What should South Sudan do first?

David Leonhardt asked all-star developmental economist Abhijit Banerjee what the world’s newest country, South Sudan, could do to improve the lives of its citizens. His answer:

Here are two policies that I think every poor country should implement. A small universal cash grant to everyone over 12, based on biometric identification. This guarantees that no one has to face the humiliation of being totally indigent, and from our evidence, makes people more productive as well. Making it universal is important, so that they do not attempt to identify the poor (which is very difficult to do effectively in poor countries).

Second, a free universal health insurance policy that covers catastrophic health events, which allows people to go to private or public hospitals. Catastrophic health shocks do enormous damage to families both economically and otherwise, and are easy to insure, because nobody gets them on purpose. On the other hand, insurance policies that only treat certain catastrophic illnesses are hard to comprehend, especially if you are illiterate and unused to the legalistic nature of exclusions etc. Therefore people do not value them as much as they should which makes it hard for markets to supply them. This is an obvious thing for governments to take on.

You can read — and see and hear — much more from Banerjee and his co-author, Esther Duflo, at the homepage for their new book, “Poor Economics.” As you’re reading this blog, you’ll probably be glad to know there are lots of graphs.