Friday, 2 December 2011

Toothbrushes and mobile phones

There are more people in the world today who own a mobile phone than a toothbrush. This may startle you, but its true, at least according to 60secondmarketer.com. There are 4 bn mobile phone users in the world. The annual sales of toothbrushes is 3.5 bn.

This won't surprise you if you read the excellent book, Poor Economics, by Abhijit Banerjee and Esther Duflo. My good friend Ravi, who often comments on this blog, very kindly gifted it to me and it makes fascinating reading.  It was named as the Financial Times Business book of the year. As the byline says, its a book about rethinking poverty and the ways to end it. The book destroys many myths about poverty and provides fascinating insights into the behaviour of the poor. Its no surprise then that they would rather own a mobile phone than a toothbrush.

One of the big insights is that things that make life less boring are a priority for the poor. The  quote from Oucha Mbarbk, a poor Moroccan villager sums it all up "Oh, but television is more important than food !" In country after country, the researchers have tried to analyse why the poor eat so little, and sometimes bad food, even when they have the money. Food spending is actually declining in a poor country like India. Its because food is not a priority !

Another fascinating area of research is health. The largest killer of children in world is actually diarrhea. Two cheap and easily available miracle drugs can save the 2 million children who die of diarrhea before their 5th birthday - chlorine bleach and a rehydration solution of salt and sugar. And yet many do not use it even when given free. They want an antibiotic or an intravenous drip. Prevention is frowned upon. An expensive cure, often in the hands of a quack is preferred. 

Another deep insight - poor are like hedge fund managers; they live with huge amounts of risk. They manage this by a typical hedging strategy - diversifying activities. A striking fact quoted from one survey - the median family had three working members and seven different occupations. And you would expect that in a high risk enviroment, insurance in some form or the other would be popular. Wrong. Nobody seems to want insurance.

The book is full of amazing tidbits of research. For example , in Kenya, one of the largest levers for ensuring prosperity for your child was actually giving her deworming tablets. Children who were given deworming tablets for 2 years instead of only 1 year earned 20% more every year for their entire lifetime !!

There is , of course, no silver bullet for eradicating poverty. You mustn't expect one from this book. But it offers many fascinating insights that would make anybody think again about poverty. I heartily recommend anybody with an interest in this subject to read this book.

26 comments:

  1. wow. you are one incredible factoid collector. Sad but true the Salt+Sugar+Boiled Water oral rehyd pack can easily save millions of babies who die a needless death. Incidentally in India there are apparently more mobile phones than toilets. The rates of infant mortality (under 5) in our own Uttar Pradesh is comparable/higher than sub Saharan Africa. So much for 'progress' and development in India.

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  2. While I am tempted to pass a value judgement on someone who prefers a TV or cell phone to food, who am I to question their free choice. It is when children get affected in the decision that they have no control over that it becomes a problem. This makes eradication of poverty seem even more daunting.

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  3. LOVED this post and learning more about a subject that I care for the most. I volunteer on and off at a local children's hospital here, and do as much as possible to help underprivileged or orphaned children. I'll pick this book up soon - its $18 on amazon and Rs.324 on flipkart - so I will ask someone coming back from India to get it for me.

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  4. @kiwi - Actuallypoverty statistics in parts of India are all worse than sub Saharan Africa. If you take on South Asia as a whole, there is a lot more poverty than Africa. There is so much to be done in our own corner of the world. Thats why I admire China so much. Whatever be their political system, they have virtually eradicated poverty on a scale even bigger than India's problem. Just shows that it can be done with proper economic policies.

    @J- I had the same response. But I was fascinated by the book's research on why this is so. At least I can understand better, even if I don't necessarily sympathise.

    @Shachi - Thanks very much for coming to this space and for your comment. I am in awe of people who actually volunteer - hats off to you. The paperbck edition is still not released in the US - hence the high prices.

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  5. Very interesting post!
    Is the book on same lines as 'Freakanomics'? (I had loved that book)

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  6. Thanks for sharing about this book and looking forward to read shortly. I only re-collect when Kamaraj brought the scheme of mid day meal in school when he learnt that children are made to work instead of studying owing to a meal not being provided or parents not capable enough to feed the children. While this scheme is mostly successful and definitely I see a big change in the state of Tamil Nadu where there is a significant jump in literacy levels and dropping of malnutrition, we have a long way to go in India.

    I am focussing on India and we haven't invested much on warehousing and the grains are rotten where tons & tons of grains are getting destroyed. Government has to focus on getting good storage system and reach out to poor people by implementing technology in public distribution system. I learnt last week that Pondicherry state has introduced smart cards in place of ration card and it is expected that one of the family member has to go to ration shop to buy through thumb impression.

