Investing in Institutions

According to Duflo and Karlan, data and research is the best way to combat poverty. They describe that stories about microloans that lead to small businesses make for nice stories but don’t increase income for most people in developing countries. In an experiment in Uganda,  kids were given money for school supplies. Kids who got cash saved more money and got higher test scores, showing that cash works best when encouraging responsible money management. In addition, Zambia faces a problem that they need teachers and health workers. However, they don’t want people who are just using it to get better jobs in the near future so they keep pay low.

Turns out, the ambitious workers do the best job, and now the Zambian government can use that information to pay better wages and recruit the right kind of people to do a good job. The authors emphasize that some aid might seem most beneficial, but the only way to know the best methods is to gather and analyze data.

Are there other ways to alleviate poverty that are also unexpectedly effective?

Stephen Krashen, a professor at USC, wrote a Letter to the Editor of the New York Times, taking the opportunity to advocate for libraries. He claims that children in poverty, who often have low literacy development, can cultivate a vocabulary, spelling, and grammar through the free resources of a local public library. These skills that libraries provide can help children in poverty find greater success in school.

Poverty tends to follow trends and patterns, and using data like Duflo and Karlan did can help provide researchers with the best ideas to combat its damage. Many of the most effective strategies involve investments in institutions, like public libraries. This way, the country is spending money on young people’s future rather than just letting people in poverty stay there.


Karlan, Annie Duflo and Dean. “Opinion | What Data Can Do to Fight Poverty.” The New York Times. December 21, 2017.

Krashen, Stephen. “Libraries Help Alleviate Poverty and Rural Isolation.” The New York Times. September 20, 2018. Accessed October 17, 2018.

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