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Andrew Winter
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When I initially read the paper for Tuesday I didn't have much background knowledge of microfinance so I was a little confused but our class discussion helped make it clearer. We've looked at household decisions before in this class and in particular the decisions made by low income households and I think (unless I'm wrong) that this idea is at the heart of microfinance. When poorer households are forced to make decisions, we talked about how it seemed like they kept making 'bad' decisions, but when we looked a little deeper we concluded that these 'bad' decisions were the result of risk aversion and simply trying to survive. We have also looked at how this leads to a cycle where development and growth are made nearly impossible, so a large part of development economics is dedicated to trying to find a solution. Microfinance appears as one of those potential solutions. By providing low income households with credit or a boost in savings, their ability to make decisions grows dramatically and gives their entire communities the chance to develop. I personally feel like microfinance could be extremely effective. The idea that it can provide these regions with a modern economic structure that increases capital and investment sounds great. However, like all potential solutions, there are problems and cases where the increased credit or savings doesn't work. Trying to balance the successes and failures of this system is especially difficult because tangible results are only available in the long run. Regardless, this system has the potential to reduce a large percentage of poverty across the world and will hopefully do so in the near future.
Earlier a few people mentioned being surprised about the potentially causal relationship of malaria on poverty. I too thought this was interesting although not necessarily surprising. I'm skeptical that either of these relationships could be causal, not just because of reverse causality but mainly because there are so many other factors that it would be nearly impossible to measure the impact of them all. However, like Callie, I never considered all the ways that malaria specifically leads to poverty and essentially just figured that poor health makes it harder to get out of poverty. The article pointed out how the presence of malaria drastically reduces human capital which I hadn't thought about but now it makes perfect sense. Children and families surrounded by malaria are so stuck it's sad. The chances of receiving a quality education are close to 0 and the household is forced to live paycheck to paycheck, so the cycle continues.
Toggle Commented Oct 30, 2014 on Econ 280 for Thursday at Jolly Green General
Writing a paper about child labor from an economic perspective is an inherently difficult. It is hard to fight the immediate urge to criticize all forms of child labor and take a no tolerance stance, but reality forces an economist to try and understand the costs vs. benefits of child labor. In developing nations, reality often displays that a good education comes at too much of an opportunity cost. Udry’s paper attempts to say that subsidies for school enrollment are the best way to solve child labor. Unfortunately, I also have to agree with the question raised by Daphine regarding the source of funding for these subsidies. It would be nice to provide all young children with the opportunities that many of us take for granted but accomplishing this feat is nearly impossible. It sort of reminded me of the discussion we had about charter cities in the last class. There are lots of good ideas stemming from economic development on how to enable growth across the globe but the truth is many of them make assumptions that aren’t realistic. Additionally, Alexandra brought up the issues regarding the quality of education that we talked about earlier in the semester. The opportunity cost for many of these families to send their children to school is high enough as it is. If the education they receive is such that they will end up working on the farm anyway, then it is hard to justify this action. Low income families need their child to work in order to get by from day to day. Udry gets at this when he explains how poverty and child labor are mutually reinforcing, that because a child’s parents are poor, they have to make their children work instead of receiving an education which will result in the children growing up to be poor as well. The cycle continues until an external force is added to the equation and what Udry explains is that one way to solve this is by taking the choice of educating a child out of the parent’s hands. I agree that the best way to solve the issue would be to have a set standard of high quality education that every child had easy access too, but I can’t help but feel like we’re light years from that being a realistic solution.
