The Economics of Poverty Traps

The Economics of Poverty Traps

Christopher B. Barrett, Michael R. Carter, and Jean-Paul Chavas

Print publication date: 2019

ISBN: 9780226574301

Publisher: University of Chicago Press


While the world has seen much progress in economic growth and poverty reduction over the last few decades, the persistence of extreme poverty and its increased concentration in specific places has stimulated renewed interest in the processes of economic development and the possibility of poverty traps. This volume, based on papers first presented at an NBER conference in June 2016, draws together an outstanding collection of new studies of the dynamic, stochastic processes by which households accumulate assets and increase their productivity and earnings potential, as well as the conditions under which some individuals, groups, and economies struggle to escape poverty, and when and why adverse shocks have persistent welfare consequences. Poverty traps may arise when poverty becomes self-reinforcing because the poor's equilibrium behaviors perpetuate low standards of living. The poverty traps hypothesis carries especially important implications for the design and evaluation of policies and projects intended to reduce poverty. The chapters in this volume extend and integrate the range of the mechanisms hypothesized to generate poverty traps, including feedback loops between poverty and mental health, aspirations and preferences. The chapters link the relevant theory to empirics, and offer new empirical evidence that highlights both the insights and the limits of a poverty traps lens on the contemporary policy commitment to achieve zero extreme poverty worldwide by 2030.

Table of Contents


Christopher B. Barrett, Michael R. Carter, and Jean-Paul Chavas

I Nutrition, Health, and Human Capital Formation

2 Poverty and Cognitive Function

Emma Boswell Dean, Frank Schilbach, and Heather Schofield

Comment on Chapters 1-2

John Hoddinott

II Psychology of Poverty, Hope, and Aspirations

3 Depression through the Lens of Economics A Research Agenda

Jonathan de Quidt and Johannes Haushofer

III Imperfect and Incomplete Financial Markets

5 Taking Stock of the Evidence on Microfinancial Interventions

Francisco J. Buera, Joseph P. Kaboski, and Yongseok Shin

6 Poverty Traps and the Social Protection Paradox

Munenobu Ikegami, Michael R. Carter, Christopher B. Barrett, and Sarah Janzen

Comment on Chapters 5 and 6

Stephen C. Smith

IV Dynamics and Resilience in Natural Resources and Agriculture

Comment on Chapters 7 and 8

Edward B. Barbier

V. Policy in the Presence of Poverty Trap Mechanisms

10 Can Cash Transfers Help Households Escape an Intergenerational Poverty Trap?

M. Caridad Araujo, Mariano Bosch, and Norbert Schady

Comment on Chapters 9 and 10

Maitreesh Ghatak