68d179-6a0a-4eee-8ed7-906f42441039 00:45:31.760 --> 00:45:33.268 the second row here. NOTE Confidence: 0.865710079669952 3e2aaa62-57f2-4bae-bfe5-b4b604b92c96 00:45:34.430 --> 00:45:37.860 Though you are already encountering many examples where this does NOTE Confidence: 0.865710079669952 feed9e48-37be-419a-b122-53ef9fca2535 00:45:37.860 --> 00:45:41.976 not happen, such as the stubborn design of food aid discussed in NOTE Confidence: 0.883137881755829 fa249634-a1c1-4cd5-91bd-834af9be2397 00:45:41.976 --> 00:45:45.659 Chapter 2. However, do small questions that result in NOTE Confidence: 0.883137881755829 463cb832-3a41-4bcb-ab0f-e5d430d2806c 00:45:45.659 --> 00:45:49.256 small changes in policy make the world better? The third row NOTE Confidence: 0.883137881755829 4b283144-becd-4e8e-995c-d8ac1af67ed4 00:45:49.256 --> 00:45:53.507 can be too small at times, as you see in some examples in NOTE Confidence: 0.883137881755829 bee858e2-1798-46b1-8340-b55bb77671b2 00:45:53.507 --> 00:45:54.815 the book as well. NOTE Confidence: 0.879719197750092 d0a9dfda-95eb-488d-841c-1e471f35d1ed 00:45:55.960 --> 00:46:01.560 In contrast, the biggest benefit to thinking big is that when we NOTE Confidence: 0.879719197750092 f89412f6-acc8-47a1-9139-7c8e9438115d 00:46:01.560 --> 00:46:06.084 get it right, the benefits are huge. The final row can be NOTE Confidence: 0.879719197750092 8e8ddcbc-7444-437b-928a-4da6420e417c 00:46:06.084 --> 00:46:09.854 extremely big. Getting big ideas right can explain some big NOTE Confidence: 0.879719197750092 0e24d56a-42fc-4343-b456-1bfabb0e8483 00:46:09.854 --> 00:46:11.362 reductions in extreme poverty. NOTE Confidence: 0.838145792484283 32675822-2983-4fad-b461-44d62d75c0bb 00:46:12.160 --> 00:46:16.219 Getting big ideas right can spark rapid growth, unlock NOTE Confidence: 0.838145792484283 b41988be-0e18-4806-9fcb-ac83bc18cabe 00:46:16.219 --> 00:46:19.827 dramatic health improvements, and reduce extreme poverty. Getting NOTE Confidence: 0.838145792484283 be56b7c5-99a1-4fe0-82c1-9b27f38bd3a9 00:46:19.827 --> 00:46:22.082 big ideas wrong can be NOTE Confidence: 0.859485924243927 968fda7c-9a71-4f92-b5cb-63ce1ae7644d 00:46:22.082 --> 00:46:25.484 devastating. Oftentimes, big questions are more complicated NOTE Confidence: 0.859485924243927 e0a0a966-83c5-44f1-83a4-c6419073a385 00:46:25.484 --> 00:46:29.224 and harder to understand or explain. The first row is NOTE Confidence: 0.859485924243927 2e271c59-514d-476f-9be3-0e515653f810 00:46:29.224 --> 00:46:33.338 difficult. In the words of Banerjee and Duflo, we have more NOTE Confidence: 0.859485924243927 4617af76-8c06-4df0-b74b-a201bd932f38 00:46:33.338 --> 00:46:35.208 ignorance about many of these NOTE Confidence: 0.867623746395111 51a5acbd-a8ef-4790-9796-5bceb7589ac1 00:46:35.208 --> 00:46:40.039 questions. Furthermore, thinking big often runs into stronger NOTE Confidence: 0.867623746395111 a1a861e4-b673-4654-8ef6-6ed40b44ab77 00:46:40.039 --> 00:46:43.728 ideological resistance and inertia, making NOTE Confidence: 0.867623746395111 fb18e80a-8296-4ae3-ab14-6d12f3de2094 00:46:43.728 --> 00:46:47.417 policy change more difficult (the second row). NOTE Confidence: 0.763265073299408 453a164b-dd38-4c2b-b5b7-86320931b05f 00:46:50.190 --> 00:46:54.788 What is an example from Poor Economics of a way that thinking NOTE Confidence: 0.763265073299408 89afd8e2-51c1-4ea8-ac47-e08c3a7c887b 00:46:54.788 --> 00:46:56.878 small made the world better? NOTE Confidence: 0.883365511894226 200c56f5-b222-4e19-98ed-99ee7b53f543 00:46:57.510 --> 00:46:59.315 My favorite example of thinking NOTE Confidence: 0.859860122203827 1612bc2c-e976-47a1-95b4-3a3a0645ebe0 00:46:59.315 --> 00:47:05.000 small helps prevent deaths from the animal that kills the most NOTE Confidence: 0.859860122203827 524b60be-7747-4a10-bd43-f3af71eae9a8 00:47:05.000 --> 00:47:08.712 people by a massive amount: mosquitoes. Insecticide treated NOTE Confidence: 0.859860122203827 fb3ceacd-116d-4d5a-b157-e936cc239a78 00:47:08.712 --> 00:47:12.888 bed nets protect people from malaria and provide important NOTE Confidence: 0.859860122203827 522777d5-4f92-409b-98a1-732062d41107 00:47:12.888 --> 00:47:17.064 benefits not only to the individuals but to their NOTE Confidence: 0.808985352516174 28aba859-65c5-4eef-9602-a405ba755be3 00:47:17.064 --> 00:47:21.736 communities. For a variety of reasons explored in the book, NOTE Confidence: 0.808985352516174 9ec7a1fb-467f-419b-ab95-babbe47eceeb 00:47:21.736 --> 00:47:25.776 individuals often fail to use cheap bed nets, and governments  NOTE Confidence: 0.808985352516174 67db158b-4f27-4957-b1d7-be728ce78f6e 00:47:25.776 --> 00:47:30.220 and NGOs often fail to provide them. One small research project NOTE Confidence: 0.808985352516174 854a5d5f-4f38-4675-8979-d9ec7728ed94 00:47:30.220 --> 00:47:34.664 is the study by Jessica Cohen and Pascaline Dupas that looks at NOTE Confidence: 0.808985352516174 2a999ed6-155d-427a-be05-57c274bc678d 00:47:34.664 --> 00:47:38.704 randomly providing free bed nets to individuals. It's cited several NOTE Confidence: 0.808985352516174 905c3a62-926b-421e-b4a2-d904c518a1ea 00:47:38.704 --> 00:47:40.320 times in Poor Economics. NOTE Confidence: 0.857690095901489 e43c16a0-1f02-4002-9030-3340cde4c24e 00:47:41.270 --> 00:47:44.220 Does research lead to more NOTE Confidence: 0.800902247428894 4f9dccb4-9e20-4fc3-af24-67f92a54b627 00:47:44.220 --> 00:47:48.710 knowledge? Cohen and Dupas have conducted an RCT that randomly NOTE Confidence: 0.800902247428894 01fcf4bf-ebc7-4d9d-967b-fc5c14e8dee2 00:47:48.710 --> 00:47:52.860 provided bed nets to some individuals. I want to highlight NOTE Confidence: 0.800902247428894 a92cdb18-5b4c-4a9d-8a73-57e101f7396e 00:47:52.860 --> 00:47:56.595 two important findings. First, providing free bed nets greatly NOTE Confidence: 0.800902247428894 deca5c10-b64f-4164-b6a5-f63843dbb9ba 00:47:56.595 --> 00:47:58.670 increases their usage. People do NOTE Confidence: 0.834146320819855 4945bf0e-c06b-4570-86c6-4be22ef8fee7 00:47:58.670 --> 00:48:03.294 use them. Second, with limited resources, it is not obvious NOTE Confidence: 0.834146320819855 9686c4c6-0049-467a-a4ef-ecac6400b24b 00:48:03.294 --> 00:48:07.532 whether it is better to give away bed nets for free or to NOTE Confidence: 0.834146320819855 0bf1d7db-4498-48c1-a555-6574a250a2b3 00:48:07.532 --> 00:48:11.444 sell them at a discount, which would leave you with more money NOTE Confidence: 