Readings for next week

Tuesday - https://www.thelancet.com/journals/lancet/article/PIIS0140-6736%2812%2960685-0/fulltext

 

Thursday - http://economics.mit.edu/files/530

 

You only need to comment on the paper for Thursday.

 

Have a great weekend!

Comments

[Alice Chen]

The Economic Lives of the Poor let me analyse poverty from a different point of view that I haven't seen before. From an economic standpoint, I can't help but feel like the poor are not trying hard enough to escape poverty since there seem to be many options that people can do: especially saving money. While we talked and read about the MDG's in class, it seems interesting that eradicating extreme poverty and hunger was one of the goals since a good chuck of money the extreme poor spent was not on food, but on festivals and entertainment instead. And, as we know, spending time on entertainment is not an effective method to escape the hands of poverty. I'm curious to know what is so appealing about entertainment that people would be willing to sacrifice food for it.

Another interesting point that stuck out to me was the lack of specialisation the poor have. While it makes sense that not specialising is a form of risk prevention, especially if the poor are entrepreneurs, but migration seems to be an option not sought after enough. From living in Shanghai, I've seen many Chinese from rural areas come to the city to seek job opportunities. Although it may be cultural, permanent migration for better opportunities to escape poverty appear to be a better option--though again, this addresses whether or not the poor are content with their living standards. I found it fascinating how the poor do not spend more money on food and would rather be malnourished. This is again used to prevent risk if they are ever met with disease.
Overall, this article made me realise just how challenging it is to bring the poor out of poverty with all these other social and cultural factors involved.

[Margot McConnell]

Banerjee and Duflo’s article discusses various aspects of the poor and identifies different issues that affect their lives due to their economic state. It is interesting because there are many aspects being poor that seem obvious to all, and there are others that are not so obvious.

One of the more obvious things people assume when discussing poverty is that they do not have choices with spending. However, Banerjee and Duflo demonstrate that the poor do get choices. In many of the countries, “extra money” is spent on tobacco and alcohol. Even more surprising is the fact that these poor families will spend a lot of money on festivals. This really shows the importance of culture and tradition in these countries. Something important to identify when making policies to eradicate poverty is to consider the beliefs and cultural traditions of the country in consideration.

One important point that stood out to me is that poor families tend to be rather large. Something I would be interested to see addressed is if part of the reason for the large families, assuming there are a lot of children, is because of the lack of education about and access to birth control. Last year, in my health economics class, we looked at a paper about contraceptives in Senegal. It showed that when there was increased education about birth control and more available access, there was a decline in fertility rates, which can, in turn, have a lot of benefits especially for women in developing countries.

Another point I found interesting was that many of the poorest households have a member who migrates temporarily for work. It would be interesting to analyze how this affects family life and the wellbeing of the individual who is now at a distance from his or her family. As we talked about in class on Tuesday, having meaningful work is important. Do most of these poor people find their work meaningful? How does it affect their wellbeing?

Another topic brought up that is relevant even today is that of insurance. Insurance is a major obstacle for the poor. There were two things, however, that I found most shocking. First, I never realized that in some countries there is informal insurance through social networks. The second thing I found interesting was that the poor will often eat less or take their children out of school as their form of “insurance.” It is a sad reality that two basic needs, education and food, are sacrificed in order to pay for insurance. This further emphasizes the fact that insurance is something every individual deserves to have, and it is an issue that needs to be addressed. In fact, an article I read last month in The Economist argues that the poor need insurance more than those who actually have it.

Finally, the point about why the poor do not invest more in education was very interesting. It is something I had never really thought of. It never resonated with me that the parents are often illiterate themselves, which causes their parents not to realize the bad quality of education. It seems like the cycle of limited and bad quality education is continuing because parents were not educated and now their children are not receiving a good quality education either but are completely oblivious to it. The cycle will continue on unless some action is taken in order to break it.

[TevinPanchal]

While reading the article a couple things stuck out to me but in particle the analysis on Udaipur, India. Udaipur is a place I actually have been too because I have family who lives a hour outside of it. Udaipur is a place my mom goes to every other year to donate to a different school every time she goes. When I went to India when I was 13 years old my mom decided to take me and my sister with her to show us how hard these kids who were my age lives were. The experience was one that will stick with me and my sister forever. The school we decided to go to that year was a small middle school with around 100 kids probably. We donated money and bought every kid a new backpack, notebook pencils and a pair of shoes. We also put up a new basketball hoop in the playground because they're hoop was a bucket on a stick, I have never seen anybody more grateful than every single kid that day. The feeling and reactions these kids had by receiving these items is something I cant even put into words. The article talks about how the poorest households are larger on average and that was very apparent at just this one school. Almost every single kid had a sibling that went to that school and the school consisted of 4 grades. This was interesting to me because even with the lack of resources these poor households tend to have more people on their plate to provide basic needs for. I played basketball with the kids on their new hoop and seeing the joy in these kids faces was something more memorable than anything I have ever done. I wasnt able to communicate with these kids besides dialect on the most basic level as a result of the language barrier but even without understanding what these kids were saying we all knew exactly what they meant. This is something I want to continue doing down the road and eventually take my kids to show them how some people live. Hopefully by then with economic development the standards are somewhat better.

The article also touched on how these poverty stricken communities and households tend to have enough money to buy more food than they actually do to not be starving but they decide to spent a lot of it on other stuff like tobacco alcohol and in Udaipur, festivals. I had the chance of seeing one of these festivals as the town of Udaipur, was celebrating Diwali while I was there. The money that was put into these festivals was definitely a good chunk of the money these people were making annually. This speaks to the capabilities of the town which attributes to the development.