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  7. Some time back there was a report which said that India has more mobile phones than toilets![Will get the book soon :)
    @Shachi Infibeam is much more cheaper. Only 299 when compared to Flipkart's 324!

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  8. Ramesh, I sent 100 copies of the book to all those associated with my start up as business associates, business partners or customers. Only 3 people have read it. Most of the Public Sector Bank people I sent it to have given it to their children or asked me why I sent them a book when they don't have time to read. You are the only person I know (other than me) who read it with fascination. I applaud you for it.

    To "J" who commented on this blog - the point of the book is that you should not patronise people about their choices just because they are poor. Another quote from another Indian thinker and doer(i.e. bureaucrat) whose writings I ask you to read - S Guhan "The poor are poor because of lack of opportunity, not because they are feckless". Our disapproval of the poor becomes an issue when as funders, we impose our choices on them.

    I enjoin all of you to read this book. And when you are done, read "Portfolios Of The Poor" by Collins/Mordoch/Rutherford/Ruthven.

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  9. If you consider the poor as a percentage of world population between the years 1960 to 2010, and you remove India and China from the statistics, you will find that the percentage of poor people in the world has actually increased. If you add India and China to the mix, the percentage has drastically fallen. This is a sad statistic for places like Africa, but one full of hope if the policymakers look at two contrasting but dedicated examples. Using different systems, India and China have managed to do something remarkable. And as Ramesh points out, if you narrow the horizon to 1980 and 2010, the standout is China. Even in Africa, leaving aside South Africa, there are some shining examples like Botswana. The lessons to be learnt are not for a comment on this blog..

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  10. @Preeti - There are some similarities with Freakonomics, but this one is different in many aspects. It is a deep insight into many aspects of poverty - economic, social, medical, etc. I found this a compelling read- not entertaining, but thought provoking.

    @Connecter - There is actually a mention of the mid day meal scheme. It was one of Kamaraj's enduring legacies to the state. Many other states then copied Tamil Nadu's example.

    @zeno - Yes, that statistic is globally true; not just for India.

    @Ravi - Thanks once again for gving me this book. Yes there are many examples of success. China is a star, but equally so on a smaller scale is Botswana. Even Rwanda is now a partial success story.We can eradicate poverty globally, with leadership, sound policies and strong implementation. If there were more Deng Xiaopings, Kemal Ataturks and the like, much can be achieved.

    It is a sad world when somebody says, I have no time to read ...... That's the most depressing comment I have heard.

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  11. You know what Ramesh, when i read the reviews on this book and some of these snippets in the paper, how much i felt that i should grab a copy of this book and read.

    But i have started falling into those depressing categories that have been troubling Ravi. I knew i would never be able to finish it. My past 15 purchases are glaring at me from the shelves even as we speak - hopefully i will finish them some day.

    But i am very thankful to you. to bring out some of these nice insights for non gnana seeking morons like me. of course, it is nothing as against reading the book, but i guess my grandpa's standard companian logic at work again :-)

    and i can very much relate to many of this. I once saw a beggar standing outside Vishranthi restaurant in besant nagar, chennai. i offered him to buy food. he said, "while i would prefer that you give me cash, but if you want to buy food, then pls dont buy Idli, but buy Masala Dosa. and please give a Rs.10/- along with that". and trust me, i am not exhagerrating here.

    No wonder,Abhijit Banerjee decided to write a book on it :-)

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  12. Thanks for the lovely book review and the interesting perspective on poverty. Actually you would see millions of such interesting examples in Mumbai n Pune. If u were to travel with someone in a Mumbai local, a perfectly decently dressed individual maybe living with 7 other family members in a 4 by 4 ft shanty. I was always intrigued by the Mumbai slums where all the shanties definitely have a Tv and a fridge. I think Ravi summed it up so well, "poor are poor because of lack of opportunities and not because they are feckless.

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  13. @Sandhya - That beggar example has been repeated in many forms and version with many. The book precisely addresses this issue - because we fund, we cannot presume to know what is best for the poor.

    @Deepa - The Dharavi examples are actually heart warming. Despite appalling conditions of living, people rise by sheer hard work and dedication to make it good.

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  14. Thanks for a wonderful post and outstanding perspective by Ravi as always.

    Imagine some high profile person winning 5 Cr. on KBC. It was the moving and grounded reaction of Sushil Kumar that makes 5 Cr. so much more important. Did he have opportunity before? Perhaps no. Who knows he might very well end as one of the finest IAS officers.

    African story is also quite scary. Can relate to the insights that you have given out of the book. Although, during my Nairobi trip, I noted that pple were generally happy with whatever they have - too little or little.

