Highlights

This urge to reduce the poor to a set of clichés has been with us for as long as there has been poverty: The poor appear, in social theory as much as in literature, by turns lazy or enterprising, noble or thievish, angry or passive, helpless or self-sufficient. It is no surprise that the policy stances that correspond to these views of the poor also tend to be captured in simple formulas: "Free markets for the poor," "Make human rights substantial," "Deal with conflict first," "Give more money to the poorest," "Foreign aid kills development," and the like. These ideas all have important elements of truth, but they rarely have much space for average poor women or men, with their hopes and doubts, limitations and aspirations, beliefs and confusion. If the poor appear at all, it is usually as the dramatis personae of some uplifting anecdote or tragic episode, to be admired or pitied, but not as a source of knowledge, not as people to be consulted about what they think or want or do. [vi-viii]

. . .

What is striking is that even people who are that poor are just like the rest of us in almost every way. We have the same desires and weaknesses; the poor are no less rational than anyone else — quite the contrary. Precisely because they have so little, we often fund them putting much careful thought into their choices: They have to be sophisticated economists just to survive. [ix]

. . .

Poverty is not just a lack of money; it is not having the capability to realize one's full potential as a human being. [6]

. . .

Talking about the problems of the world without talking about some accessible solutions is the way to paralysis rather than progress. [6]

. . .

If people in the West, with all of the insights of the best scientists in the world at their disposal, find it hard to base their choices on hard evidence, how hard must it be for the poor, who have much less access to information? [59]

. . .

Our natural inclination is to postpone small costs, so that they are borne not by our today self but by our tomorrow self instead. [65]

. . .

[T]ime inconsistency is what prevents our going from intention to action. [67]

. . .

Aren't we, those who live in the rich world, the constant beneficiaries of a paternalism now so thoroughly embedded into the system that we hardly notice it? It not only ensures that we take care of ourselves better than we would if we had to be on top of every decision, but also, by freeing us from having to think about these issues, it gives us the mental space we need to focus on the rest of our lives. [70]

. . .

Parental income plays such a vital role in determining educational investment, rich children will get more education even if they are not particularly talented, and talented poor children may be deprived of an education. So leaving it purely to the market will not allow every child, wherever she comes from, to be educated according to her ability. Unless we can fully erase differences in income, public supply-side intervention that makes education cheaper would be necessary to get close to the socially efficient outcome: making sure that every child gets a chance. [81]

. . .

For the poor, every year feels like being in the middle of a colossal financial crisis. [138]

. . .

There are ways to get around self-control problems, but to make use of them usually requires an initial act of self-control. [198]

. . .

Awareness of our problems thus does not necessarily mean that they get solved. It may just mean that we are able to perfectly anticipate where we will fail. [198]

. . .

Saving is less attractive for the poor, because for them the goal tends to be very far away. [199]

. . .

Saving behavior crucially depends on what people expect will happen in the future. Poor people who feel that they will have opportunities to realize their aspirations will have strong reasons to cut down on their "frivolous" consumption and invest in that future. Those who feel that they have nothing to lose, by contrast, will tend to make decisions that reflect that desperation. [201]

. . .

This, the uncle reckoned, was true entrepreneurship: If you have very little, use your ingenuity to create something out of nothing. [206]

. . .

Incremental progress and the accumulation of these small changes, we believe, can sometimes end in a quiet revolution. [237]

. . .

If we resist the kind of lazy, formulaic thinking that reduces every problem to the same set of general principles; if we listen to poor people themselves and force ourselves to understand the logic of their choices; if we accept the possibility of error and subject every idea, including the most apparently commonsensical ones, to rigorous empirical testing, then we will be able not only to construct a toolbox of effective policies but also to better understand why the poor live the way they do. Armed with this patient understanding, we can identify the poverty traps where they really are and know which tools we need to give the poor to help them get out of those. [272]