Economic applications in Mount Sinai

A few weeks ago a retreatant, after hearing about my work at Hogar de Cristo and my economics background, asked what I thought was the largest barrier oppressing the poor and preventing them from experiencing economic growth. All I could say at first was, “good question, I do not even know where to start.” As somebody interested in development, the first few months here were frustrating – every risk factor written in studies exists here in Mount Sinai. There are SO many barriers. And I am here with the mission of Rostro de Cristo to be not to do - to sit in this reality, not thinking of how I could change it, but learning to accept and love it as it is. Nonetheless, in my spare time before bed and at the office I have been reading books like Poor Economics, The End of Poverty, and Banker for the Poor. I wanted to do my best to answer this question (with a few different answers) and share some of my findings in reading these past 6 months.

In The End of Poverty Jeffrey Sachs proposes the idea of a poverty trap – the idea that structures and circumstances literally trap the poor. Extreme poverty has many dimensions, not only low income, but also vulnerability to disease, exclusion from education, chronic hunger and under nutrition, lack of access to basic amenities such as clean water and sanitation, and environmental degradation. (Sachs) Sometimes aid, if not properly placed, is not accessible or even useful to the poor. “The greatest tragedy of our time is that 1/6 of humanity is not even on the development ladder…they are trapped by disease, physical isolation, climate stress, environmental degradation, and by extreme poverty itself” (Sachs). Duflo and Banerjee in Poor Economics explore a few specific ways that the poor are trapped; I will expand on three that are prevalent in Mount Sinai.

Nutrition-based poverty trap: The quantity and quality of calories that the poor can afford is limited. The food that they can afford often does not provide the strength to work or study well. Studies have interestingly found that an increase in income results in the poor buying better tasting, more expensive calories instead of more calories. For instance, if the poor desired a purely nutrition based diet, they would eat eggs every day as their protein source, which only cost 15 cents each in Mount Sinai. However, if they experience an increase in income they are more likely to buy a piece of chicken at around $2 per pound (a better tasting calorie) instead of doubling the amount of eggs they buy and their protein intake. There is a lot of evidence proving that childhood malnutrition has a direct affect on the ability of adults to function successfully in the world. Specifically direct links have been made to height (general health of child), years of education, and future income. The problem of nutrition may be less of a problem of quantity of food than it is quality, specifically the shortage of micronutrients. In Mount Sinai many families cannot eat three full meals a day and the filler food eaten at most every meal is white rice. According to “La herencia de los vulnerables” (The inheritance of the innocent), 33% of the population in Mount Sinai is anemic, 35% are low weight, and 7% are low height; all of which can be at least partially attributed to a poor diet.

Health trap: Many natural health risks related to geography, limited access to healthy drinking water, and limited access to adequate healthcare are common in developing nations, including Ecuador. There is an invisible incentive system in developed nations that doesn´t exist in developing countries like Ecuador. In the United States it is required to immunize children, water is piped in that is already safe to drink in most places, and doctors can mostly be trusted. The rich “rarely need to draw upon (their) limited endowment of self-control and decisiveness, while the poor are constantly being required to” (Banerjee and Duflo). While inexpensive, it takes an extra effort to put chlorine in water to purify it, whereas at home I can just turn on the faucet. Immunizing children can be put off – there is a natural inclination amongst all human beings to postpone small costs so that they are borne in the future instead of today, especially when the benefits of the cost will not be felt in the present. I have done very little work related to healthcare. But I know that my neighbors travel two hours by bus to the south of Guayaquil to receive free healthcare. Sometimes this trip needs to be put off; they may not be able to take a day off or lose a day of pay to make the trip. Due to the dust, unsanitary water, and bugs there are a LOT of unique medical issues my neighbors face.

Education trap – The UN Millennium Development Goals includes that by 2015 children everywhere are able to complete a full course of primary schooling. While this is a good first step in improving education, parameters to measure the quality of education received are more important in my opinion. In tutoring at the afterschool program I have learned more on the education system in Ecuador. Each night the kids have a “rough draft” notebook that they simply copy over neatly into a new notebook. Before exams they are given a study guide with all the questions of the test. For instance, for a math exam they may already know the exact division problems they will have. Critical thinking and learning processes are nearly eliminated. Another prevalent issue in developing nations is low enrollment in school – some young children dropout early. Parents invest in their children when sending them to school and the children will not receive the benefits until often much later. Sometimes it makes sense to invest in just one child instead of spreading the investment equally across all children. Sometimes children need to stop schooling early to make money to support the family. Sometimes the children are just “victims of some misjudgment somewhere: parents who give up too soon, teachers who never tried to teach them, the students’ own diffidence” (Banerjee and Duflo). Level of education has a clear impact on future success according to the statistics collected in “La herencia de los vulnerables”. Only 2% of the population studied in Mount Sinai has wages higher than $600 a month, of these 47% are people with 10 or more years of study and 53% have a primary education.

Years of study	Percentage that work
0 to 5 years	22.7%
6 to 9 years	58.7%
10 to 12 years	62.2%
13 and up	68.8%

Education level	Percentage
Read and write	0.5%
Illiterate	3.8%
Primary	51.9%
Secondary	20.7%
Superior (Bachelor´s degree)	1.7%

Sachs believes that at the very least, methods to end extreme poverty must enable the poorest of the poor to get their foot on the development ladder. As mentioned at the beginning of this post, many cannot even access the first rung to escape the poverty trap – they lack six major types of capital to reach the ladder (as explained in The End of Poverty):

·         Human capital: health, nutrition, and skills needed for each person to be economically productive

·         Business capital: the machinery, facilities, motorized transport used in agriculture, industry, and services

·         Infrastructure: roads, power, water and sanitation, airports and seaports, and telecommunications systems, that are critical inputs into business productivity

·         Natural capital: arable land, healthy soils, biodiversity, and well-functioning ecosystems that provide the environmental services needed by human society

·         Public institutional capital: the commercial law, judicial systems, government services and policing that underpin the peaceful and prosperous division of labor

·         Knowledge capital: the scientific and technological know-how that raises productivity in business output and the promotion of physical and natural capital

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The ways to combat poverty, to break the poorest of the poor from the poverty trap, are widely disputed. I will not even touch on those here. As I said at the start, my mission in this year of service is to be not to do. So for now, I will leave you just with these academic observations of the tough reality I witness and participate in. This post is in no way an expansive or thoroughly researched response to the question of what obstacles the poor face in economic development. But this will hopefully give you an idea – the barriers are extensive!

However, there is one aspect of poverty not as widely written about in economics books that my job as a volunteer does touch: “Poverty is not just a lack of money; it is not having the ability to realize ones full potential as a human being” (Banerjee and Duflo). I recall a neighbor once telling me how touched she is that the “gringo” volunteers and retreat groups enjoy entering her home to mutually share their lives. Before Rostro de Cristo´s presence in Mount Sinai she felt she was socialized to believe she was worthless, marginalized by her material poverty and the machista culture. She told stories of when she used to take the bus into the center of Guayaquil and when people got onto the bus who appeared “better” or “above” her, she would literally get up and give her seat up to them. While not all of us have the position or education to address structural issues impoverishing people, we can all recognize the human dignity of our neighbors; we can all work together in realizing our full potential as human beings.