    P.S. - This book will be in my radar and thank you for the recommendation.

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  15. Another very interesting post!!! I read about the book earlier, but I'll order my copy now after reading this post. And it is indeed surprising to see how people make their choices - if you were to travel across any of the mumbai slums, you'll be shocked to see so many DTH dish antennas installed on rooftops of almost all of those very small dewelligs, row after row. It's just another class of consumers, but it seems that they compromise the hygine factor in favor of entertainment factor.

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  16. @ Ravi: I hear you and agree with your comments on not imposing our choice on others. But I think we do it subconsciously all the time. For example, I participated in an "adopt a family" project at work. From their wish list I chose to get blankets and clothes for the kids rather than a Barbie doll, Cars 2 DVD and such items also on the wish list. This post and your comments make me feel bad that I considered some of the wishes to be less important. (As an aside, i refuse to buy my daughter a Barbie). But, if I had to do it again I would still probably go with my original choices. Maybe when I read the book I will think differently... The issue is that it would be easy if we could all agree on the priorities for dealing with poverty - things that seem obvious like eradicating hunger, clean water, sanitation etc but when the people who are themselves affected want something else, it is confusing. I wonder if China could have made such huge strides in getting rid of poverty if they paid attention to what the people wanted rather than deciding for the poor what had to be done.

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  17. Before I launched my company (www.empays.com, a shameless plug, and Ramesh is a Director so he wont mind!), I held Group Discussions in Dharavi with migrant workers on their financial habits. I spent a total of 8 Sundays in Dharavi, morning to evening, listening to these guys. It was totally fascinating. The participants were chosen at random, and they were smart, alive to opportunity and quick to learn a new trick. The same public sector employees who are supposed to cater to this segment just will not believe how intelligent these people are. I thought sending these people copies of the book would help change their opinions. It is depressing to see bankers with 30 years of experience struggling to understand our payment system - something that these migrant workers understood in 10 minutes and could explain in Hindi or any of the Hindi-belt dialects with great ease.

    And yet there is hope. How else can one carry on?

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  18. @J: the book makes the point that if you understand why the poor make these choices that are incomprehensible to us, it enables us to design these interventions better. Of course we must intervene - there are moral and other reasons for it - and laissez-faire is not good enough. It is a combination of incentives that makes these interventions successful. The Tamil Nadu "satt-unavu thittam" (where is Gils when you need him) is a brilliant example of incentives that combine nutritional intervention for children with the need to cut truancy in schools. Designing nourishing foods that are tastier to eat in order to entice a poor person to spend on nutrition when his income rises is another example - and these efforts don't have to be government directed.

    To act effectively, we must understand first. And sometimes the results are not palatable. Here is an example. Harold Morowitz (an eminent molecular biologist who was also an accomplished writer on the sciences) wrote about a long term study done at Yale on the effects of social intervention on delinquent children. Two groups of delinquent children were selected - the control group had no special interventions other than the ones the department of social sciences in the State had put in place. The experimental group had special inputs provided to address parenting deficits, ability impairment, counseling etc. The study tracked these two groups for 30 years.

    At the end of 30 years, they found there was no difference in achievement, orientation towards crime, etc between the control group and the experimental group.

    A depressing conclusion. But the lesson here is that society cannot NOT do anything in the face of delinquency. It cannot NOT do anything to help the poor. But when it does so, it must accept that its best efforts may come to naught, and it must have the humility to accept that.

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  19. @Vishal - Yes the Africa puzzle is not easy to solve. Its not a simple question of aid.

    @Tarun - Yes, the book adresses this in some detail. What might seem irrational choices to us are meticulously examined in the book. Definitely worth a read.

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  20. @J & Ravi - Wonderful your dialogue. It so much enriches our perspectives. Thanks for such insightful comments

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  21. @Ramesh to J m Ravi- count me in please! The dialogue was so thought provoking. I definitely took something home from it today for life.

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  22. great dialogue...i love this...keep up the good work bro... here is my blog..
    Mobile Zone

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  23. Thats very interesting insights here. Cant believe the Toothbrush one. What wrong perceptions we have of people's needs.
    I should buy this book ASAP and read it.

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  24. @Hema - Yeah ; there are many books being written about poverty and its good that there is so much research and debate of how it can be tackled.

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  25. WOW awesome post! I really missed your blog...should login to google reader more often...
    "One of the big insights is that things that make life less boring are a priority for the poor" this is so true and I think not only for the poor, it is the same for middle-class masses too...

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  26. @Rads - Hey thanks. Actually its the same for everybody irrespective of status I think.

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