Poverty

Economics / Micro / Poverty — Comments Off
14
Dec 11

Payday Loans and Microfinance

Consider the fuss that people now make about microcredit — small loans, often at interest rates well above 50 per cent a year that are said to help the very poorest families manage their finances and even become entrepreneurs. That’s a story that many people are happy to accept without examining the evidence, while at the same time condemning payday loans, which appear to be a similar product. Are you sure [that's] not just reflecting a prejudice that credit-starved Bangladeshis are heroic would-be entrepreneurs while credit-starved westerners must be trailer trash?

That’s Tim Harford, in a post on whether payday lending is wrong.

Each fall, when I teach the students in my development seminar about credit rationing, I tell them “If you think credit rationing is a developing-country phenomenon, think again.” I then encourage them to drive up North Roxboro Street north of I-85 to see how the market responds to failures of the credit market in Durham.

Food / Policy / Poverty — Comments Off
4
Nov 11

Food Deserts: Health Impacts and a Short Reading List

From an article in this week’s issue of The Economist:

This part of Chicago’s South Side is in the heart of one of America’s many food deserts. These are notable not for the absence of food, but for the kind of food available. Though crisps, sweets and doughnuts are easy to come by, an apple is a rare commodity. Yet all the evidence shows that poor access to quality food results in a higher risk of obesity, diabetes and cancer — and more avoidable deaths.

Although cynics might argue that the market gives people the food they deserve, research published this month in the New England Journal of Medicine suggests otherwise. During the 1990s, when the American government paid for around 1,800 women to move out of public housing, the women who had moved showed a 20% lower rate of obesity and diabetes than those who had not. In other words, their improved environment (which many assume would include better shops) led to their better health.

Here is a link to the New England Journal of Medicine article by Ludwig et al., which relies on a randomized controlled trial. Here is the Wikipedia page discussing food deserts.

This article by Marcel Fafchamps and Ruth Vargas Hill lists many scholarly references on food deserts. In particular, I would check out those by Alcaly and Klevorick (1971), Caraher et al. (1998), Goodman (1968), Whelan et al. (2002), and Wrigley et al. (2002).

Poverty — 3 Comments
2
Nov 11

Spent

I’ve been unemployed for just one month, and already I’ve sent my only child to school crying because other kids make fun of him for being on the free lunch program, driven away from a fender bender with a parked car because I didn’t have the money to pay for the accident (luckily no one was around), been fired from my temp job for talking to a union organizer, put my kid’s dog to sleep because we couldn’t afford its medical care, and applied for food stamps — which won’t arrive until next month.

I’m not proud of myself, but this is what it takes to survive as a poor person in America — and now I know, because I played the game Spent, designed by Jenny Nicholson, herself once a child who grew up in poverty.

This is Christopher Mims discussing the game interactive presentation Spent in a post over at Technology Review. You can play Spent for free by clicking here. You might even be surprised at the very difficult choices poor Americans have to make every month.

The game is sponsored by the Urban Ministries of Durham, which provide food, clothing, and shelter to Durhamites in need.

(HT: Raul Pacheco-Vega.)

Development / Economics / Poverty — Comments Off
1
Nov 11

Where Do the Poor Live?

That’s the title of a new paper in World Development by Andy Sumner, a research fellow at the Institute of Development Studies (IDS) at Sussex. Here is the abstract:

This paper argues that the distribution of global poverty has changed and that most of the world’s poor no longer live in countries officially classified as low-income countries (LICs). It is estimated that the majority of the world’s poor, or up to a billion people, live in middle-income countries (MICs). This pattern is largely as a result of the recent graduation into the MIC category of a number of populous countries. The paper discusses the trends in the distribution of global poverty, and opens a wider discussion on the potential implications for aid and development cooperation.

This new paper looks like it is the published version of a Center for Global Development working paper published in October 2010 titled “The New Bottom Billion,” which is a play on the title of Paul Collier’s book The Bottom Billion.

To listen to an IDS podcast featuring both Andy Sumner and Paul Collier, who disagrees with Andy’s conclusion, click here. To follow Andy on Twitter, click here.

Food / Poverty — Comments Off
1
Nov 11

The Food Stamp Explosion

Taking a page from Hans Rosling, Tufts School of Nutrition associate professor Parke Wilde and his coauthors have developed a fascinating Google Gadget to help visualize the evolution of the Supplemental Nutrition Assistance Program (SNAP), i.e., of the food stamp program. Parke’s post on the topic is here.

The SNAP is one of the US government’s most important programs aimed at helping the poor (and, for those of us who teach principles of microeconomics, it also provides a great in-class example when teaching about budget constraints.)

The gadget developed by Parke and his coauthors allows one to track either the number of SNAP participants or the proportion of SNAP participants as a percentage of the population against other indicators — population or unemployment rate — for all 50 states plus the District of Columbia over the last 20 years.

For example, looking at North Carolina where I live, I see that the state went from a proportion of food stamp users of 6.3 percent for an unemployment rate of 3.8 percent in 1990 to a proportion of food stamp users of 14.1 percent for an unemployment rate of 10.9 percent. It is particularly disturbing, however, to watch the proportion of SNAP participants explode after 2008 all over the country.