0.834146320819855 962e642b-6fd4-42b5-aeec-6b31ddf6991a 00:48:11.444 --> 00:48:14.704 available to distribute more total bed nets. It depends. Cohen NOTE Confidence: 0.834146320819855 2b2ff6fc-70f8-40f8-b128-5bae4e69e123 00:48:14.704 --> 00:48:18.616 and Dupas find that is more cost effective to give away bed nets NOTE Confidence: 0.834146320819855 56d4f2bc-6de0-4ba5-8b63-ba1b55a33425 00:48:18.616 --> 00:48:20.572 for free. It saves more lives. NOTE Confidence: 0.856136441230774 dc96be4a-eadc-448d-903b-236378cb7bd2 00:48:21.240 --> 00:48:24.900 It is more cost effective. This is important information. Giving NOTE Confidence: 0.856136441230774 f8d2af45-617d-4558-8005-dcb2ed116d8c 00:48:24.900 --> 00:48:29.658 away bed nets gets more people to use them and saves lives more NOTE Confidence: 0.856136441230774 a95a3c8c-ddf6-4e4b-aa48-d0361da03fa7 00:48:29.658 --> 00:48:32.586 cost effectively. But what happened with this knowledge? NOTE Confidence: 0.856136441230774 b96c099f-0d16-4883-8958-80eb0dad7c74 00:48:32.586 --> 00:48:35.514 Did this knowledge lead to better policy? Yes. NOTE Confidence: 0.81532222032547 789672ef-6499-4704-8ed7-b8f474b0796c 00:48:36.110 --> 00:48:39.860 This knowledge led NGOs to switch from subsidized bed nets NOTE Confidence: 0.81532222032547 f3e90e1b-1659-475b-a35f-6979d6bbfcf6 00:48:39.860 --> 00:48:43.985 to free bed net distribution. Now, many just give them away. NOTE Confidence: 0.861959517002106 5f1d735b-7537-462a-b8de-806f3fdd1ed1 00:48:44.530 --> 00:48:47.738 Also, many donors support these NGOs, including ourselves. NOTE Confidence: 0.861959517002106 8a76bacb-0367-414d-8c44-81f83f6d3908 00:48:47.738 --> 00:48:52.550 Today, hundreds of millions of them are given away each year at NOTE Confidence: 0.861959517002106 abd17637-7dc2-4d31-9c57-6e6da7ccf016 00:48:52.550 --> 00:48:54.956 the cost of about $5 each. NOTE Confidence: 0.830712378025055 6572f8a1-c36a-4d81-8dd9-a84166c3fe26 00:48:56.100 --> 00:49:00.489 Has this change, has this policy change, impacted the world? Yes. NOTE Confidence: 0.830712378025055 283b9ef0-7007-4518-ad9a-fd268a7e834f 00:49:00.489 --> 00:49:04.479 Today, far more young children in sub-Saharan Africa sleep NOTE Confidence: 0.830712378025055 897c9927-8ddf-4b5a-99cf-52550d80fc74 00:49:04.479 --> 00:49:09.267 under bed nets. In 2000, less than 20% of children in most NOTE Confidence: 0.830712378025055 cf925836-b6de-441c-a922-3db1e2225ed8 00:49:09.267 --> 00:49:14.055 countries in sub-Saharan Africa slept under bed nets, as you can NOTE Confidence: 0.830712378025055 f8fa91a1-727f-4c6e-907f-4e159a7909f2 00:49:14.055 --> 00:49:18.045 see from the light shading indicating zero to 20% usage. NOTE Confidence: 0.772291839122772 ec7bcdb4-41cb-40b2-81a4-cb5a5225134d 00:49:18.680 --> 00:49:20.930 By 2010,  NOTE Confidence: 0.860526025295258 db2708d6-63ed-4f69-a509-94bfdff0b7c2 00:49:23.640 --> 00:49:27.974 more than half of children do so in most countries, including NOTE Confidence: 0.860526025295258 9c672f38-69d1-458e-9515-b135f6d5148b 00:49:27.974 --> 00:49:33.096 over 80% in some, so the usage of bed nets has gone up NOTE Confidence: 0.86705493927002 e8b9ed22-92bc-4ccd-9fa9-fd0b192ba462 00:49:33.096 --> 00:49:38.220 considerably. And this increase in bed nets is causing a massive NOTE Confidence: 0.86705493927002 2f69592b-ecb8-437e-a78e-34ca640b4f1e 00:49:38.220 --> 00:49:42.741 reduction in malaria. One study finds that the increased use of NOTE Confidence: 0.86705493927002 9f21faeb-3b15-4f00-8111-0c6f5cc05a67 00:49:42.741 --> 00:49:47.262 bed nets caused 451 million fewer cases of malaria in Africa NOTE Confidence: 0.86705493927002 70104157-cdb4-4d36-9aa6-7da61d4a89be 00:49:47.262 --> 00:49:48.906 between 2000 and 2015. NOTE Confidence: 0.866309344768524 ad3ca162-25cb-45a6-8d79-101deeb039dd 00:49:49.530 --> 00:49:51.672 That is a lot of cases of NOTE Confidence: 0.850881338119507 a2ed13d0-61aa-4b01-9c6f-318566211e27 00:49:51.672 --> 00:49:55.228 malaria avoided. And deaths are falling as well. NOTE Confidence: 0.8664870262146 abcf9e1e-d3ce-422e-be37-5c7edfcfdc62 00:49:57.800 --> 00:50:02.585 For bed nets, then, I could complete the table with plus NOTE Confidence: 0.8664870262146 92f5488d-818d-4d25-8885-6188a7b64cad 00:50:02.585 --> 00:50:07.370 signs all the way down. It accomplished all three goals and NOTE Confidence: 0.8664870262146 6cdc96ac-7677-492f-bb25-3322c718018f 00:50:07.370 --> 00:50:12.155 it's having a big positive impact on the world. This is a  NOTE Confidence: 0.8664870262146 5743e96e-01d5-4818-86fc-611eaa117866 00:50:12.155 --> 00:50:16.070 really important study and a really important policy change NOTE Confidence: 0.8664870262146 c0573a9a-e9b9-41f2-81bd-75045988df18 00:50:16.070 --> 00:50:19.985 that's having a big impact. It's improving health and making NOTE Confidence: 0.8664870262146 85ec7618-f6e7-43c9-8964-77733a67bf19 00:50:19.985 --> 00:50:21.290 people's lives better. NOTE Confidence: 0.860817849636078 64e639b1-9a65-4a79-bc04-da329cdbb10a 00:50:22.510 --> 00:50:26.128 The global decline in extreme poverty is an incredible NOTE Confidence: 0.860817849636078 30679e1e-80b7-4f7f-8fa6-30b1f13e4d01 00:50:26.128 --> 00:50:29.746 success. Few accomplishments match over one billion people escaping NOTE Confidence: 0.860817849636078 92625746-6e77-4f63-9033-0ab28431e32e 00:50:29.746 --> 00:50:32.158 extreme poverty in a 30 year NOTE Confidence: 0.849863529205322 3cc02be7-915b-4e44-88ee-bada5b9f95d5 00:50:32.158 --> 00:50:36.181 period. But what explains this decline? The bed nets example NOTE Confidence: 0.849863529205322 88e93878-5e53-40dc-b841-7d1ac805b328 00:50:36.181 --> 00:50:39.772 and others presented in Poor Economics indicate that thinking NOTE Confidence: 0.849863529205322 3b8847f6-f2ba-44b4-9f35-f478b7a0b80f 00:50:39.772 --> 00:50:42.166 small is part of the answer. NOTE Confidence: 0.883865058422089 f938c9f2-e39f-43df-93af-509e87c18194 00:50:43.410 --> 00:50:48.393 What else has helped reduce poverty? Here are a few examples NOTE Confidence: 0.883865058422089 501e944b-2b00-4656-b0c0-655403809d94 00:50:48.393 --> 00:50:52.470 of declines in a few selected countries, including remarkable NOTE Confidence: 0.883865058422089 1adeed78-ac91-4955-ba13-9a1cb888fe10 00:50:52.470 --> 00:50:56.094 reductions in China, Vietnam, Indonesia, India, Ethiopia, and NOTE Confidence: 0.855008065700531 b81df18b-f59e-41e3-bde6-ae4514e73ba2 00:50:56.094 --> 00:50:59.967 Tanzania. Other than