贫穷经济学

I came from a small town in China which most of the people there have an average income about $5 per day. Therefore I can say that most of the people there are living in the poverty. When I get elder, I have been in U.S. Los Angeles for 3 years and India Bangalore for half a year due to work dispatching. And I have been Africa for several times during my vacations. Now I am in Japan. Compared with American and Japanese children, I found that so many children are living in such a poor livelihood in China India and Africa. Unsurprisingly, for the most of those countries are agricultural based countries. Every year, 9 million children die before their fifth birthday; they have no medical attention, no education, and no future. My personal experience and what I saw motivate me to setup my research plan as Global Poverty.

Based on my personal understanding the reason why poor people are living in poverty may be attributed to below four sections:

·Poverty lines in many countries were originally set to capture the notion of poverty based on hunger

·Basic health care services in most countries is failed to offer to the poor.

·Many families could not afford sending their children to school or local school labor is in shortage.

·The overwhelming population against finite income.

However, I believe there is a root cause for above four reasons or can be summarized as one: Currency. And we cannot simply trust that the poor could help themselves out and become rich eventually because the Poverty Trap does exist:

The S-shape of this curve is the source of the poverty trap. On the diagonal line, income today is equal to income tomorrow. For the very poor that are in the poverty trap zone, income in the future is l ower than income today. This means that over time, those in this zone become poor and poor and they will eventually end up trapped in poverty, at point N.

An expert from the worl d of high finance always says that the poor are like hedge-fund managers-they live with huge amounts of risk. The only difference is in their levels of income. In fact, he grossly und erstates the case: No hedge-fund manager is liable for 100 percent of his losses, unlike almost every small business owner and small farmer. Moreover, the poor often have to raise all of the capital for their busi nesses, either out of the accumulated “wealth” of their families or by borrowing from somewhere, a circumstance most hedge-fund managers never have to face.

Then what can the pool to do to cope with these risks? A natural reaction when faced with a drop in wages or earnings is to try to work more. But this may sometimes be self-d efeating. If all the poor laborers want to work more when times are bad, they compete with each other, which drives wage down. The best bet I believe is often to try to limit exposure to risk by building, like a hedge-fund manager, a diversified portfolio, and it is cl ear that the poor invest a lot of ingenuity in doing so. Generally I believe there are three approaches:

·Holding multiple plots in different parts of the village, rather than one single large plot, also provides some risk diversification.

·temporary migration can also be interpreted in this light.

·Being very conservative in the way they manage their farms or their business.

All of these ways in which the poor cope with risk tend to be very costly, consequently most of areas are choosing below strategies: One is to become someone’s share tenant, meaning that the landlord pays a part of the cost of farming and claims a part of the output. This limits the farmer’s risk exposure at the cost of incentives, however, knowing that the landlord will take half of whatever comes out of the ground, the farmers has less reason to work very hard; Another way is having multiple occupations, as many poor people do, is also inefficient, simply because it is hard to become a specialist in anything without specializing in it. So how to find the best fit and the most profit portfolio investment for those people? Can this portfolio be adapted to any part of the poor area? These two questions lead to my research purpose and research significance.

One way to approach to the answers is Information collecting, background research and field Investigation (Questionnaire and Interview). Find the commonality of all the solutions, exaggerate it, optimize it and then put it back in the field for the test. That will be my research method for this task as well.

The key of the future is the education of the children at present. I sincerely hope my research will help improving the children’s living conditions and educations in those countries, let them have the smile of which originally belongs to them, the same smile as other countries’ children do.

References:

1.Jeffrey Sachs, The End of Poverty, 2005

2.Abhijit Vinayak Banerjee and Esther Duflo, Poor Economics, 2011

3.United Nations, Department of Economic and Social Affairs, The Millennium Development