Why is poverty so difficult to overcome? Why are poorer people less likely to spend money on their own learning and ability development, but more likely to be addicted to television and video games?
In the past, a poor person was normally considered to have bad virtue or have no ambition. The Nobel Prize winner Banerjee corrects such views and explains the truth behind the poor. Poor people tend to live with more worries in their lives, he said, so they need tools such as televisions, cell phones, junk food and video games to get rid of worries more than others. But learning something often takes a lot of time and money to get rewards, while the poor are often impatient due to economic (经济的) reasons, and their life in the meantime is getting more boring.
Banerjee's research has found that the poor often need to borrow short-term loans (贷款) Thus, the poor tend to take higher financial risks — they often have unstable incomes and are unable to get money to start a business from banks, so they rely more on these high-interest loans. And these small loans put a brake on their savings against risks.
How could the poor step into the middle class? Maybe starting a business is a way out. But for the extremely poor, it's impossible to get help from banks to start a business. In most cases, a more practical option is getting a job in government agencies because comparatively speaking, government jobs are very stable, which give the poor the opportunities to be hired for the long term, to increase the "bandwidth (带宽) " of their thinking, and thus making it possible for families to move from poverty to the middle class.
What's the role of government then? When the market can't solve a problem, the government will solve it. And the problem behind the poor is actually the failure of the market. The poor often lack the necessary information to make the right choices and they often carry too much responsibility for their survival to make the best choices. In this sense, Banerjee's research provides a new perspective for governments to understand poverty, so that policies can be tailored to reduce poverty and eventually remove it.