Toggle Commented Oct 23, 2014 on 280 Paper for Thursday at Jolly Green General
After reading the posts above, I was immediately drawn to Curtis' first sentence where he mentions how it is most likely a mistake to look at this paper as making a stance and being either pro-models or anti-models. I believe it was our class last Thursday where we talked about how almost every conversation we have where we attempt to communicate a position stems from the use of models. Analogies and metaphors are in a sense just very basic models that we use to illustrate our thoughts. Building off of that, I don't think any rational economist would consider themselves anti-models. What Krugman and some of my peers above have alluded to is that there are times where certain models are unable to accurately illustrate what is truly taking place and that this is particularly true with models explaining economic development. Krugman makes a concerted effort to express his admiration for Albert Hirschman but wants to make sure that he presents his argument against Hirschman in this specific context. In doing so, he states that Hirschman's flaw was not in his models, but rather in his methodology. "The second theme is the problem of method in the social sciences. As I will argue, the crisis of high development theory in the late 1950s was neither empirical nor ideological: it was methodological. High development theorists were having a hard time expressing their ideas in the kind of tightly specified models that were increasingly becoming the unique language of discourse of economic analysis. They were faced with the choice of either adopting that increasingly dominant intellectual style, or finding themselves pushed into the intellectual periphery. They didn't make the transition, and as a result high development theory was largely purged from economics, even development economics." Sorry for using such a long quote, but I thought this paragraph presented the best summary of Kirschman's mistake. It also gave Krugman an opportunity to point out that Kirschman's high development theory was perfectly reasonable. Krugman says that all he needed was a different perspective and attitude towards translating real life complexities into simple models, which is probably easier said than done.
Like Zach, this paper immediately reminded me of our discussion from last class. I remember in particular how we emphasized how often economists and other policy makers attempt to use the same treatment on underdeveloped economies worldwide. As if the solution to Country A's economic issues would automatically work in country B. Rodrick reminds us that this is not only an inadequate solution, but that the state of Country B may require a completely different approach. He states, "The point is that even the simplest of policy recommendations—“liberalize your trade”—is contingent on a large number of judgment calls about the economic and political context in which it is to be implemented." Basically, I agree with Rodrik and most of my peers above in feeling that we need to rethink our growth strategies; we need to stop trying to find a one size fits all cure and look at each country on more of a case by case study.
Toggle Commented Oct 2, 2014 on ECON 280 Paper at Jolly Green General
Like most everyone before me, I am pretty surprised to see how preferable boys are to girls in these low income countries. Duflo mentions how women's empowerment is believed to occur naturally as a nation develops. Here it seems like the low income countries showed definitive signs of at least some development, but women are still mistreated in households and communities. I've always heard of how low income families in rural areas would want sons over daughters so that the son can start providing for the family as soon as he is old enough to work, but I had no idea how extensive this still was today. What is interesting to me is that equality in education between girls and boys has grown tremendously in the past 20 years. Both boys and girls are far more likely to graduate from secondary schools which would indicate that they should be able to acquire similar jobs in the labor force and contribute to the economy. The statistic that shocked me was from New Delhi where girls are more than twice as likely to die from diarrhea because parents are less likely to spend money on a daughter's illness as opposed to a son's. (Duflo) It's hard for me to imagine a family with two equally sick children where the parents have to make a decision on who to treat. I feel like that shows how far these countries still have to go in achieving a healthy standard of living before they can get at the heart of gender equality.
Toggle Commented Sep 24, 2014 on ECON 280 paper #2 at Jolly Green General
Looking at all the rest of the comments, I have to agree in that I am shocked at how low some of these statistics truly are. I'm used to feeling fortunate for all the luxuries that I have been able to live with but rarely do I think about how lucky I am just to have food on my plate. As a result, what really struck me about this article was the fact that the majority of these low income households would never think to feel bad for themselves. The article mentions how "The poor generally do not complain about their health―but then they also do not complain about life in general either. While the poor certainly feel poor, their levels of self-reported happiness or self-reported health levels are not particularly low (Banerjee, Duflo, and Deaton, 2004)." I found this particularly interesting because in our society, people are constantly complaining about their life. We have an incredibly high standard of living relative to the rest of the world yet we are never satisfied. I feel like part of that comes from America being a place where we strive for excellence which would seem like a good thing, but after reading this article I'm not so sure. If people can live on less than a dollar a day and find a way to do it without complaining, then what does that say about us?
Toggle Commented Sep 17, 2014 on 280 reading for Thursday at Jolly Green General
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Sep 17, 2014