PLCY 110 Week 2 Notes on Poverty
PLCY 110 Week 2 Notes on Poverty 110
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This 5 page Class Notes was uploaded by Victoria Snow on Sunday September 4, 2016. The Class Notes belongs to 110 at University of North Carolina at Chapel Hill taught by Dr. Zimmerman in Fall 2016. Since its upload, it has received 33 views. For similar materials see Global Policy Issues in PLCY at University of North Carolina at Chapel Hill.
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Date Created: 09/04/16
PLCY 110 POVERTY 8/30/16 Poverty- canhave many definitions: -low income -lackof resources for basic needs -low purchasing power -lower social class Purchasing power- abilityto buy a bundle (largeset)ofgoods MAIN THING: poverty poor quality of life for group of people or individual Development- improving qualityoflifefor community (usuallythrough economic improvements) Human development- improving the quality of life for a community (not often with economic means, but helps others and angroup level).Example: red cross and welfare Poverty alleviation-improving qualityof lifefor anindividual.Example:Kiva-givesout microloans Inequality- unequal distribution of resources Howpooris poor? -Less than $1/day vs “bottom billion” -Peoplevs countries -Generational vs sudden **focused on the leftsidein this class GlobalPovertyDimensions: Low income Limited capital-physical,human, social,environmental Increased uncertainty Increased risk Narrow focus on today Limited safetynet Limited choices (career, migration) Limited power- economic, political Lackof opportunity/access to services (education, health, infrastructure, paved roads) Psychological concerns (shame,inferiority, resignation) Whatis development? Long-term growth (Collier) Development (Sachs)vs Poverty Alleviation (Easterly) Sustainabledevelopment (Stiglitz)-how itgrows o Economic o Social Political o Environmental The 8 Millennium development goals (Macro)vs Community level (micro) Chutes (down to poverty) vs Ladders (out of poverty) Chutes talked aboutin Collier 1. Conflict cycle:requires resources to recover, not focused on long term outcome 2. Bad governmentsandsmallcountries:corruption, theft, coercion, lowtransparency, low accountability, apathy/inaction. If you are small country and have an ineffective government, then you are become reliant on your neighbors which canbe detrimental. 3. Natural resources: generally bad because countries become dependent on them, all resources go to a small group of people, and there is no incentive to invest in human capital. 4. Landlocked with bad neighbors-noway to trade and with bad neighbors and there are no friendly recipients of trade. Growth spillover Additional chutes: 1. Health/disease-takes resources 2. Colonialism-French/Spanish vs British a. British invested in institutions and stayed to set up- so their countries are now more stableafter they left. b. French/Spanish did not stay, sothose countries are less stable 3. Conflicttrap- resource shortages breed conflictand vice versa 4. Geography- countries in tropical area less growth 5. Globalization- RTTB(raceto the bottom), migration, trade. 6. Poor governance Good Governance- participatory, transparent, accountable, effective, and equitable. Promotoes the rule of law -Democracy -State of capacity -Ruleof law- new -Just laws,enforced, no buy outs, property rights, POVERTYSOLUTIONS 9/1/2016 Solutions= ”Ladders” Graduationapproach: - Program providing poor people ways and means to graduate out of poverty involve stages andinterventions soindividuals don’t fall backinto poverty traps - Self-employment - Multiple house visits - Science paper by Banerjee et al,and in BRAC (BangladeshRehabAssistanceCommittee) - Helps the “poorest of the poor” o Used surveys and rankings in poorest villages inthepoorest countries o Looked at total assets,consumption, political participation, and women empowerment o Wealth Ranking Survey (PWR) o Poverty- defined as living on less than$1.25/day - How are participants selected? o Randomization of treatment/control o Reduces bias and increases validityof study Steps of the Graduation Approach: 1. Productiveassettransfer-a one-timetransferof a productiveasset.Creates jobopportunity a. Capableof generating income b. Revenue- immediate or later c. Livestock,petty trade, seeds tools,stove, etc. d. Training 2. Consumptionsupport-regulartransferoffood/cash a. Amount varied depending on PPP b. Peru- women received money bc they were better at keeping money i. Treatment and control groups both got money in Peru 3. Technical skillstraining on managingthe particularassets 4. High frequencyhomevisits.Checksto makesurethey aredoing whatis expected. a. Increased accountability of participants b. Kept them doing their tasks c. Financial capability d. Without the visits,participants may abusethe program 5. Savings-accesstosavingsaccount.Sometimes mandatory. a. Provides safetynet for sickness,disasters,etc. b. Smooth out uncertainty of income flows c. Microloans- address financial constrains i. Helps people buy something (stoveto generate their own income by baking and selling cookies) 6. Somehealth education, basic health services,and/orlife-skillstraining a. Many people in poverty have no health education b. This helps them stayhealthy, sothey do not have spend extra money on medicine in which it could have been prevented. c. Alsohelps them to stayhealthy sothey cancontinue working and generating income Finalnotes/thoughtsongraduationapproach: - Did it work?Treatmentgroupswerehigher than controlgroupsinalmost everycategory(soyeah, it definitely did something) - Spillover-treatment groupstalk to controlgroupsandtheir behavior changes.Treatmentgroupsin differentvillages to try andpreventthis. In India,therewas>50%spillover. - Results weredifferentforeach country(dueto somanydifferentfactors) - Did it untanglepovertytraps?Noevidence in this studyto get outof traps RECITATION NOTES 9/2/2016 Livingon one dollar-Netflix - 4 guys went to Pena Blanca,Guatemala to liveon $1/day. - In Pena Blanca,70% of the residents liveunder the poverty line - For 56 days $56. - Random payments of $0-9. They drew strips from a hat every morning - Got microloan of $125 with $6.25 installments - Anthony and Rosa became their friends and helped them learn how to cook, and tend to their radishes. o Gave them polick, which is only for special occasions. o The guys felt that they needed to repay for them for this and their overall generosity o Anthony and Rosa seemed to value social capital over everything