My mom went back to Udaipur last year and she did say that the level of education is rising since the last time she went and the level of basic needs for children was increasing definitely at least since the time I went. Hopefully this means we are moving in the right direction but I hope one day to go back and the level of poverty be much lower than what it was when I went.

[Kenza Amine Benabdallah]

I think that this article offers a very interesting perspective on some causes of development and what could be hindering countries from attaining a certain level of economic growth. I usually argue that education and health are the most important steps towards development because they are an investment in human capital and they should result in higher productivity. However, this article made me question this belief. I have realized the importance of political institutions on the process of growth.
The diagrams show a clear picture of how the world income disparities between countries have widened throughout the past decades. I was very surprised by the remarkable growth experienced by the “Asian Tigers” and how that contrasted with the withering of the “Trapped countries”.
When comparing all the countries chosen in the article, I have realized that there were some obvious common denominators for growing economies and common denominators for trapped economies. The former would be the adoption of policies that led to exported-led economies and the investment on industrialization, while the latter would be the corruption of the governments and the dependence on imports. I noticed that some countries had their own surprising steps that lead them to development that were not necessarily correlated to industrialization, technological advance, or opening to international trade. Mauritius is a great example of how a country can achieve economic growth just by improving tourism. I also noticed that China, while international trade played a big role in its growth, there were many other interesting transformations that were part of this change including rural industrialization, reform state-owned enterprises, and modernization of the banking sector.
Finally, I believe that most of these arguments seem valid and the evidence is strong. However, they should not be taken as the ultimate cause of poverty or economic growth. There are many other different factors that could have hindered economic growth in Africa and Latin America such as geography, colonial history…

[Maisie Strawn]

There were two things that really struck me after reading Duflo and Banerjee’s paper. First, the tensions, decisions and unspoken-value statements made in defining poverty. Lastly, the absence of consideration of any enjoyment of life as a factor in the decisions those living in poverty make considering allocation of very limited resources.
At the very beginning of this paper the authors offer a definition of their terms of “extremely poor” and “poor” as those living with a rate of consumption per capita of less than $1.08 per day and less than $2.16 per day respectively. This is consistent with the established international poverty lines, but after reading this paper I question whether those values make sense as definitions. These are apparently based on a budget needed to cover the most basic needs (nutrition) in the least expensive way, but what about all the other things necessary for a life of quality (healthcare, education, choice, freedom) some of which we discussed in Tuesday’s class. Based on the observations of this paper regarding widespread lack of appropriate nutrition, healthcare, education, and public infrastructure for people living at both the extreme and standard poverty level, it seems the poverty level should be moved up. I’m not sure what that number would be, but it seems that even people living just above the $2.16 line would be living in rather dire circumstances. I fear that there is a value-statement implicit within these poverty-levels that the extremely poor ought to be making all decisions based solely on how to buy the most food at the cheapest price, and that making decisions beyond this is somehow irresponsible. However, I believe that having enough calories to support bodily functions is not all there is to living, which segways to my next point.
Duflo and Banerjee offered many enlightening explanations regarding the choices the poor and extremely poor make regarding nutrition, entertainment, saving, health, and education. Many of the explanations had to do with lack of access to markets for credit, savings, and insurance as well as poor physical infrastructure. I learned a lot from these explanations-- I had not necessarily considered before how difficult it is for the poor to have access to a physical way to save money. However, I did think there was one explanation missing, which was the idea of enjoyment of life as a factor in spending decisions. Towards the end of the paper, the question, “Why the poor don’t eat more?” was asked, and the answer given seemed to be that they spent the money on entertainment in order to keep up with their neighbors. Although I’m sure this is partially true, I do not think it tells the whole story. Maybe spending money on entertainment is worthwhile to the poor because it adds some enjoyment to an otherwise brutal existence. It provides something worth living for.

[Alecsander Horne]

It’s impossible to imagine living in the United States with only $1 to $2 a day. It’s also difficult to imagine even living off of $30 dollars a day once you factor in rent, electric, water, and food. Living in an urban area makes that even more challenging. This summer I worked in the DC area and found a place to live in a small apartment complex in Bethesda. The experience I had was life-changing and made me realize how serious a problem the issue of poverty is not only around the world, but in our own backyard.

I was amazed to learn the family I was living with this summer shared parallels to the ideas presented in the paper. This past June through August, I lived with a family of three (a grandmother, a mother, and a 9-year-old boy) in a two-bedroom apartment. I paid rent for one room and they all shared the other. What stood out to me the most from my reading is when the paper stated how “most extremely poor households have a bed or a cot but only about 10 percent have a chair, or a stool and 5 percent have a table.” The apartment I stayed in had no furniture, no tables, and no chairs. Only beds in each of the rooms. There was no A/C, no washer dryer, and they each only owned 2 sets of clothes. They had been living in the apartment for two years. I believe the article should also mention the issues seen in the lives of the poor isn’t just present in undeveloped countries, I believe it is present in every country. What is interesting to look at is how we have so much as a nation yet that so much of it is carried by such a small percentage of people in our massive inequality gap. Even though the incomes of the individuals I lived with was far greater than those living overseas with only $1 to $2 a day after the family’s expenses are factored out, I wonder; how much income they have left after having to pay all the monthly expenses? My guess is little to none.

