Supported by Greenhaven Road Capital, finding value off the beaten path.
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I’ve only just started Poor Economics but the introduction has a number of lessons we see frequently in business, sports, and investing but not always from two academics. The first question that arises is when to use facts and when to use stories.
Buying bed nets sound like a great idea, but Duflo and Banerjee want to know when it really is. Ray Dalio said: “Basically everything is another one of those … the key to success is to identify which one of those it is.” If he were in Africa rather than Connecticut, he may ask, ‘which one of those situations is one where free bed nets work?’ That’s what Duflo and Banerjee want to find out.
It’s not easy to answer because we’ve got baggage. Ken Burns said he didn’t put his finger on the scale for his documentary but this is hard to do. We have biases and sweet spots. Specific questions help us find oversights:
“Answering the (narrower) questions we get to understand what, if anything, is special about the poor.”
“We have to abandon the habit of reducing the poor to cartoon characters.”
“The position that most rich-country experts take on issues related to development aid or poverty tend to be colored by their specific worldview.”
This takes work. Stories are easy to digest and pass as opinions. But “The idea that everyone is entitled to his or her opinion,” said Danny Kahneman, “was a California thing – that’s not how we did things in Jerusalem.” Dalio agrees, “There’s such a bias to think that just because you have an opinion that it’s valuable.”
Yet stories are valuable. When fundraising, aid organizations know that a photo and a story of a person will raise twice as much as general facts and figures. ‘A billion people will go to bed hungry’ is more effective than ‘865 million people live on the equivalent of ninety-nine cents a day.’
The right facts will lead us to better stories.
Those facts take work to find. “This (research) has taken us to the back alleys and villages where the poor live, asking questions, looking for answers.”
“This (research) has taken us to the back alleys and villages where the poor live, asking questions, looking for answers.”
“This shift in perspective required us to step out of the office.”
Being there is the best way to get facts. Jason Calacanis said this about tech in Silicon Valley. Marcus Lemonis said it about interviewing business owners.
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