India, it is interesting to note how NOTE Confidence: 0.855008065700531 503f1556-f6c8-42e4-a23e-0277b9822397 00:50:59.967 --> 00:51:02.784 little these countries appear in Poor Economics. What explains NOTE Confidence: 0.855008065700531 50047a88-64d7-4768-bf2e-c0f7a07522da 00:51:02.784 --> 00:51:06.227 these dramatic improvements? I don't have time to fully go into NOTE Confidence: 0.855008065700531 a9f3e5d1-cc89-4855-8f49-6a4569dc3ceb 00:51:06.227 --> 00:51:10.296 these topics today, but I want to highlight a few causes of the NOTE Confidence: 0.855008065700531 bda3f298-42f0-452a-add1-199aa6bc3392 00:51:10.296 --> 00:51:13.739 fall in extreme poverty. So these are big causes or big NOTE Confidence: 0.855008065700531 42a66047-f6fd-4f70-8d46-d03321124b30 00:51:13.739 --> 00:51:17.182 ideas that are causing some of these changes. One is economic NOTE Confidence: 0.882300615310669 dc27cfe4-9aa7-47d6-83e4-a3cb900d9997 00:51:17.182 --> 00:51:21.222 growth. The relationship between economic growth and falling  NOTE Confidence: 0.882300615310669 d2b7d7b2-7065-4a06-9267-caea96c27e95 00:51:21.222 --> 00:51:24.630 poverty is remarkably strong. It appears NOTE Confidence: 0.882300615310669 94c4b18d-167b-43c4-9f47-10b36e0b5856 00:51:24.630 --> 00:51:29.316 that economic growth is one of the most important factors in  NOTE Confidence: 0.882300615310669 dd5d6046-ee86-4ab7-bf21-181cf3828857 00:51:29.316 --> 00:51:31.020 enabling and causing poverty NOTE Confidence: 0.859860360622406 847946e5-568f-4fff-8bce-d0a2a00d422e 00:51:31.020 --> 00:51:34.941 reduction. One argument you'll soon encounter is that most of NOTE Confidence: 0.859860360622406 7489d298-f9e0-44ce-90b9-1834dc3d2081 00:51:34.941 --> 00:51:38.031 the poor don't want to be entrepreneurs. They want good, NOTE Confidence: 0.855276465415955 4ec8f852-56cf-4286-aeaf-935af5cfcf1a 00:51:38.031 --> 00:51:42.440 stable jobs instead. Where do these good jobs come from? NOTE Confidence: 0.855276465415955 191d0900-fff6-4bdf-bf22-3fae13a2ab6d 00:51:42.440 --> 00:51:45.400 Sometimes from thinking small. Governments can provide small NOTE Confidence: 0.855276465415955 74567cfe-53e8-4cc2-9a69-4fd05b989729 00:51:45.400 --> 00:51:49.100 incentives or tax breaks for firms to attract businesses. But NOTE Confidence: 0.855276465415955 a03f84b8-6e8b-4b36-81a7-96c456129317 00:51:49.100 --> 00:51:52.430 more importantly, from thinking big.  Economic growth drives the NOTE Confidence: 0.855276465415955 8cb71bbb-5f74-4e1f-b65c-58f65fc1bc7c 00:51:52.430 --> 00:51:56.130 expansion of production and jobs and can push up wages. NOTE Confidence: 0.873139262199402 32c1c4d4-33de-489b-b631-35b1a187644f 00:51:56.960 --> 00:52:00.750 Second, migration. Another source of good jobs, migration. In my NOTE Confidence: 0.873139262199402 8fe7f7ba-f8a8-4980-a680-c7387dc5714b 00:52:00.750 --> 00:52:04.540 opinion, the economic and moral cases for greater migration are NOTE Confidence: 0.873139262199402 07218ce8-1c37-4ff4-a083-d799e81041bf 00:52:04.540 --> 00:52:08.330 both extremely strong, and economists as a whole tend to NOTE Confidence: 0.873139262199402 93af6ce3-a694-40cb-a8da-03d5a1872065 00:52:08.330 --> 00:52:12.499 favor much greater migration, which might be one of the best NOTE Confidence: 0.873139262199402 0239032f-6dfa-4cbe-b19c-65713625e4d8 00:52:12.499 --> 00:52:15.910 ways to grow the global economy and reduce poverty. NOTE Confidence: 0.879775643348694 1877bf66-6e63-4840-ab0d-6279675db8bc 00:52:16.630 --> 00:52:19.910 This can involve international migration, but also domestic, NOTE Confidence: 0.879775643348694 ac00d0ef-3a15-4b40-808e-3f40ab88b327 00:52:19.910 --> 00:52:24.010 rural to urban migration, as seen in China in unprecedented levels NOTE Confidence: 0.879775643348694 15f193fe-fef9-47eb-acd2-fc098060454f 00:52:24.010 --> 00:52:25.240 in recent decades. NOTE Confidence: 0.863688290119171 362e3bab-423f-45a0-ba24-137a6e8aebcc 00:52:25.800 --> 00:52:29.650 Third is increased agricultural productivity. Many growth NOTE Confidence: 0.863688290119171 3e861e4b-337e-4d66-b330-7f87b20f0de1 00:52:29.650 --> 00:52:34.600 miracles, whether India, China, South Korea or others, aren't NOTE Confidence: 0.863688290119171 c2161fe7-9639-4f7e-916c-e484301daa75 00:52:34.600 --> 00:52:40.100 just explained by migration and more manufacturing jobs, but NOTE Confidence: 0.863688290119171 64b82d44-4b95-4ce5-98bb-32541e6207bf 00:52:40.100 --> 00:52:41.750 also greater agricultural NOTE Confidence: 0.894795954227448 5ab3e10b-ddc3-4677-a415-4c8e516d7f13 00:52:41.750 --> 00:52:46.236 production. The Green Revolution and other increases in NOTE Confidence: 0.894795954227448 43307a73-3ab0-4eaf-8d36-f96d3c590381 00:52:46.236 --> 00:52:49.182 agricultural productivity are also incredibly important. NOTE Confidence: 0.873092889785767 425322cd-0b2c-4dc9-92e1-06237499df06 00:52:49.730 --> 00:52:52.535 Fourth is markets and economic NOTE Confidence: 0.888468444347382 1f25e299-42de-4189-94a5-8a47284a6ba6 00:52:52.535 --> 00:52:57.120 reforms. The growth of China and Vietnam has coincided with the NOTE Confidence: 0.888468444347382 6dee4df4-06b7-4572-a8eb-b0f3ddf47de7 00:52:57.120 --> 00:52:59.928 introduction of more markets and market based incentives. NOTE Confidence: 0.864934265613556 d1a89e64-a327-4333-86ff-95b4cfb2e0b6 00:53:00.910 --> 00:53:03.542 Transitioning from central planning to more emphasis on NOTE Confidence: 0.864934265613556 5f2cee7b-eee3-4f59-81f8-e936e0001a7c 00:53:03.542 --> 00:53:07.161 markets thus appears to be a very important factor as well. NOTE Confidence: 0.854610562324524 8e3af0ab-7384-4dc1-9c59-cee733afa09d 00:53:07.910 --> 00:53:11.502 Fifth is strong, effective governments.  