I am not saying the family I lived with was struggling like others living off of $1 to $2 a day. The family I stayed with has a place to live, clean water, and sanitation. All the basic things needed to survive. What I find interesting is how even in wealthy nations that have attained the basic needs of everyday life, there is still a massive divide between people which possess a much larger question. If the issues of what the United States considers “poverty” in its own borders is not resolved, how can we expect the government to help those overseas who are struggling to an even greater extent with only $1 to $2?

[Sofia G. Cuadra]

The Economic Lives of the Poor offered numerous interesting questions and possible answers about the lives of those who live under $1 or $2 per day. One specific question that I found interesting included the question of why the poor do not spend more money on food. Among the 13 countries the article looked at, food represented only 56% to mid-70% of the budget for rural and urban poor households. When I read the statistic for the first time, I found it quite surprising, because when I think of "absolute poverty" I typically think of someone who has to spend well over the majority of their daily income on merely surviving. Survival in this sense thus means caloric survival by spending money on food. Also, I thought that poor people would be quite price conscious and spend their money on the cheapest and most nutritional food options available. However, further studies indicated that many of the extreme poor spend 50% of their food budget on the quantity of food and the other 50% on more expensive/tastier food. To illustrate, many extreme poor people are not spending their entire budget on the cheapest grain, such as rice, but instead are also mindfully spending money on getting other foods they value like sugar, despite it's lack of nutrition and possible extra cost. Additionally, many extreme poor people spend some of their money on entertainment, whether that be festivals, television, etc.

To me, the trend harkens back to the importance of considering well-being in creating sustainable development, beyond simply trying to raise income. Those extreme poor people who are spending the extra money on getting the better quality grain, or the tastier ingredient, or whatever form of entertainment desired are consciously doing so because they see those goods and services as having intrinsic value. To them, they are goods and services that give them satisfaction and, in a way, are necessary for their well-being and happiness. Consequently, the idea follows with the supporting statistic that self-reported levels of unhappiness among the poor are actually not incredibly low. I know if I were in their shoes, I would most likely make the same choice of not spending my entire budget on food and instead save some to spend on other valuable means, because it would improve my sense of well-being and happiness within my reach. After all, I believe those are important qualities to living a good-life.

[Lauren Paolano]

In "The Economic Lives of the Poor", I was most intrigued with the section on "How The Poor Earn Their Money". Given the men and women have very little education, there aren't many open jobs in the available workforce. The men and women must make the most out of what resources and skills they have in order to provide for themselves as well as their usually large families. The customs in the popular eateries in the Southern Indian city of Guntur is a location where women can be found making a "dosa", a rice and beans pancake only costing 15 cents.

However, once these women were finished frying “dosas”, they move on to another task in order to collect enough money to make ends meet. Some other jobs the women completed during the day include: collecting trash, making pickles to sell, and working as laborers. Unlike the United States or other more developed countries, laborers usually have one job in which their skill sets are developed in order to fulfill that job. In developing countries where education and resources are limited, women especially, find the necessary products to sell either personal labor or create items for consumers for small amounts of money. This pattern of multiple occupations is more common in rural areas compared to urban cities. This is because there is only 19% of households that describe agriculture as the main source of their income.

It was interesting to me to read about the correlation between entrepreneurs among the poor population. In the United States, entrepreneurs are usually individuals who have gained much wealth through their work and are now developing an idea or product as a hobby or activity. These poor individuals are actively creating job opportunities for themselves to stay alive and support their loved ones, which is a completely different definition of entrepreneurship than I have been accustomed to in the past. I learned that in these developing countries like Southern India, becoming an entrepreneur is easier than finding a job because the creativity created by one's product is more appealing to the consumer. In addition, the man or woman has the flexibility and freedom to create his or her own schedule in order to balance caring and supporting other family members.

I took a course at W&L called “Business of Technology and Entrepreneurship” where we traveled to Silicon Valley in San Francisco for a week to visit these small start-ups and speak with entrepreneurs. Silicon Valley is filled with these wealthy and intelligent individuals who have years and years of higher education and therefore have advanced skills: a degree in computer science from Stanford. This was the image of an entrepreneur that I have had in my mind based on my own personal experiences and it was interesting to learn that the poor individuals of Southern India are also entrepreneurs on a different level, given their available education and resources.

[Caroline Florence]

In reading “The Economics of the Poor,” I was struck by how different poverty looks around the world. There is no one view of poverty; instead, it differs based on location and individual priorities. When I think of the very poor, I imagine them spending every dollar on the cheapest food they can find in order to survive, but that is not really the case. Just like everyone else, they budget their money in a way that will maximize their happiness. Even if they do not have enough food, many spend on entertainment such as festivals, weddings, and televisions. It is hard to grasp that people would sacrifice their health for entertainment, but upon reflection, I realized that it is only human. It is their money and they can decide how they want to spend it. If that is what allows them to feel fulfilled, I view spending on entertainment as a rational decision.

I cannot imagine the stress that must come with living on $1 a day. It would take careful planning to make sure that you have enough food to survive. This article gave me the perspective to understand what kinds of choices the extremely poor are having to make on a daily basis. It also made me think about how difficult it would be to break the cycle of poverty. If you grow up in a household that cannot afford to send you to school or give you enough food, how could you possibly get a job where you earn enough to break out of poverty? These are the things policymakers need to think about. In order to address poverty, we have to find long-term solutions and not just temporary fixes.

