Life on $1 or $2 a day

Here is one summary, consistent with my research and travel experience:

1. "The average person living at under $1 a day does not seem to put
every available penny into buying more calories…Food typically
represents from 56 to 78% [of household spending]."

Despite this, hunger is common. Among the extremely poor in Udaipur, only 57% said their household had enough to eat in the previous year, and 72% report at least one symptom of disease.

"The poor generally do not compain about their health – but then they
do not complain about life in general.  While the poor certainly feel
poor, their levels of self-reported happiness or health are not
particularly low."

3. Spending on festivals – religious ceremonies,
funerals and weddings – is high.  In Udaipur, median spending on these
by people living on $1 a day was 10% of income.

4. In several countries, the extremely poor spend about 5% of income on alcohol and tobacco.

5. In the Ivory Coast, 14% of people on $1 a day have a TV – and 45% of those on $2 a day have one.

Many of the extremely poor get income from more than one source.
Cultivating their own land is not always the main source of income.

7. Participation in microfinance is not as high as you’d think. The poor seem unable to reap economies of scale, therefore.

Here is the underlying paper, by Banerjee and Duflo of MIT, highly recommended, hat tip to Michael Blowhard

Here is one more controversial bit, I wonder what they see as the relevant alternative:

…it is easy to see why so many of them are entrepreneurs.  If you
have few skills and little capital, and especially if you are a woman,
being an entrepreneur is often easier than finding a job: You buy some fruits
and vegetables (or some plastic toys) at the wholesalers and start
selling them on the street; you make some extra dosa mix and sell the
dosas in front of your house; you collect cow dung and dry it to sell
it as a fuel; you attend to one cow and collect the milk. As we saw in
Hyderabad, these are exactly the types of activity the poor are
involved in.  It is important, however, not to romanticize the idea of
these penniless entrepreneurs.  Given that they have no money,
borrowing is risky, and in any case no one wants to lend to them, the
businesses they run are inevitably extremely small, to the point where
there are clearly unrealized economies of scale.  Moreover, given that
so many of these firms have more family labor available to them than
they can use, it is no surprise that they do very little to create jobs
for others.  This of course makes it harder for anyone to find a job and
hence reinforces the proliferation of petty entrepreneurs.


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