However, both China NOTE Confidence: 0.854610562324524 8fa0ab14-7de6-4b9b-bddc-455b3a2ddfa1 00:53:11.502 --> 00:53:15.094 and Vietnam combined this transition to markets with NOTE Confidence: 0.854610562324524 423f6442-581d-48bf-9b04-74aec01a5dc1 00:53:15.094 --> 00:53:18.686 strong, active governments. Earlier growth, miracles in the NOTE Confidence: 0.854610562324524 b3f20665-4083-4842-9a25-ddcd91517dd5 00:53:18.686 --> 00:53:23.176 East Asian Tigers -- South Korea, Taiwan, Singapore and Hong Kong --  NOTE Confidence: 0.854610562324524 34a2d530-bdb7-43c8-9428-1156a32b9f65 00:53:23.176 --> 00:53:26.768 similarly suggests that active state policy is important. NOTE Confidence: 0.818895161151886 eaa08709-360c-432e-ad31-2432d3528a41 00:53:27.510 --> 00:53:30.543 Furthermore, this highlights that many of the recent growth NOTE Confidence: 0.818895161151886 f2746822-f20b-40d2-81ac-4178f27cc2fe 00:53:30.543 --> 00:53:31.891 miracles occurred under non- NOTE Confidence: 0.835852742195129 1aa757a5-08ae-4854-a7ef-3a82b691308c 00:53:31.891 --> 00:53:35.921 democratic governments. As you see from these examples, when NOTE Confidence: 0.835852742195129 18429399-dc51-4d9c-9b92-fac2d5999c3e 00:53:35.921 --> 00:53:39.278 trying to explain the global fall in extreme poverty, we NOTE Confidence: 0.835852742195129 cd497940-f8b2-409f-a92a-60c0434d5593 00:53:39.278 --> 00:53:43.008 quickly start focusing on big questions with big effects. What NOTE Confidence: 0.835852742195129 896b40e5-8aff-43a0-85a4-62ed7dbe75d8 00:53:43.008 --> 00:53:46.365 sparks rapid economic growth?  Are more market incentives  NOTE Confidence: 0.835852742195129 38293e03-894d-4134-8bc3-2b28b77b0d0d 00:53:46.365 --> 00:53:50.468 good or bad? Are more active or stronger governments good or NOTE Confidence: 0.835852742195129 aa3180a8-7aa6-405e-b5e2-a7adef38c32a 00:53:50.468 --> 00:53:51.960 bad? What about democracies? NOTE Confidence: 0.831559419631958 cf92c789-06be-45d2-a9c3-8b0f57cb19a9 00:53:52.700 --> 00:53:56.200 It is incredibly difficult to get these big policies right, NOTE Confidence: 0.831559419631958 af064f67-f056-46f3-a6a6-dccf0a772b5e 00:53:56.200 --> 00:53:59.700 but doing so unleashes some of the biggest poverty reductions NOTE Confidence: 0.831559419631958 d0372fca-4217-4b66-9660-f0eefd6514c9 00:53:59.700 --> 00:54:00.750 we've ever seen. NOTE Confidence: 0.855020105838776 08333695-f16c-4258-9018-e47471f5402d 00:54:01.290 --> 00:54:05.670 Even if thinking big faces large barriers in the first two steps, NOTE Confidence: 0.855020105838776 0e7393a0-30f2-431a-93fb-e39f33cbf394 00:54:05.670 --> 00:54:08.590 these barriers are not insurmountable and the magnitude NOTE Confidence: 0.855020105838776 1e50db3b-ac50-44ca-98cb-8da377023dc3 00:54:08.590 --> 00:54:12.240 of the gains from better policies (the third row) are NOTE Confidence: 0.855020105838776 c665e942-7f1c-48bb-ac8f-61b2a3280cbf 00:54:12.240 --> 00:54:15.160 massive enough to make big questions incredibly important. NOTE Confidence: 0.843580067157745 5cfc4cec-bc47-495f-8bb9-77d381e9671c 00:54:16.190 --> 00:54:19.120 Here I'm not focusing on examples of thinking small and NOTE Confidence: 0.843580067157745 948a8c79-2ee3-4a25-8e2d-535bd0140961 00:54:19.120 --> 00:54:22.636 thinking big that don't result in big gains, but you might want NOTE Confidence: 0.843580067157745 932907ce-5725-4357-9727-a819d9b8996b 00:54:22.636 --> 00:54:26.152 to reflect on these cases as well and see some of the NOTE Confidence: 0.843580067157745 02e6669f-4de6-44ae-942b-1fba8b638ee2 00:54:26.152 --> 00:54:27.324 examples from Poor Economics. NOTE Confidence: 0.826214551925659 4d18cba7-694c-4da7-9bf4-3c5d73e1b050 00:54:28.030 --> 00:54:31.904 So my fifth goal is to talk about how we as individuals can NOTE Confidence: 0.826214551925659 01cae2c6-2ceb-4321-ab69-9d9bc1b6c675 00:54:31.904 --> 00:54:35.182 help reduce extreme poverty. So Banerjee and Duflo just argued that NOTE Confidence: 0.826214551925659 5178e032-b479-4779-992d-c97be7b66e19 00:54:35.182 --> 00:54:38.162 thinking big makes us more vulnerable to the three I's. NOTE Confidence: 0.826214551925659 6468e88a-4a94-4abb-a4a9-2a425a0fd8c2 00:54:38.162 --> 00:54:41.738 This may be true, but thinking big can also produce big gains. NOTE Confidence: 0.865674555301666 8c4c6e0c-a151-4ef0-b450-35c76e95b016 00:54:42.560 --> 00:54:46.784 Banerjee and Duflo then argue that even if we can't answer the NOTE Confidence: 0.865674555301666 0cf05b8b-ae89-4874-a99b-d9f5b4fb1d6e 00:54:46.784 --> 00:54:50.304 big questions, thinking small helps us to improve health and NOTE Confidence: 0.865674555301666 0606c933-9374-42b5-ad07-d2f278878ff2 00:54:50.304 --> 00:54:54.176 happiness among the poor. And I fully agree with this, 100%. NOTE Confidence: 0.860046684741974 f05722f6-34f7-453e-9f3e-52d5f93101d4 00:54:54.710 --> 00:54:58.283 Thinking big and thinking small are both incredibly important. NOTE Confidence: 0.860046684741974 81a7f119-e85d-422b-909a-59a5dbcb876a 00:54:58.283 --> 00:55:03.047 Extreme poverty is too severe a problem not to do both, not to NOTE Confidence: 0.860046684741974 517e2966-2592-4fd0-a35c-7bc031c32fb6 00:55:03.047 --> 00:55:07.414 try both approaches.  With 700  NOTE Confidence: 0.860046684741974 1f0462fa-8146-4a2e-8dc6-f890ee96aa6a 00:55:07.414 --> 00:55:09.399 million people still trapped in NOTE Confidence: 0.877419412136078 342ae383-3183-4a49-9b88-d1561c5ef855 00:55:09.399 --> 00:55:11.732 extreme poverty, policymakers, medical researchers, NOTE Confidence: 0.877419412136078 053782d3-1ffd-4a03-8244-93c7653a03e6 00:55:11.732 --> 00:55:14.972 nutritionists, economists, and others should all do as much as NOTE Confidence: 0.877419412136078 70f62949-2cad-4c4a-94a8-f30669fd1aa0 00:55:14.972 --> 00:55:19.508 we can in as many ways as we can to try to end poverty. NOTE Confidence: 0.844846665859222 12b26394-228b-45cd-8b88-ba3774807d37 00:55:20.450 --> 00:55:25.548 First, let me note that individual actions can help  NOTE Confidence: 0.844846665859222 4dd4b668-697b-45da-a3e0-54e2de3cb473 00:55:25.548 --> 00:55:28.908 people escape from extreme poverty. There are NOTE Confidence: 0.844846665859222 fd1f9382-5c43-4156-9319-01bb69072039 00:55:28.908 --> 00:55:33.276 currently ways that we can help the poor. We can save lives and NOTE Confidence: 0.844846665859222 67205c07-8c23-4845-a238-469a6c20193c 00:55:33.276 --> 00:55:35.628 it is shockingly cheap to do so. NOTE Confidence: 0.872874021530151 d77a8dc3-d1bc-4f66-af69-3bb6a6192675 00:55:36.200 --> 00:55:40.061 Through the most cost effective NGOs in the world, we can save a NOTE Confidence: 0.872874021530151 803a182b-5b34-4197-ac13-4c19af3e7aa3 00:55:40.061 --> 00:55:42.140 life for every $2000 to $3000 we NOTE Confidence: 0.890832543373108 56e3e286-9d2c-4157-8787-91892fd19139 00:55:42.140 --> 00:55:45.988 donate. And these organizations need and can effectively use NOTE Confidence: 0.890832543373108 ba8d5426-93e1-42ba-8bff-6dd868968f5e 00:55:45.988 --> 00:55:48.480 your money. How do we know this? NOTE Confidence: 0.872258424758911 c41b7dd9-b050-452d-9a47-abc7e92ea19c 00:55:49.080 --> 00:55:53.710 First, the types of studies we are encountering in Poor NOTE Confidence: 