[Anne Riter]

The Economic Lives of the Poor posed a series of interesting questions that suggested that the status of the poor and the extremely poor (and whether or not they were likely to remain poor) relies not only on economic factors of the country but also on different social and familial issues. I thought it was interesting how they analyzed the data from countries such as India, Pakistan, Mexico, Cote d'Ivoire, etc... and how many of their spending habits and their priorities were very similar. It was also interesting for me to compare how people who live on less than $1 or $2 a day in those parts of the world to what my grandmother's experiences growing up in a poor rural area of Denmark were. They were by no means extremely poor, but they had a paltry income to support themselves. Much like the poor families of the countries analyzed in this paper, her family was very large (11 kids, 2 parents, plus aunts and uncles that lived nearby) but what her family chose to spend their income on differed. A lot was spent on the farm and for the family, and her parents were specialized. While in places like Udaipur, Mexico, and Pakistan the adults of the family would work part-time on the farms and part-time doing some other work, in Denmark it was important that the work be 100% on the farm at all times. The adults were not able (or perhaps not willing) to have the flexibility to work in different places, as ones status within the Danish rural communities rested heavily on where your farm was and how it was doing. There is a large sense of pride attached to the family farms in Denmark, and whether or not you could afford to buy "frivolous" items was secondary. A huge form of stress for my grandmother's family was the farm.

School was also not a priority for my grandmother, and since she was neither a boy nor one of the oldest children, she completed 8th grade and no more. What stood out to me was the contrast between public and private schools in India and how, while private school teachers showed up to class more often than public school teachers did, they were not as educated (or had the proper certification). Same with the health care providers. Private providers offered more care and attention, but they weren't as well trained.
On the economic side of things, it did seem like those living off of $1 or $2 a day knew they would make impulsive decisions with their money and used it as an excuse not to save. Instead of saving up and buying something for their business or their farm, they would spend the money on alcohol or tobacco or entertainment. It also seemed that the lack of specialization hindered their abilities to make any significant strides within their community. Instead of focusing on farming or focusing on running a business, they would split their time between both and never really advance in either. I think it would be interesting to focus on the poor or the extremely poor families where one of the adults did choose to specialize, and to see how their economic standing changes, whether their income or happiness increases or if their values change.

[Lucas Flood]

In Abhijit V. Banerjee and Esther Duflo’s “The Economic Lives of the Poor,” Banerjee and Duflo synthesize and analyze data from around the world in order to better understand poverty. Their ability to take information gathered around the world and tell a well-evidenced narrative of the challenges faced by the poor is beneficial to any study of developing countries. While the arguments made in “The Economic Lives of the Poor” are certainly valuable, I thought some of the conclusions drawn by Banerjee and Duflo partially undermined their argument.

First, I found the manner in which Banerjee and Duflo approach the concept of “How the Poor Spend Their Money” to be particularly problematic. Banerjee and Duflo approach the issue from the perspective of benevolent and all-knowing members of academia by arguing that poor people lacking adequate sustenance could spend more money on food, but simply choose not to do so. To Banerjee and Duflo, entertainment is simply not a logical use of income share. Therefore, it is perfectly logical to argue, as they do later on, that “Carrying enough savings to make sure that they never have to cut meals, should not be too hard for these households since, as noted above, they have substantial slack in their budgets and cutting meals is not that common” (Page 9). However, such an argument is derived from a lack of recognition of societal pressure, quality of life, and religious beliefs in poverty-stricken communities. While poor families would certainly benefit from greater amounts of savings, arguing that such an action is simple or easy is simply ignorant of the larger and self-evident issue: lack of adequate income, instead of the manner in which the income is spent.

Additionally, Banerjee and Duflo’s answer to the final question of “Why don’t the Poor Migrate for Longer?” demonstrates the pitfall of focusing almost exclusively on an issue from a monetary point of view. According to the data provided, the incomes of poor individuals would be increased by simply spending more time in jobs far away from home. Banerjee and Duflo argue the reason for many poor individuals to ignore such an opportunity is “a reluctance of poor people to commit themselves psychologically to a project of making more money” (Page 24). Such a conclusion reveals yet again the approach taken by the authors. Instead of recognizing the emotional and societal benefits of staying and working in close proximity to the family unit from the perspective of quality of life, Banerjee and Duflo ignore such a possibility. Instead, Banerjee and Duflo essentially argue the poor are afraid to better themselves economically.

In conclusion, “The Economic Lives of the Poor” certainly makes a variety of informed and well-reasoned arguments. However, Banerjee and Duflo’s failure to recognize the value of non-food expenses, particularly in regards to community celebrations and religious activities, diminished the overall impact of their work.

[Travis_Dover]

What sparked my interest most in the reading was the inability of the poor and the extremely poor to leverage their current assets into loans that could provide upside to their small businesses. In a very different environment, but similar enough so that it is worth mentioning, the lack of land ownership on American Indian reservations has caused the same issue for tribal entrepreneurs. For ECON 286: Lakota Land, Culture, & Religion with Professor Guse and Markowitz, we went to the Pine Ridge Reservation in South Dakota. We learned that because reservation lands are held in trust by the United States government (trust land is in place to prevent tribal lands from being further confiscated from American Indian “ownership”), American Indians cannot use their land, which is often their only asset, to obtain a loan to pursue a business or any other type of asset they cannot pay for up front. When the article mentioned that often extremely poor people’s only asset is the land they live and even then, the title to the land is difficult to acquire, I immediately thought of the tribal members on the Pine Ridge reservation who cannot obtain loans because they have no collateral. As is stated in the article, many of the extremely poor people studied were entrepreneurs, but their businesses were run on such a small scale that they lacked efficiency. Moreover, the entrepreneurs possess very few usable assets that could be helpful in boosting the profitability their businesses. If a reliable banking system existed in many of the countries that the article studied, and people living in poverty were able to use their land as collateral to obtain a small loan to purchase materials to increase the efficiency of their small businesses, the increased success of their businesses would hopefully take steps to alleviate some of the extreme poverty these hard-working entrepreneurs face. Some tribal banks are stepping up to work with reservation business owners who need a loan to jump start their businesses, and I hope this can become possible in some of the developing countries studied in this paper.

