Sam Watson recently drew my attention to this fascinating article by my heroes – Adhijit Banerjee and Esther Duflo. How do people in the “bottom billion” spend an income of around $1 per day? The authors turn to household surveys covering 13 countries in Asia, Africa and Central America (one assembled by the World Bank, and the others by the RAND Corporation). Even though it is hard to get a full stomach on $1 per day and many are hungry, not all money is spent on food – the proportion varies from a half to three-quarters of income spent on food. Nor are the cheapest foods always selected – taste crowds out Calories, even if that leaves you hungry. The second largest source of expenditure is festivals, such as weddings and funerals. Radios are a priority and show elastic demand on income. There is an inverse relationship across countries between spending on radios and on festivals. Asset ownership is very low – even in rural areas bicycle ownership is low – at a third of households or less. Education attracts a very low proportion of expenditure; 2-3% of the household budget in Pakistan, for example. People often feel hungry, many are anaemic, and energy levels are low. Illness rates are high and anxiety common when compared to high income countries. I guess many are in a poverty trap and need a little help to get them out of it, but the results resonate with the Gospel of Matthew, ‘Man shall not live by bread alone’.
— Richard Lilford, CLAHRC WM Director
- Banerjee AV & Duflo E. The Economic Lives of the Poor. J Econ Perspect. 2007; 21(1): 141-67.