0.872258424758911 f0e82ea3-3038-4b6e-a4ae-965cbd63e8ef 00:55:53.710 --> 00:55:56.488 Economics highlight the effectiveness of certain NOTE Confidence: 0.872258424758911 9bbb989e-5157-4744-919f-1ac768b748eb 00:55:56.488 --> 00:55:59.729 programs, providing concrete evidence about what improves NOTE Confidence: 0.872258424758911 de8376a6-7ba9-4dfe-b75c-daaf2fde9461 00:55:59.729 --> 00:56:02.970 health, increases opportunity, and enhances well being. NOTE Confidence: 0.829841077327728 e8080472-ed56-40cd-8830-ef5eedb58c94 00:56:03.780 --> 00:56:07.780 Second, NGOs are being held more accountable for their spending NOTE Confidence: 0.839434683322906 d5657df9-7c63-439c-8a7c-1c683c24ba71 00:56:07.780 --> 00:56:10.662 and effectiveness. Give Well provides detailed research NOTE Confidence: 0.839434683322906 21dd8cf3-bf04-493b-aedb-0e1e31efe5ce 00:56:10.662 --> 00:56:14.154 on a number of organizations and highlights their top NOTE Confidence: 0.839434683322906 9cbe899a-352f-4361-8a0f-e824b092ee55 00:56:14.154 --> 00:56:18.034 charities each year. Here are a few of their top NOTE Confidence: 0.839434683322906 cd8b9622-064e-480e-a683-8db5abb1f699 00:56:18.034 --> 00:56:20.750 charities that relate to Poor Economics.  Insecticide NOTE Confidence: 0.839434683322906 59a8e652-efe0-4cef-96d8-72babab1b4ac 00:56:20.750 --> 00:56:23.854 treated bed nets, as we discussed. The Against NOTE Confidence: 0.839434683322906 9086fb1e-95bd-4463-b9c9-6c6a7b5e8853 00:56:23.854 --> 00:56:26.570 Malaria Foundation is one really effective example.  NOTE Confidence: 0.839434683322906 d0f0f0f1-f007-448f-8047-de76fba161e3 00:56:26.570 --> 00:56:30.062 Give Well estimates they can save a life for $3000. NOTE Confidence: 0.770276546478271 69623d49-92cd-4915-9cc6-daf5313e7f69 00:56:31.590 --> 00:56:34.626 Deworming pills:  Evidence Action and other NOTE Confidence: 0.770276546478271 881effce-62b9-4bb0-ac33-d6c708bfdb87 00:56:34.626 --> 00:56:38.168 organizations conduct this work in several countries. NOTE Confidence: 0.783024847507477 2dd65358-51e8-4db1-b725-ed50c133470f 00:56:39.480 --> 00:56:41.370 Give Well regularly recommends NOTE Confidence: 0.815374493598938 737be48b-1a79-4260-b4cc-21eabfc662fa 00:56:41.370 --> 00:56:45.630 multiple organizations that provide deworming pills to NOTE Confidence: 0.850942671298981 b89cc6e9-482d-4737-8d6c-c40a101bc105 00:56:45.630 --> 00:56:50.964 children. It costs $1 to deworm a child for one year. For $100 NOTE Confidence: 0.850942671298981 8a2606e9-b4c2-4882-b4e7-058ae2b8320b 00:56:50.964 --> 00:56:55.475 you could deworm 100 children for a year. It is estimated that these NOTE Confidence: 0.850942671298981 1c555640-8702-4263-aba6-b4e773d45f99 00:56:55.475 --> 00:56:56.863 are also extremely cost NOTE Confidence: 0.812302589416504 356c0c9c-e7e7-4483-8258-55f5572e401f 00:56:56.863 --> 00:57:00.440 effective. Incentivising immunizations: This is also seen in NOTE Confidence: 0.812302589416504 842c68f6-b698-4373-97ba-299bcd055836 00:57:00.440 --> 00:57:03.720 Poor Economics. New Incentives provides cash incentives for NOTE Confidence: 0.812302589416504 f17fa353-bfb9-476a-adab-43d4b364a75c 00:57:03.720 --> 00:57:07.410 families to get their children vaccinated. Give last mistake NOTE Confidence: 0.812302589416504 bf9fe183-ae1d-4fdd-8578-89fde2a9e10c 00:57:07.410 --> 00:57:11.510 can save a life for every $3000 that it spends. NOTE Confidence: 0.87135910987854 348c4b6d-a227-4921-921a-7dd1944fef6f 00:57:12.250 --> 00:57:17.893 In contrast, maybe you think that the poor just need more NOTE Confidence: 0.87135910987854 8c49ca10-e16b-4d45-a60c-d8754bc404e1 00:57:17.893 --> 00:57:21.163 money, with which they can pay for bed nets, send  NOTE Confidence: 0.87135910987854 5e95e398-0b7f-47b4-aa3c-c0484b4f331b 00:57:21.163 --> 00:57:23.452 children to school, improve their house, started NOTE Confidence: 0.87135910987854 10c9a410-4e90-48c9-9ba8-245247b43c5c 00:57:23.452 --> 00:57:26.395 business or whatever else they might need. You can NOTE Confidence: 0.87135910987854 f74b868b-1798-488d-8f82-d4ca8a4d8c3b 00:57:26.395 --> 00:57:29.011 directly transfer money to people living in extreme NOTE Confidence: 0.87135910987854 c8fbcaa7-e94f-4e8d-b6d9-5f9d78997300 00:57:29.011 --> 00:57:30.973 poverty through Give Directly, working primarily NOTE Confidence: 0.87135910987854 a4e4f7d1-9aef-48d9-b3b5-9e51bf7940b3 00:57:30.973 --> 00:57:32.608 in Kenya, Uganda, and Rwanda. NOTE Confidence: 0.853653848171234 b425d7eb-c466-4a3d-9303-b2d26b62a9fc 00:57:34.790 --> 00:57:38.390 Nicholas Kristof with the New York Times also provides charity NOTE Confidence: 0.853653848171234 20655473-e862-4928-bf3a-be3668ec0b31 00:57:38.390 --> 00:57:41.990 rankings every year. This year, CAMFED was highlighted. For $150, NOTE Confidence: 0.853653848171234 f7b3e21a-55e0-424e-8381-613106d532e3 00:57:41.990 --> 00:57:45.950 you can support one year of high school, including mentorship and NOTE Confidence: 0.853653848171234 96ad5a23-17c9-4ef0-93df-d6fa23cc5f32 00:57:45.950 --> 00:57:47.390 training for one girl. NOTE Confidence: 0.871690034866333 74129fd5-c70b-4b18-a9a4-9c824d32a2d0 00:57:48.560 --> 00:57:53.150 Thus, there are a number of effective organizations that you NOTE Confidence: 0.871690034866333 d1a6c8df-7fa0-4e1c-a9b9-41a75cc24c88 00:57:53.150 --> 00:57:57.281 can donate to, that benefit people living in extreme NOTE Confidence: 0.871690034866333 2941ef9b-5ed2-4207-9de1-e7e0ee992930 00:57:57.281 --> 00:58:01.412 poverty. Some of these are amazingly cost effective, doing NOTE Confidence: 0.871690034866333 b2d7e650-b653-4940-923c-5471272605f1 00:58:01.412 --> 00:58:02.789 really important work. NOTE Confidence: 0.879489243030548 22f5151e-262f-4dcf-9b9f-8bf59c8c603d 00:58:03.470 --> 00:58:06.913 Thinking and acting small is something that we can do as NOTE Confidence: 0.879489243030548 286cd7c6-7013-4ac9-aa87-13a59ff0d4bd 00:58:06.913 --> 00:58:09.730 individuals, and because thinking and acting small can be NOTE Confidence: 0.879489243030548 5867fd05-6c17-468f-8fdc-807c18820213 00:58:09.730 --> 00:58:13.486 so effective, this means that you as an individual can do good NOTE Confidence: 0.860559582710266 3dca8792-613f-419d-b180-3c3feb8b32f7 00:58:13.486 --> 00:58:18.803 in the world. One of the most memorable things that I've ever NOTE Confidence: 0.860559582710266 d3711a39-a2cb-4c0a-aad2-33ecbfb024c1 00:58:18.803 --> 00:58:23.500 read is a 1910 New York Times article