[MarkLamendola1]

After spending about 3 and a half months in Indonesia living with host families throughout a number of very poor villages, I was able to relate firsthand to the some of the topics and statistics brought up by Banerjee and Duflo. It is one thing to read about some of these things but it is a completely different perspective when you are apart of them. There is one experience from my time in Indonesia that sticks out. It relates directly to a few of the topics discussed in the article; A woman died while I was in this small agricultural village on the island of Flores and I attended the funeral. As Banerjee and Duflo talk about how poor people do not spend as much money as they could on food, but rather save and spend on festivals - in this village funerals were that type of celebration. Everyone in the village and all of the neighboring villages poured in to attend this funeral and give support to the family. It is tradition that a gift is provided to the suffering family; people brought money, rice, food, and the most customary thing to bring was a live pig. By midday, there were around 30 pigs tied up in front of the house that the funeral was in. Long story short, there was a ceremonial sacrifice of all of these pigs for the diseased and the celebration began shortly afterwards- food, drinks, music, and games. When I was there in the moment, I never thought of the economic implications of this until I had read this article.
These festivals and celebrations are deep rooted in community and tradition in the village so it does make sense that one may choose not to purchase more food but rather save for this type of festival. Banerjee and Duflo bring up another point that I found relevant to the funeral and that is the idea of insurance and using social groups for loan exchange. In this village, The whole idea of offering support(money, food, or pig) is so that when your own family member dies, you receive the same support. The customary thing to do in Indonesia is to reciprocate with a gift that is similar or larger in size and value. People take records of what they receive from each person, so when it comes time to loan back, they can do so appropriately. I found it fascinating to look at the experiences I had in Indonesia through a different lens. I thought that the exchange of pigs at a funeral was a way to give support and strengthen the community; I did not realize it was also an insurance network within the community as well.

[Christopher Watt]

Reading The Economic Lives of the Poor stimulates a number of questions about the choices that those experiencing the most extreme poverty around the world make, as well as their motivations for making them. I imagine many are confused as to why individuals experiencing such harsh circumstances make choices that seem counter to their health and well-being by diverting funds away from basic needs to purchase entertainment or pay for foods that offer lower calories. Furthermore, I am fascinated that the poorest among us do not experience very low levels of self-reported happiness according to Banerjee and Duflo. These observations combine to make me think about what these individuals value and how they seek to live. It seems that in such dire circumstances, they would choose to focus on basic needs rather than rituals and celebrations; that prioritizing their health would be vital to living. However, living and being a human involves so much more than just surviving. Yes, many of their choices and income must revolve around that goal. But just like people in more affluent circumstances, living requires much more than sustenance. They may not all live what people in more developed countries consider to be “the good life,” but in choosing to spend on entertainment and celebrations, or experiences of religious, cultural, and recreational relevance, as well as living in community and taking care of others, they make decisions that they feel improve well-being, which correlate to Sen’s capabilities; ideas of personal freedom, entertainment, and enjoyment. They find happiness despite their circumstances. These bring dignity and purpose to life beyond simply trying to survive. I fear that criticizing them for not allocating enough funds toward basic needs is dehumanizing and lacks consideration for what “human well-being” fully consists of.

The paper also caused me to think about how little access the poor have to legitimate financial institutions such as banks and loan agencies even though they likely need them most of all. Because of their financial status, lenders are reluctant to offer loans. I would be interested in talking about microloan programs and organizations in class as I know little about them but am aware that they are used in poor areas to support development. Furthermore, as this paper was published in 2006, I am curious about changes in some of these statistics over the past 13 years. Have there been improvements around the world in the poverty rate and many of its indicators? Do these individuals now have greater access to formal financial institutions?

[Prakriti Panthi]

The Economic Lives of the poor was eye-opening in many regards. I hadn't really thought about how different poverty, or living on less than $1 a day, would look like in different developing nations. The facilities and services, and even how people choose to spend their money differs quite significantly amongst the 13 nations. The resources available in the country and the cultures and society people were brought up must also play a role in what poor people prioritize in terms of spending.

Many questions and thoughts came to mind while reading this peace. A lot of the problems that people faced seemed to be because the system in place was not accountable or reliable. While people living in poverty do have the autonomy to choose how they spend their limited income, the lack of developed infrastructure makes it difficult for them to really improve their living standards. When taking about the quality of education, the authors try to speculate why parents would choose to keep their children in public schools that were not providing quality education. But would parents moving their kids elsewhere really solve the deep-rooted problem regarding the quality of education in rural areas? Would migrating elsewhere really solve the problem? Because in the schools and places people left, the problems would persist. Also, there is already so much burden on people who have to survive on less than $1 a day, I wonder how much time and effort they are able to put on making decisions that were discussed on the paper? And regarding problems people living in poverty face with land ownership and access to credit from formal institutions, people do not have the power or infrastructure to combat that, so how can the government intervene? I wonder what the government is doing currently to combat those issues?

