On 2nd February 2026, Professor Abhijit Banerjee gave a lecture on “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty” at Malviya Hall, University of Lucknow.
The lecture was organized as part of the Mahindra Sanatkada Lucknow Festival. The day marked a truly historic occasion as it’s the first time a Nobel laureate has visited our campus.
The lecture focuses on the updated edition of his book Poor Economics, which he co-authored 15 years ago. He explains that the new edition includes 100 additional pages to update findings based on evolving evidence and to acknowledge where initial hypotheses may have been wrong or incomplete.
Professor Banerjee discusses how early research suggested that increasing income had little effect on improving nutrition.
The initial theory was that productivity was linked to nutrition and early data, around 2009-2010, suggested that “nutrition is something that is hard to improve,” as “nutrition doesn’t improve very much with income.”
Based on these observations, his book initially concluded: “by providing free food or more income we won’t be able to change nutrition. We need to focus on something else.”
However, it turned out he was wrong. He explains that large-scale field experiments, particularly conditional cash transfer programs, showed that “when you have actually randomly given somebody income who didn’t have income they increase consumption including significant increases in food consumption.”
He gave one reason for this: “People actually, when they get some extra money, become more optimistic. When you give people extra money they work harder.”
He also mentions that this finding is consistent with other observations and references from 147 separate studies by USAID.
He described Microcredit as a concept that was once very prominent, particularly 15-20 years ago, with the theory that poor people are “natural entrepreneurs” who would use microcredit to start businesses and pull themselves out of poverty.
Many assumed that microcredit would lead to business creation and experiments but experiments showed no “miracle of microfinance”. Most people who received microfinance didn’t get richer, instead, they often used the loans for personal consumption, such as financing weddings or buying household items, rather than starting a business.
He also mentioned two points: a study in Andhra Pradesh where the shutdown of microfinance organizations led to a substantial demand shrinkage and fall in incomes in exposed areas and how a certain segment of the poor benefited as they were already natural entrepreneurs.
Therefore, while the initial optimism about microcredit transforming lives was largely misplaced, it remains useful both for providing needed credit for consumption and for enabling a small segment of talented entrepreneurs
Professor Banerjee further discusses failures in the education system. He stated that it’s not like children cannot learn it, it’s about teaching at the right level.
He talked about a simple idea which is very hard to implement in the Indian education system. He suggested teaching the child what the child needs to learn, not what the syllabus says the child should learn.
He further added “If your child cannot read, don’t teach him history. Teach him how to read.”
He praised the intervention by the NGO Pratham, called “Teaching at the right level.” This approach involves grouping children by their actual learning level rather than their class grade (e.g., a Class 4 child who can’t read is taught with Class 1 children learning to read). This method is remarkably effective, showing that “children learn fast” when taught what they actually need.
He presents a study comparing 3-5-year-old children from Delhi slums (among India’s poorest) with children of PhD students and professors in Cambridge, Massachusetts (Harvard and MIT).
He found that the children from Delhi slums performed “exactly the same” on pre-mathematical skills, indicating that “our children at three are just as smart as the children of the professors of MIT and Harvard” and that India has “all the talent we need”.
While these children were good at “mental exercises”, they “don’t do better in school math” because the school system is not addressing this child with his capability to do this thing but on how they teach him something else and he doesn’t learn it.
People don’t respond to what the child knows, or what the child wants to know, or even how the child wants to think. They have a fixed way of doing things and they make you do that.
He concluded by stating the belief that the state is bound to fail, arguing that many failures come not from bad intentions but from rigid systems and habits. Institutions function the way they do because people repeat established procedures without experimenting.
Small, well-designed changes can therefore have large effects. He explained that failures are often driven by three factors—ignorance, ideology, and inertia.
What stuck with me after his lecture was where he mentioned that there’s a power called the power of small things. He stated “If you actually propose the right way to do things, things often work.”