that presents a NOTE Confidence: 0.860559582710266 e3d7b584-6ee2-43c6-a216-1e590f778dd4 00:58:23.500 --> 00:58:26.489 compelling case for more Universal altruism toward NOTE Confidence: 0.860559582710266 7e347067-1da5-47fe-ab86-f1a9c9dfd345 00:58:26.489 --> 00:58:30.332 children. It is provocative, clear and organized in its NOTE Confidence: 0.860559582710266 42630e64-4234-4b9d-84c9-7599ac279fe4 00:58:30.332 --> 00:58:33.748 logic, emotionally devastating, powerfully written, and it draws NOTE Confidence: 0.860559582710266 3401ff36-a008-4a8e-a70f-1bc54242d15c 00:58:33.748 --> 00:58:39.299 a lot on economics. It's a lot to like. It notes that 200,000 NOTE Confidence: 0.860559582710266 bb01ed93-0d04-4c12-9c9b-952c422959b8 00:58:39.299 --> 00:58:43.142 children died in the United States from preventable causes NOTE Confidence: 0.890145480632782 3026be7e-eaef-4d50-96d9-176ddee515df 00:58:43.142 --> 00:58:46.840 that year. It then presents the NOTE Confidence: 0.898138999938965 c68c7290-99d0-41ef-ae59-9709f6dd8146 00:58:46.840 --> 00:58:51.302 following argument: "A paradox is required to explain this NOTE Confidence: 0.898138999938965 99b4d789-5f4d-4d62-8553-f50d3ae14715 00:58:51.302 --> 00:58:55.062 situation. Here it is: So many children die because parents NOTE Confidence: 0.898138999938965 0b1db6ce-e451-4217-982f-ee5316a9ee3b 00:58:55.062 --> 00:58:56.942 love their children so much. NOTE Confidence: 0.875078439712524 70b2b4d5-3f94-4529-8208-c7188104de06 00:58:57.460 --> 00:59:00.424 Pick this statement to pieces and see if it is not true." NOTE Confidence: 0.79787403345108 a6264b83-b1a9-447f-93de-aa4c6da44efa 00:59:01.200 --> 00:59:04.490 They obliged -- they meet their own challenge, I guess. Comparing NOTE Confidence: 0.79787403345108 f7f67a37-89a5-4da7-8b0c-5c3f6a17ac5e 00:59:04.490 --> 00:59:07.780 the lives of rich and poor families, they then explained: NOTE Confidence: 0.857522964477539 7f015599-e4e8-4960-ad1f-09c9773ae122 00:59:08.320 --> 00:59:11.569 "Two hundred thousand children annually die from preventable causes in this NOTE Confidence: 0.857522964477539 cbea4ac7-b6b7-4470-b491-5b5ea795b521 00:59:11.569 --> 00:59:15.179 country because each parent loves his own children to the NOTE Confidence: 0.857522964477539 3c5e4a03-24ce-4d86-b587-12d9d84fe446 00:59:15.179 --> 00:59:18.789 limit and cares next to nothing about anybody else's children." NOTE Confidence: 0.811951160430908 25453335-3e37-4c48-b1c5-a427b4924466 00:59:19.650 --> 00:59:22.881 We're often extremely altruistic for our own families and NOTE Confidence: 0.811951160430908 496cdfa7-a132-4a1f-a103-88a1bdb21f13 00:59:22.881 --> 00:59:26.830 friends. However, as we branch out from family to friends to NOTE Confidence: 0.811951160430908 40ed1353-afcc-482e-a9fb-f99a789091d5 00:59:26.830 --> 00:59:30.061 neighbors, to citizens, to the global poor, our altruism NOTE Confidence: 0.791374504566193 b388f96b-96b5-40e9-89a4-7f6431ea0293 00:59:30.061 --> 00:59:34.184 declines. What about you? Where does your altruism decline? How NOTE Confidence: 0.791374504566193 f9881dc5-ca58-41bf-903a-8ae219032e09 00:59:34.184 --> 00:59:38.100 fast does it decline? Why does it decline? Does your altruism NOTE Confidence: 0.791374504566193 73da34c8-ecbc-4072-8867-a25cdf93265d 00:59:38.100 --> 00:59:39.524 include the global poor? NOTE Confidence: 0.868980407714844 04543473-c31f-462f-949d-e6199a2837c5 00:59:40.620 --> 00:59:42.120 The article concludes with the NOTE Confidence: 0.844186782836914 fa408890-7bd0-486f-8cd7-37e214288905 00:59:42.120 --> 00:59:46.340 following: "The exclusive love of a parent for his own children is NOTE Confidence: 0.844186782836914 75102037-3cfe-4e2f-9a32-8ec838257936 00:59:46.340 --> 00:59:49.730 upon its face an absurdity. Either children are lovable or NOTE Confidence: 0.844186782836914 4378fc23-b970-437e-9689-d0f22d7d18b6 00:59:49.730 --> 00:59:53.459 they are not. If they are lovable, no child is so NOTE Confidence: 0.844186782836914 412d2d12-7016-4a92-ac3d-e9b9a050bf04 00:59:53.459 --> 00:59:57.188 admirable that it has not millions of equals. As a matter NOTE Confidence: 0.844186782836914 bdafd795-23d3-4e1a-b896-fbd8ffed5201 00:59:57.188 --> 01:00:01.256 of fact, children are all about alike, just as adults are all NOTE Confidence: 0.844186782836914 8efea267-cf2b-44b6-a77d-b882838d70c2 01:00:01.256 --> 01:00:05.663 about alike. We are all both young and old. We all both old NOTE Confidence: 0.844186782836914 9de3feab-2483-449a-939d-f342b86575eb 01:00:05.663 --> 01:00:09.392 and young, resemble each other more than we differ from each NOTE Confidence: 0.844186782836914 d0a188e8-d0cf-4d6d-ae79-72d1fbc46ac6 01:00:09.392 --> 01:00:12.443 other. Environment and opportunity, or the lack of it.  NOTE Confidence: 0.844186782836914 0e07baea-58be-417c-8e2b-9aa17cb29829 01:00:12.443 --> 01:00:14.138 make most of the differences. NOTE Confidence: 0.883177161216736 9b004377-5239-4406-bb26-4908d358499b 01:00:15.340 --> 01:00:19.596 The fact is that all children are as good as they can be, as NOTE Confidence: 0.883177161216736 98a760bf-71c0-48d5-bd9b-fd481d667452 01:00:19.596 --> 01:00:23.244 good as they have a chance to be. They are all entitled to NOTE Confidence: 0.883177161216736 20100c0b-c918-4f2b-b3bf-3ac8404a1409 01:00:23.244 --> 01:00:26.588 live. They can't live without love and the love of their NOTE Confidence: 0.883177161216736 424601ce-a041-4f21-ae57-fb304ff0dcb5 01:00:26.588 --> 01:00:29.932 parents is no longer enough to protect them. That is why NOTE Confidence: 0.883177161216736 c0e6d3fa-547a-4985-b790-c52215787a88 01:00:29.932 --> 01:00:32.364 200,000 children died in this country from preventable NOTE Confidence: 0.883177161216736 ba06d11f-3c10-40cf-9359-a51c0ceedb35 01:00:32.364 --> 01:00:35.100 causes last year. They weren't loved by enough people." NOTE Confidence: 0.852391481399536 6c9de5b2-5751-4afe-a67b-c4ee0663242f 01:00:36.280 --> 01:00:42.172 What will you do? We all want to help others and alleviate NOTE Confidence: 0.852391481399536 0152f5fc-68f6-4525-be99-eba5d6cc7eef 01:00:42.172 --> 01:00:46.591 suffering. I find this particularly true in 2021, as NOTE Confidence: 0.852391481399536 8a7ee00d-a1f0-4a6f-b26d-4a711f97d51e 01:00:46.591 --> 01:00:51.501 the terrible spring started last year with fears of coronavirus NOTE Confidence: 0.852391481399536 8b6c5ddf-a1c3-45c1-bc18-377d2f3c7e7b 01:00:51.501 --> 01:00:55.920 causing tragic