[Nicholas Tierney Watson]

One thing really stood out to me in this paper, and fully cemented the difference between the study of Economics and Development Economics. In this study, the extremely poor spent between 1% and 8% of their daily income on commodities, such as tobacco and alcohol. To add on to that, the average extremely poor family spent a median amount of 10% of their annual budget on festivals and weddings.
At first, these findings shocked me. If I was living on 1 dollar a day I would spend every cent on food and nothing else, just trying to survive. These statistics, especially in the face of the fact that most of these extremely poor and poor families are malnourished and hungry, flew in the face of how I sometimes conceptualize the lives of the impoverished. In a global sense, the extremely poor and poor families exist half a world away from me. The only real way I can view the experience of the globally extreme poor is through the lens of my economics courses and sometimes the front page of National Geographic. Often times, it is easy for me to get lost in the mental game of trying to min-max every cent that extremely poor families make when I read statistics about poor families spending money on commodities.
In my mind, at the core of this mental game trying to min-max consumption is the difference between true Economics and Developmental Economics. The obvious answer to a pure economist, (and I understand that I’m exaggerating this), is that those poor families should stop spending their money on detrimental vices and useless festivals, and start eating more. Especially, when malnourishment in early developmental years for children leads to serious cognitive setbacks. A Developmental Economist looks at it from a different angle, an angle that incorporates more than just GDP per capita into a person’s well-being. Developmental Economists understand that spending money on commodities and traditional festivities is important to “taking part in the life of the community” and self-esteem. Living, and being well, is about far more than just meeting the required caloric intake for the day. I appreciate the more holistic view of economic well-being that Developmental Economists bring to the field and the way that it tries to empower people when compared to neoclassical economics.

[Julia Moody]

I thought the section on the poor's self-reported happiness was interesting because despite the constant stressors related to finances, health, and inequality in their lives, the poor do not have especially low self-reported happiness levels. This plays into the points that Sachs’ article made about human wellbeing involving more than just economic performance. It might benefit countries to emphasize measuring gross national happiness, instead of solely the gross domestic product, like Bhutan does. Happiness does not necessarily correlate with income for many people, which is clear from the study in Economic Lives of the Poor. From a policy perspective, policymakers could aim to increase overall happiness and improve attitudes among people of low socioeconomic status as well as focusing on the financial aspects of being poor.

[rrirwin]

Banerjee and Duflo examine the economic lives of the those living on less than two dollars a day among thirteen countries. More specifically, they review their living arrangements, spending, sources of income, education, economic markets and infrastructure. However, in addition to identifying elements of their economic lives, Banerjee and Duflo address the questions that arise from attempting to find solutions to poverty. These questions ask why those in poverty aren’t eating and saving more, investing in their education, and specializing in their work. I found the answers to these questions to be quite effective at explaining how those in poverty have a justifiable rationale for doing so. I found the explanation of spending choices particularly compelling. While I see why there would be a common misconception that those living on less than two dollars a day should spend money solely on food or other basic necessities, it’s quite irrational. When it comes to spending, humans make trade-offs. Often times things other than the basic necessities play more importance in life. Wanting to purchase a radio or a couch—even if it requires sacrificing a meal—makes sense under certain circumstances and is a human tendency.

In high school I went on a mission trip to Orange Walk, Belize (near the border of Guatemala). We ran a vacation bible school program and helped begin construction for a local congregation. One night of the trip we went to the homes of members of the congregation for dinner. The owner of the home I visited was a single woman named Sera. Her children, along with her sister and her children, lived with her. The house consisted of two rooms. The six children shared one bed and I remember Sera expressing her excitement about her new TV. What I saw paralleled a lot of what Banerjee and Duflo mention. For instance, Sera not only had a large family, but her family unit consisted of more than just her nuclear family. Further, she had allocated her resources to have us over in celebration that night. Sera’s priorities were based around providing for her family and their happiness, such as buying them a TV. Based on what I witnessed in Belize, I appreciated the way in which Banerjee and Duflo explain the complexity of human tendencies for those living in poverty.

[Olivia Luzzio]

While Banerjee and Duflo certainly provide context and an explanation behind the financial decisions and situations of those living on $1 per day throughout the world, I believe Economic Lives of the Poor goes beyond an economic explanation of poverty in low-income countries. My main two takeaways from the paper concern the roles of personal choice and institutions (or lack thereof) in the economic lives of the poor.

In my Economics of Social Issues course, we are currently discussing the structural vs. individualist approaches to explaining poverty. The structural approach dictates that people are born into economic circumstances established by already-existing social hierarchies and institutions. Banjeree and Duflo point out the impact of poor or nonexistent institutions on the poor, such as the lack of trustworthy banks preventing people from saving and low-quality education preventing children from learning to read and write. The severe effects of inadequate institutions on economic well-being reflected in this article beg the question of exactly how much choice and potential the poor have to improve their situation. If you are born into a community with poor schools, lack of infrastructure, and less than sufficient healthcare, advancing economically requires far more than hard work.

On Tuesday, we talked about freedom as one of the main values of economic development. Everyone strives for the ability to make choices about their own lives. Thus, when Banjeree and Duflo discuss how the poor throughout the world spend less than they could on food in order to afford luxuries like TVs, radios, and festivals, to me this is a demonstration of impoverished people attempting to maintain at least a small ounce of control over their lives. Sure, they have to eat a little bit less, but at least THEY are the ones making the choice to eat less in order to enjoy "unnecessary" entertainment. Perhaps this same notion drives small-scale entrepreneurship and unwillingness to specialize to a certain degree. Selling their own goods and essentially running a business of their choice allows the poor to maintain a sense of freedom in a world where it appears they are economically trapped.

