- Title Pages
- Introduction and Overview
- 1 Measuring Poverty
- 2 Understanding Prosperity and Poverty: Geography, Institutions, and the Reversal of Fortune
- 3 Colonialism, Inequality, and Long-Run Paths of Development
- 4 The Kuznets Curve: Yesterday and Tomorrow
- 5 New Growth Approach to Poverty Alleviation
- 6 Globalization and All That
- 7 The Global Economy and the Poor
- 8 The Role of Agriculture in Development
- 9 Fertility and Income
- 10 Fertility in Developing Countries
- 11 Corruption and Development
- 12 Ethnic Diversity and Poverty Reduction
- 13 Redistribution toward Low Incomes in Richer Countries
- 14 Transfers and Safety Nets in Poor Countries: Revisiting the Trade-Offs and Policy Options
- 15 Poverty Persistence and Design of Antipoverty Policies
- 16 Child Labor
- 17 Policy Dilemmas for Controlling Child Labor
- 18 The Primacy of Education
- 19 Public Goods and Economic Development
- 20 Intellectual Property and Health in Developing Countries
- 21 Public Policies to Stimulate Development of Vaccines for Neglected Diseases
- 22 Microinsurance: The Next Revolution?
- 23 Credit, Intermediation, and Poverty Reduction
- 24 Poor but Rational?
- 25 Better Choices to Reduce Poverty
- 26 Nonmarket Institutions
- 27 Racial Stigma: Toward a New Paradigm for Discrimination Theory
- 28 Aspirations, Poverty, and Economic Change
Poor but Rational?
Poor but Rational?
- (p.367) 24 Poor but Rational?
- Understanding Poverty
- Oxford University Press
When theoretical work made it clear that being poor meant being cut off from many opportunities that were available to others, the task of empirical economics shifted to providing evidence for market inefficiencies and the potential of economic policies to alleviate them. A new paradigm, “poor but neoclassical”, helped define an empirical agenda and structure a vision of the world, even though it often remained implicit in empirical work. While the poor (and the rich) are all perfectly rational, the markets, left to themselves, may not produce an efficient outcome. In turn, many of the predictions of this body of work have been substantiated by the data. But there are also some fundamental facts for which this view of the world does not account. This essay explores this agenda using two classic examples, which have been very fertile ground for research in development economics: insurance and agricultural investment.
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