Banned Products, Available in Poor Countries

In a recent Harry Hole mystery novel, The Leopard, Jo Nesbø (an economist as well as novelist) has Harry ask someone, “Where would you go to get it [a particular anesthetic] now?” and is answered, “Ex-Soviet states. Or Africa….The producer sells it at bargain-basement prices since the European ban, so it ends up in poor countries.” When rich countries ban something, they increase its supply to poor countries that refuse to ban it.  Prices are lowered to consumers there.  Rich countries’ safety is enhanced, poor countries’ worsened, with the only consolation that consumers in poor countries become able to obtain the harmful substance at lower prices.  Are people in each country better off, worse off, or what?

Hope and Poverty

Is there a role for hope in poverty alleviation programs?  According to a recent speech by economist Esther Duflo, there is. Duflo looked at a BRAC program in West Bengal; program participants were given a "small productive asset" (a cow, a goat, or some chickens) and a small stipend to encourage participants not to immediately eat the animal. The results were significant:

Well after the financial help and hand-holding had stopped, the families of those who had been randomly chosen for the BRAC programme were eating 15% more, earning 20% more each month and skipping fewer meals than people in a comparison group. They were also saving a lot. The effects were so large and persistent that they could not be attributed to the direct effects of the grants: people could not have sold enough milk, eggs or meat to explain the income gains. Nor were they simply selling the assets (although some did).

Acemoglu and Robinson Answer Your Questions

Last week, we solicited your questions for economist Daron Acemoglu and political scientist Jim Robinson, who just published a new book called Why Nations Fail: The Origins of Power, Prosperity, and Poverty and are now blogging on a variety of interesting development topics.

Their thoughtful responses below cover everything from robber barons to the artificial construction of African nations to whether the race of a country's leaders determines its success.  A big thanks to Daron, Jim, and all our readers for another great Q&A.  

First, a note from Daron and Jim: "We thank everybody for these excellent questions and comments. We had to pick a few to be able to provide detailed answers.

Wondering Why Nations Fail? Bring Your Questions for Daron Acemoglu and James Robinson

When it comes to economic ideas, Daron Acemoglu never thinks small. Widely acknowledged as one of the most insightful economists alive, Daron seems to have brilliant things to say about any and all things economic.

When you have that sort of gift, you might as well go after the biggest problems imaginable.  Thus his latest book, Why Nations Fail, written with Harvard political scientist James Robinson.

It is an awesome piece of work.  So full of ideas and wisdom, but still so easy to read.  I just love it.  Daron and Jim have agreed to take your questions about their new book, so please leave them in the comments section below.  To get you started, here's the table of contents:

Cash Transfers: The Key to Keeping the World's Working Kids in School?

A new paper from Eric V. Edmonds and Norbert Schady finds that cash transfer programs in developing countries may keep kids in school and out of the labor force. From the abstract:

Poor women with children in Ecuador were selected at random for a cash transfer equivalent to 7 percent of monthly expenditures. The transfer is greater than the increase in schooling costs at the end of primary school, but it is less than 20 percent of median child labor earnings in the labor market. Poor families with children in school at the time of the award use the extra income to postpone the child's entry into the labor force. Students in families induced to take-up the cash transfer by the experiment reduce their involvement in paid employment by 78 percent and unpaid economic activity inside their home by 32 percent.

Bargain Hunting for Charities

Gosh that sounds so stingy. When we are charitable, we don’t want to be cheap. This is our moment of giving, of generosity, not bah-humbugness. Alas, that is exactly what we should be. If we go to a restaurant for chicken wings, what would you think of the following prices:

4 chicken wings: $8
6 chicken wings: $8
8 chicken wings: $8

Which would you opt for (assuming more is always better)? Naturally, it shouldn’t require much thought. So why not apply this to charity?

This is what Givewell does. (And I’m pleased to say, you can see the imprint of lots of research from Innovations for Poverty Action on their assessments and recommendations). You may remember I blogged about Givewell over the summer, and how there is no correlation between their assessment of organizational effectiveness and the horrid measure often used by those in search of a good charity, “general administrative and fundraising expenditures as a proportion of program expenses.”

In Search of an NGO in New Delhi

I’m going to be in India this week, just for a few days. My time is completely booked except for a few hours on the morning of Friday, Dec. 2. I’m looking for an NGO that works with the downtrodden in New Delhi and is willing to show me around some poor neighborhoods there. In return, I will donate $5,000 to that NGO in appreciation.

Can any blog readers provide guidance on this? I know it is short notice.

For White Girls, a Bigger Penalty for Being Obese

We hear increasingly about the healthcare costs of obesity; but what about social costs?

A forthcoming Economics and Human Biology paper (abstract here; PDF here) by Mir Ali, Aliaksandr Amialchuk, and John Rizzo, titled "The Influence of Body Weight on Social Network Ties Among Adolescents," makes this interesting argument:

We find that obese adolescents have fewer friends and are less socially integrated than their non-obese counterparts. We also find that such penalties in friendship networks are present among whites but not African-Americans or Hispanics, with the largest effect among white females.

The Suburb as the Slum: Housing Voucher Shifts in America

A new working paper from the Brookings Institution's Metropolitan Opportunity series examines a major demographic shift in housing voucher recipients from the cities to the suburbs. Authors Kenya Covington, Lance Freeman and Michael A. Stoll write: “Just as the suburbanization of poverty has gathered momentum, Americans who use housing choice vouchers (HCV) to help pay for their housing have increasingly moved into suburban areas as well.” The authors studied data from 2000 to 2008 to see how this shift has taken place.

They found that:

Nearly half of all HCV recipients lived in suburban areas in 2008. However, HCV recipients remained less suburbanized than the total population, the poor population, and affordable housing units generally.

Black HCV recipients suburbanized fastest over the 2000 to 2008 period, though white HCV recipients were still more suburbanized than their black or Latino counterparts by 2008. Black HCV recipients' suburbanization rate increased by nearly 5 percent over this period, while for Latinos it increased by about 1 percent. The suburbanization rate for white HCV recipients declined slightly.

Does Fingerprinting Food Stamp Recipients Save Money?

What do New York City and Arizona have in common? No, this is not a trick question; there is one thing: currently, they are the only jurisdictions in the country that require food stamp recipients to register their fingerprints in an electronic database. California and Texas recently lifted their fingerprinting requirements.

Not surprisingly, this has touched off a debate over social utility and costs in New York. Proponents say that the resulting fingerprint database saves the city millions of dollars a year in duplicate fraud. Last year, the Human Resources Administration said it found 1,900 cases of duplicate applications for 2010, with savings of nearly $5.3 million.

Detractors claim this estimate is unproven and that fingerprinting keeps a certain amount of needy people out of the system through intimidation.