[drewwoodfolk]

Reading Economic Lives of the poor was quite the eye-opening experience for me. While the poverty line of $2 per day and $1 for extreme poverty are not new concepts to me as a whole. It was interesting to learn that this number has been adjusted relative to the 1985 PPP. These considerable changes my opinion of the $2 per day poverty threshold and makes it very clear just how difficult it would be to meet basic needs on a budget this small.

The first topic of the paper that really stood out to me was how much people in poverty spend on food relative to the amounts spent on alcohol, tobacco, and other vices. At first, I was alarmed to see that some impoverished households spent 5, 6, or sometimes 8 percent of their budgets in some cases on goods that do not directly contribute to health and aren't particularly know for the nutritional value. Upon further thinking about these somewhat unsettling facts, I think I may have some ideas for why this is the case. While I've never personally seen poverty in the communities listed in the study, I believe that unemployment and general morale in impoverished communities may be connected to the amount of money spent on alcohol and tobacco. In the time I've spent volunteering in impoverished communities, most seemed to have an above average unemployment rate. Many of those faced with chronic unemployment that I've personally seen didn't seem to have particularly busy schedules and often used alcohol and tobacco products as their one escape for the day. While it was incredibly unfortunate to know that their money probably could have been used in more effective and certainly healthier ways, I also found it hard to blame them. Living on a budget so small, in my opinion, would push almost anyone to their breaking point.

The second topic of the paper that really stood out to me was the tendency of many rural, impoverished household to temporarily migrate for work. At first glance, I believed this was a good thing: one member of the household working their hardest to achieve financial stability for the family. But after thinking about temporary migration further, it is clear to me that this practice has many unintended consequences. For example, in Udaipur, 60% of families stated that one or more family members had to temporarily move during the year to find work. While there are certainly benefits to have a family member with a job that feeds the family, this also effectively increases the number of children who have to grow up at times without the presence of both parental figures. While I don't know the specific data for the communities listed in the paper, I am aware that children in the US who grow up even temporarily without both parent present face a multitude of challenges that children of two parent homes simply don't have to deal with. I'd assume the difficulties of the American single parent household would also transfer to the impoverished communities in the paper.

[Adrian Lam]

My favorite excerpt from the Economic Lives of the Poor comes from the subsection on “Why Don’t the Poor Save More?” The poor could save more if they cut spending on nonessential items (alcohol, festivals, sugar) and entertainment, so why don’t they? Why is there still a constant temptation to spend? Banerjee and Duflo believe the temptation to spend is highly applicable to the poor, especially when “many of the temptations you are being asked to resist are things that everyone else might take for granted.” This line resonated deeply with me.

Often, I notice many people inadvertently use the social construct known as “the Other” when talking about the poor. If THEY are poor, THEY should spend money on necessities like food, not on entertainment. WE are not poor, so this does restriction does not apply to US. By using this attitude of THEM vs US, we alienate the poor and treat them as outsiders. The reason why I wanted to highlight this quote is because I believe we are all human beings with similar wants and needs at the end of the day. The poor share many of the same desires and temptations we have. For example, we can look at the following staggering statistic. Despite facing harsh financial difficulties, more than 99% of the extremely poor households that were surveyed spent money on a wedding, a funeral, or a religious festival during the year. This is because THEY are just like US - these important events are just as meaningful to impoverished families as rich families.

In addition, this quote reminds us of how many modern conveniences we take for granted, such as having simple air-conditioning and electricity to power a laptop. It was shocking to see the percentages of extremely poor households that were lacking basic infrastructure, like in-house tap water or a toilet/latrine. Unfortunately, none of the households living for less than $1 a day in Udaipur, India, have either of these basic needs (Table 5).

Overall, I found this paper to be highly relevant at illustrating several of Amartya Sen’s arguments that we discussed on Tuesday. It demonstrated how differences in relational perspectives, such as the other members of your community, can affect one’s behavior and well-being. The paper uses the example that poor families may opt to spend more on entertainment rather than on food in order to keep up with their neighbors. I also found it interesting that the self-reported happiness and healthiness levels of the poor were not particularly low. This may be because they can still partake in community life, and they do not always compare themselves with a richer society.

Lastly, I was able to better understand that income by itself is insufficient at determining a poor person’s quality of life. For example, Sen believes that freedom of choice is essential to well-being. This paper makes evident that extremely poor families generally do not have many “real” choices, and many of their economic choices are constrained by their market environment. Maybe, this is why they will capitalize on choosing how to spend their money, such as on entertainment over food, when the opportunity arises.

[EC Myers]

When reading the paper, I kept reading a statistic and thinking "wow this stands out to me the most- I'll have to include that in the blog." Well that happened about 20 times, so I'm not going to include all of them. The point in bringing this up though is how astoundingly different the lives of the poor and the extremely poor are from our lives in the US. Perhaps my judgement is clouded but I do not think it would be possible to survive in the US on consumption of $1/day (I think its very smart to consider poverty in terms of consumption rather than earnings because for example a person with a giant inheritance could earn nothing daily but be spending thousands of dollars a day). While the cost of living is certainly higher in the US compared to the countries focused on in the paper, so are the standards of living.

It was interesting that the study did not find a large gap in the lives of the poor and the extremely poor, despite their consumption level being double the other. It was not shocking to see that one shift between groups was that the poor often had smaller family sizes than the extremely poor, as they have to split their earnings among less people.