death, stress, isolation, lost jobs, and more, NOTE Confidence: 0.852391481399536 03d761fa-ccfd-4071-b696-ddf771a20e1b 01:00:55.920 --> 01:00:59.848 we collectively struggled to decide how to respond. NOTE Confidence: 0.870359361171722 b9225180-e399-4d3b-872e-605cd791fea2 01:01:00.410 --> 01:01:04.609 Many of us questioned whether we were  NOTE Confidence: 0.870359361171722 6fe02243-8c10-409b-b03e-6e3245798272 01:01:04.609 --> 01:01:07.839 willing to trade lives for anything NOTE Confidence: 0.870359361171722 765b85a1-1ba7-461c-b5cf-d72ab101c04f 01:01:07.839 --> 01:01:11.392 else. Intuitively, many people felt that we can't put a price NOTE Confidence: 0.870359361171722 d1653663-1707-476f-b2d0-c7a0e791edc6 01:01:11.392 --> 01:01:14.299 on life and must sacrifice everything for our collective NOTE Confidence: 0.84985876083374 6d37c200-66bb-4665-830d-33d7f8a3aa7b 01:01:14.299 --> 01:01:19.040 health. How do we reconcile this thought with our NOTE Confidence: 0.84985876083374 a6618491-052f-45da-9692-75b2799b216a 01:01:19.040 --> 01:01:22.660 actions, which often don't involve trying to do more to NOTE Confidence: 0.84985876083374 4a498ed7-eb58-4e59-8845-4fc902821ec8 01:01:22.660 --> 01:01:26.280 save lives of the global poor for $2000 or $3000? NOTE Confidence: 0.889422953128815 db3a8e5b-d6ad-4d43-8871-527633c4c62e 01:01:27.000 --> 01:01:30.322 The most important First-Year Studies question in my mind is, NOTE Confidence: 0.889422953128815 c04b4838-6c6b-4e1c-8ef5-b4086d40ae2b 01:01:30.322 --> 01:01:31.832 How should we respond to NOTE Confidence: 0.878963768482208 e79408c9-fcac-4893-b7df-4c9ba1d2f0d4 01:01:31.832 --> 01:01:36.142 injustice and suffering? We can help others and many of NOTE Confidence: 0.878963768482208 d30399e7-3c1c-4e4b-b0df-1c1dea218568 01:01:36.142 --> 01:01:39.346 us want to, but spending less on ourselves isn't NOTE Confidence: 0.878963768482208 000dee7a-5efa-47ea-8ef9-3a7928d2bc36 01:01:39.346 --> 01:01:43.262 always easy. For myself, I find it useful to appeal to NOTE Confidence: 0.878963768482208 484a60c6-a302-47be-ab9b-db10cafb965c 01:01:43.262 --> 01:01:44.686 both empathy and reason. NOTE Confidence: 0.859907388687134 da2237e0-8592-46bf-aa8f-d8268e7d3179 01:01:48.950 --> 01:01:52.050 Empathy is a powerful phrase these days for many good NOTE Confidence: 0.859907388687134 a11ce0ad-48fa-4b0c-949b-126830c46d83 01:01:52.050 --> 01:01:55.770 reasons. Empathy allows me to try to feel the pain of others. NOTE Confidence: 0.887985050678253 efcb9d9a-a0c5-4761-a45c-6d9a5a220de8 01:01:56.600 --> 01:02:01.235 To see myself in someone else and to see some of them in me. As NOTE Confidence: 0.887985050678253 4c6a5aab-6265-4aab-9ff2-a448147d0c12 01:02:01.235 --> 01:02:04.943 a result, it can make me care more for others because they NOTE Confidence: 0.887985050678253 084da224-c8cb-4055-bb10-97fc2b56ebb0 01:02:04.943 --> 01:02:06.179 suddenly appear more familiar, NOTE Confidence: 0.847750782966614 609c1c75-050c-41af-ae7e-7fb5b97d6d79 01:02:06.179 --> 01:02:10.940 more relatable. One of the main lessons of Poor Economics is the NOTE Confidence: 0.847750782966614 dbf2f16b-d7bc-46e0-8807-82d7604e581c 01:02:10.940 --> 01:02:15.529 need to listen to the poor. This is largely an effort at greater NOTE Confidence: 0.847750782966614 2f2103e3-7d0d-46e1-81ec-27986e64cfab 01:02:15.529 --> 01:02:19.059 empathy. Listening to them in order to understand their lives, NOTE Confidence: 0.847750782966614 1e2ef09a-0d55-47b5-a301-4f3fc4261c0c 01:02:19.059 --> 01:02:22.589 contexts, choices, needs and more. Empathy is powerful, but it NOTE Confidence: 0.847750782966614 547f7449-bc16-424b-952b-48fb9c6d3130 01:02:22.589 --> 01:02:27.531 isn't enough. What should I do? How should I do it? For me, I  NOTE Confidence: 0.847750782966614 3d80b4c5-957b-44af-a6bd-6bfbf992bd8f 01:02:27.531 --> 01:02:30.708 need to combine empathy with reason or critical thinking. NOTE Confidence: 0.861617088317871 9c60f366-3daf-40f2-ba17-28036e9c77e2 01:02:31.640 --> 01:02:35.096 Poor Economics starts with a discussion of the identifiable NOTE Confidence: 0.861617088317871 c65a5de4-9ed8-4e30-ad4d-abfaf20733c6 01:02:35.096 --> 01:02:38.936 victim effect, citing studies in which individuals give more when NOTE Confidence: 0.861617088317871 926b2aa4-dbe8-44ef-be84-efbd163ce131 01:02:38.936 --> 01:02:43.160 there is a single identifiable victim, than when there is a NOTE Confidence: 0.861617088317871 3ef8fb1f-5e99-473a-8c69-6166aabed626 01:02:43.160 --> 01:02:46.232 larger number of lives represented by statistics. This NOTE Confidence: 0.880113244056702 9c9c7d58-d54f-43f9-8561-712c611b1c2f 01:02:46.232 --> 01:02:49.725 is understandable. But also worth working to overcome, so NOTE Confidence: 0.880113244056702 8dc87d1f-a243-4ddb-a8b8-7645e3d9bff8 01:02:49.725 --> 01:02:53.820 that we can help more people. And one way is through the arguments NOTE Confidence: 0.880113244056702 8a8bcaec-3b78-4ccf-9240-0eda696d52b2 01:02:53.820 --> 01:02:55.080 provided in Poor Economics. NOTE Confidence: 0.874502539634705 8a3ef79c-72ce-4be4-9c50-1daff2b23466 01:02:55.690 --> 01:02:58.615 While it is the responsibility of governments to provide NOTE Confidence: 0.874502539634705 dd8593ca-27e7-4383-ad80-44b64d0a66de 01:02:58.615 --> 01:03:01.865 for their citizens and to ensure their life and happiness, I NOTE Confidence: 0.874502539634705 0d41874d-ded7-4df1-935d-cbec3b0d1344 01:03:01.865 --> 01:03:04.465 understand that many governments are corrupt and ineffective. NOTE Confidence: 0.874502539634705 81aec653-15ba-438c-8b74-01f7800ac168 01:03:04.465 --> 01:03:08.040 Well, I think that the wealthy have a responsibility to pay NOTE Confidence: 0.874502539634705 43fb204f-4d7f-4db6-ae8b-f8d7267eb69e 01:03:08.040 --> 01:03:10.965 progressive income taxes and to donate themselves to fight NOTE Confidence: 0.874502539634705 f35d023f-6ec3-4f49-8b6f-74d087655b5e 01:03:10.965 --> 01:03:14.865 poverty. I can understand that many do not and instead spend it NOTE Confidence: 0.874502539634705 0d49e8fb-1990-4170-8158-8d80253aadb8 01:03:14.865 --> 01:03:16.815 or donate it in other ways. NOTE Confidence: 0.837525248527527 f9fd1b31-74ee-428c-bb0a-60b0995dc178 01:03:17.620 --> 01:03:20.248 I can understand why a parent maybe didn't use a NOTE Confidence: 0.837525248527527 4a400cbd-01a8-445b-ab16-1169f32111d7 01:03:20.248 --> 01:03:23.460 cheap bed net, whether due to a lack of information or NOTE Confidence: 