In chapter two of Poor Economics, Banerjee and Duflo discuss the relationship between nutrition and economic success. The authors assert that poor people are often hungry and that hungry people are often poor. What is the direction of the casual chain here? I think it can go both ways. Banerjee and Duflo provide examples displaying that malnutrition and hunger are reasons for poverty; without enough calories, humans lack the strength and energy to perform many jobs. Another main point of the chapter is the examination of the allocation of income to food and other goods. Upon researching this topic, the authors discover that people in poverty struggle to properly allocate their incomes to satisfy their hunger. Improper allocation of the household budget seems to be the biggest issue, not the “hunger-based poverty trap” which the authors discuss.
In order to escape the hunger-based poverty trap, it would make sense that people in poverty spend as much as they can on food. This is not how they spend their money, however. The authors provide examples and data supporting this conclusion: “In our eighteen-country data set on the lives of the poor, food represents from 45 to 77 percent of consumption among the rural extremely poor, and 52 to 74 percent among their urban counterparts” (Banerjee & Duflo, 22). Shouldn’t these percentages be higher if they actually wish to escape the nutrition-based poverty trap? One would think so. Instead of spending a greater portion of their household budget on food, they spend it on other items. The authors provide an example from Udaipur, India: “…the typical poor household could spend up to 30 percent more on food than it actually does if it completely cut expenditures on alcohol, tobacco, and festivals. The poor seem to have many choices, and they don’t elect to spend as much as they can on food” (Banerjee & Duflo, 23).
When poor people experience an increase in income, they do not purchase more food in order to eat more calories. Rather, they spend this on “better-tasting, more expensive calories”. This idea is directly related to the economic concept of normal vs. luxury goods; an increase in income leads to an increase in consumption of luxury goods. An example of this concept is provided through Robert Jensen and Nolan Miller’s study discussed on page 24. The subsidy placed on rice and noodles (staples of a Chinese diet) should have led people to buy more of these two goods. Jensen and Miller discovered that the exact opposite occurred: “Households that received subsidies for rice or wheat consumed less of those two items and ate more shrimp and meat, even though their staples now cost less” (Banerjee & Duflo, 24). Another example of improper budget allocation among the poor is found on page 36. Oucha Mbarbk, a man from Morocco who struggles with poverty and hunger, has a television, a parabolic antenna, and a DVD player in his house. When asked why he spent money on these items instead of food, Mbarbk replied, “Oh, but television is more important than food!” (Banerjee & Duflo, 36). Through this and several other examples, the authors assert that “things that make life less boring are a priority for the poor”.
The original statistic involving the proportion of income spent on food in eighteen countries could be flawed because it captures data from only eighteen countries. There are close to 200 countries in the world. Although the data is drawn from only eighteen of 190-plus countries, I believe that it makes sense and is realistic. In most cases, the poor are not trapped in poverty due to hunger; they are trapped in poverty due to irresponsible budget allocation.