While the paper is packed with statistics and is intended to generalize groups for informative purposes, I felt that there was a light tone of judgement, particularly when discussing how the poor spend their money. The poor did not spend all of their money on the most nutritional food; instead they spent some on sweets, alcohol, tobacco, and entertainment. While the lack of food does make them unhappy, wouldn't the lack of joy in their lives? I know they say that money can't buy happiness, but it can provide the opportunity to indulge and not have to focus on the fact that these people will likely be struggling to provide for their families every single day for the rest of their lives. While 44% of the households mentioned wanting to cut their spending on alcohol and tobacco, a majority did not mention it and I do not think they should be shamed for that. I distinctly remember seeing a man on the sidewalk in Madrid (much wealthier than the areas discussed in the paper) passed out drunk beside the cup he was using to collect the change he had begged for. My instant reaction was judgement until I took a step back and realized that maybe thats the way he can find happiness?

I appreciated the paper including some potential reasons as to why the poor face the problems they do, but I would like to question whether or not the subjects were questioned about the motives behind their habits.

[Kate44_]

I thought Banerjee and Duflo’s article, “Economic Lives of the Poor” provided an insightful and thorough description of how the poor live their lives through an economic lens. One finding that particularly caught my attention was that among the 13 countries studied, people on average spent only 56% - 78% of their budget on food. Whenever I initially read this statistic, I was confused as to why the poor weren’t spending more money on a necessity such as food. I then remembered our discussion in class on Tuesday and how humans are much more substantive than simply having food and clothing. In order to live a meaningful life, the people who were included in the study chose to allocate a percentage of their money toward festivals, weddings, and funerals in addition to the basics. In some circumstances, being able to enjoy seemingly “frivolous” things that wealthier people take for granted might be as impactful to a person’s life as having the basics.

The article later mentions that the poor could “easily save more,” however, this assumption fails to account for the value of self-esteem. Although difficult (or impossible) to truly measure, spending money on a wedding festival, for example, may contribute more to a person’s overall happiness/quality of life than buying an extra pound of flour. People define themselves partially based on how others perceive them, so it may be important to keep up appearances in a sense. Additionally, people may choose to allocate their spending differently based on religious beliefs. Understanding this notion helped to clarify why on average, people living in poverty don’t spend every last penny available on food.

[Colby Boudreau]

Studying poverty and how it affects people is always a tough subject, but it opens your eyes to just how little people have to survive on. While we think we might understand or begin to comprehend what people are going through, it is impossible to imagine going through a day at W&L with only $1-$2 in your pocket, a place where food and shelter is pretty thoroughly provided. But to take that concept and to try to imagine living out in the real world, in a city where the cost of living is extremely high, it seems like a miracle that people are able to somehow survive on so little. The more urbanized you go, the higher the cost of living is and the more difficult it is to live on so little.

I live in New Hampshire, but this past summer I had an internship with a company in San Francisco, and spent 2 months there from June to the beginning of August. San Francisco and Silicon Valley are known for being the rising technology and startup center of the United States, if not the world. However, what most people don’t know is that the rapidly rising cost of living and influx of massive corporations over the past decade has quietly created one of the worst homelessness problems in the country. Throughout my time in the city, I lived/rented from 4 different places, which let me explore and experience different neighborhoods of the city in ways that I never otherwise would have been able to. What stood out to me the most was the dichotomy in lifestyles. Walking around the streets, almost everyone that I saw had AirPods in and were staring at their phones, but nobody seemed to notice the homeless people huddled up sleeping on the sides of buildings on every street. One of the places that I lived in was in one of the “not so great” neighborhoods of the city. I rented from a lady who works in commercial real estate, and was doing very well for herself. However, whenever I would leave to go do anything, there was a section of street on her same block where the homeless would congregate and pool their shopping carts full of gathered items, and essentially made that part of the street their area. One specific thing that stuck out to me the most from the article was how the “extremely poor” would spend large portions of the little money that they have on tobacco, alcohol, and other stimulants, as opposed to buying more food, water, clothes, or other forms of shelter. This was something that I witnessed my entire time that I was in San Francisco, as most people you would walk by usually had something to smoke or drink. When they had run out, they would rummage through the trash for food and drink, and attempt to smoke discarded cigarette butts from the ground. I mention this because it seems astounding to me that this level of poverty and homelessness is happening in one of our wealthiest and quickly developing cities, and yet no one seems to be talking about the issue or doing anything to help them.

Being poor or extremely poor is a legitimate, scary problem, and one that exists in much more places than the third world or undeveloped countries that everyone associates them with, including within the United States.

[Parker Skinner]

"The Economic Lives of the Poor” provides meaningful commentary on the lives of the poor and the extreme poor. I found the sub-sections the authors chose to identify and explain interesting. Breaking down consumption, income, market availability, and infrastructure allow for an understanding of the day-to-day decisions that people in these groups must face. The dilemma between choosing to feed oneself or pay for the funeral services of a relative is one that many of us have and will never face. The authors’ statement about the “substantial slack” in the analyzed people’s budgets is an unfair assessment of the way humans ought to act. I believe this is where the concept of freedom being one aspect of development comes into play.

The argument may be rational from a purely caloric perspective, but in terms of human happiness it does not have the same validity. All people should have the freedom to spend as they please. If “festival” activities bring one more utility than extra meals, then that person should act by spending on these activities. I believe the authors ignore this aspect of what we mean when we define development. Societal judgements of those whose identity includes poverty or even extreme poverty should not limit their consumption choices. While I do disagree with the authors in thats sense, I did find the statistic that expenditures on food have decreased as a percentage to be intriguing.