0.837525248527527 75feb4eb-6e20-4ec5-a189-1082e4abe4a0 01:03:23.460 --> 01:03:25.504 behavioral challenges like we all struggle with. NOTE Confidence: 0.846594333648682 79660394-9dc1-4d2c-b4d1-4b00226ea147 01:03:27.370 --> 01:03:30.133 While I understand the importance of thinking big, I NOTE Confidence: 0.846594333648682 e04bb5e2-4672-4c19-86da-ac91852f9866 01:03:30.133 --> 01:03:33.510 understand that thinking small can also help. In other words, I NOTE Confidence: 0.846594333648682 47cb0e4c-7d0b-4ef4-a05a-3d4090491b15 01:03:33.510 --> 01:03:36.887 can use reason to see how my donations can help somebody NOTE Confidence: 0.846594333648682 ac41dddd-3b06-4472-a8b1-7631192efd57 01:03:36.887 --> 01:03:39.957 somewhere, and I feel confident in my knowledge that our NOTE Confidence: 0.846594333648682 81aba809-2f8f-44d9-85aa-35a9a5800064 01:03:39.957 --> 01:03:42.720 donations ensure that more children avoid malaria and that NOTE Confidence: 0.846594333648682 6eb5d3a3-7ced-4f93-a83b-16435bb7986b 01:03:42.720 --> 01:03:45.790 the money transferred through Give Directly does a lot more NOTE Confidence: 0.846594333648682 09eb9eae-234f-45c5-90d1-d10de4df1c2d 01:03:45.790 --> 01:03:49.781 good for someone else then it would have done for us. As an NOTE Confidence: 0.846594333648682 59cc884a-b4c2-41c9-9e3f-02c3d8aa1aba 01:03:49.781 --> 01:03:52.237 economist, I probably do empathize with numbers somewhat NOTE Confidence: 0.846594333648682 c074ded5-3a27-403b-a2ab-3139cbdf65d5 01:03:52.237 --> 01:03:54.386 well, but I think most people do NOTE Confidence: 0.839459955692291 1becc95d-e0f3-4611-b0f2-0423bf3544a9 01:03:54.386 --> 01:03:58.870 call this reason. However, this still isn't enough. I'll call it NOTE Confidence: 0.839459955692291 acb106a9-9d0d-47b6-984b-48a73e11c71e 01:03:58.870 --> 01:04:02.670 reasoned empathy. I need to choose who I empathize with, NOTE Confidence: 0.839459955692291 0ed98c71-9fae-4dbc-a851-93e59ec8dfb4 01:04:02.670 --> 01:04:05.710 especially with an empathy craving toddler at home --  NOTE Confidence: 0.872381985187531 79f58018-b156-4aeb-8593-33965f9d311c 01:04:06.280 --> 01:04:09.760 who we might have just heard. As Michael Harrington wrote about NOTE Confidence: 0.872381985187531 4b202122-f955-42d7-a7ab-a1b617512808 01:04:09.760 --> 01:04:13.790 the poor in the United States in 1962: "The millions who are poor NOTE Confidence: 0.872381985187531 5483c70b-5e08-4bb4-9186-29907e914aed 01:04:13.790 --> 01:04:16.580 in the United States tend to become increasingly invisible. NOTE Confidence: 0.872381985187531 aebf1ffe-2ed8-4c55-8e13-4e60a38550cd 01:04:16.580 --> 01:04:20.610 Here is a great mass of people, yet it takes an effort of the NOTE Confidence: 0.872381985187531 33617183-5885-41ce-a4e1-2e45bba33305 01:04:20.610 --> 01:04:22.470 intellect and will even to see NOTE Confidence: 0.846805930137634 b73b7aab-6700-4517-b84f-d4db68b617b2 01:04:22.470 --> 01:04:27.057 them." This book helped inspire the War on Poverty. To a large NOTE Confidence: 0.846805930137634 949cba09-208c-4cc3-a021-e3fdeed888cc 01:04:27.057 --> 01:04:30.654 extent, we each choose what we encounter, what we read, and NOTE Confidence: 0.846805930137634 4022480e-3295-4918-85cf-00c97dbdf42d 01:04:30.654 --> 01:04:33.924 what we value. I very rarely encounter anything about free NOTE Confidence: 0.846805930137634 4051db3c-e331-4db1-a452-62cb731ffb0e 01:04:33.924 --> 01:04:37.848 bed nets or deworming pills in my daily life. Instead, I need NOTE Confidence: 0.846805930137634 3dcb07db-3f0f-4f4a-a5d3-436fb588f6ad 01:04:37.848 --> 01:04:40.137 to use reason to help direct my NOTE Confidence: 0.843651950359344 821d990b-a94e-42c7-8f75-1fab52de1917 01:04:40.137 --> 01:04:44.408 empathy. I need to choose to empathize with children NOTE Confidence: 0.843651950359344 5505bee6-23c9-448e-8afc-ad90374bb0c0 01:04:44.408 --> 01:04:48.268 receiving bed nets, such as these from the Against Malaria NOTE Confidence: 0.843651950359344 0fde865a-7e59-4c7b-9315-3ce43626e343 01:04:48.268 --> 01:04:52.128 Foundation, and reflect on the joy and hope of children. NOTE Confidence: 0.860324800014496 a1515f7e-eca1-4ea1-9431-6a66359c7bf7 01:04:53.900 --> 01:04:58.060 I need to force myself to look at a parent caring for a sick NOTE Confidence: 0.860324800014496 59a2290b-2e72-4ac4-8f7e-1d5ba281f227 01:04:58.060 --> 01:05:02.220 child with malaria. I did this a couple times as fall, with our NOTE Confidence: 0.860324800014496 9c1a0c48-aab2-44c9-a3ed-122ce0980ae3 01:05:02.220 --> 01:05:06.380 new baby, and just looking at the pain in their faces, amazed at NOTE Confidence: 0.860324800014496 ead038da-2692-43d6-ad8e-cfc363d3bbc7 01:05:06.380 --> 01:05:09.580 their strength, knowing that I feel a deep, devastating pain, NOTE Confidence: 0.860324800014496 61756328-b3a4-4b0a-a9ee-dce8c7f7b044 01:05:09.580 --> 01:05:13.100 but I can't truly understand and I hope I never do NOTE Confidence: 0.860324800014496 7b35c101-cc32-4bb8-aec6-d54655f33878 01:05:13.100 --> 01:05:14.380 experience what they're going NOTE Confidence: 0.88949179649353 76f4e662-d77e-4d30-bc85-82eba5709b17 01:05:14.380 --> 01:05:18.219 through. But engaging with this and looking at it, it makes me NOTE Confidence: 0.88949179649353 caa53c83-ed6c-4e12-8b5a-20b1787fdb43 01:05:18.219 --> 01:05:21.586 want to help. It makes me want to do something to help them,  NOTE Confidence: 0.88949179649353 9862a205-b1f1-48a5-8c5c-f0637b586cc1 01:05:21.586 --> 01:05:24.953 also to make myself feel better. I want to do something to help. NOTE Confidence: 0.894488334655762 0241549a-ef9f-4445-b38b-e8af5df09677 01:05:25.480 --> 01:05:29.596 I need to choose then to act and seek out ways to do so. NOTE Confidence: 0.896917700767517 0b34fc11-7c72-48c6-9bc7-36e8608254ee 01:05:30.320 --> 01:05:34.114 Will you find the will to act? What will you do? You can use NOTE Confidence: 0.896917700767517 2e984139-6706-4b90-a94e-908362434dd7 01:05:34.114 --> 01:05:37.366 your education to decide what to learn about and how to learn NOTE Confidence: 0.855563163757324 fbe0a4d3-e08c-4e54-baf6-5110229b9002 01:05:37.366 --> 01:05:41.940 about it. What questions will you ask? How will you attempt to NOTE Confidence: 0.855563163757324 29b9c2b3-ca96-4f08-9837-abf277da25f3 01:05:41.940 --> 01:05:45.559 answer them? Whose lives do you value? Who do you love? NOTE Confidence: 0.90217798948288 641ff822-9fcc-459a-99b4-4d58d6861ee9 01:05:46.250 --> 01:05:47.810 And how do you show it?