A Micro Solution for a Global Problem

A new book, More Than Good Intentions: How a New Economics is Helping to Solve Global Poverty, by Dean Karlan, an economist by trade, and Jacob Appel, a seasoned researcher in the field, tackles the subject of how best to eliminate global poverty, given our understanding of human psychology and hard evidence. Their goal is to educate the general public about the workings of microfinance and its global variables.

Poverty affects a large portion of the world’s population, and many solutions have been offered over the years. Microfinance, a method of alternative investment by which as little as $25 can be loaned to someone in a developing country to grow their business, has taken the spotlight over the last decade. Both online organizations and brick-and-mortar stores offer opportunities for shoppers to contribute extra pennies to microfinance programs in an attempt to collect funds to ease global poverty.

Microfinance has been promoted as a panacea to solve global poverty, and organizations like Kiva (Kiva.org) are attractive to socially conscious Americans that want to feel like they are making a difference in the life of a specific person in a developing country. But microfinance has also been criticized as being one-dimensional and offering a narrow view of a multi-dimensional topic. No single program can solve world poverty single-handed and at best, serves as one element of a comprehensive solution.

The book relies heavily on market research and methodology, but spares non-technical readers the statistics and theorems of most research papers. It does discuss a research practice Kaplan and Appel use called randomized control trials (RCT), but the authors also use anecdotes and stories to illustrate their point and keep the story moving.

Free chlorine in easy-to-use dispensers at water collection points can reduce cases of diarrhea that are claiming the lives of 2 million people each year.global poverty microfinance

Karlan and Appel offer seven ideas to consider for reducing global poverty that yield relatively short-term, measurable results. Interestingly, microfinance isn’t one of the options, but other ideas include how de-worming kids affects school attendance in Kenya. Another is educating people about the importance of savings and personal finance. They also explain that providing free chlorine in easy-to-use dispensers at water collection points can reduce cases of diarrhea that is claiming the lives of 2 million people each year.

More Than Good Intentions is a great resource for anyone interested in global affairs, especially global poverty reduction in developing countries, serving as a good overview of the microfinance conundrum. It’s aimed at the general reader and provides insight to a problem that is more complex than it might seem.

Megy Karydes is founder of World Shoppe, a fair trade importing business that works directly with artisans in South Africa and Kenya. To learn more, visit World-Shoppe.com.

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