Summary of survey article by Abhijit Banerjee and Esther Duflo (MIT), November 2006 http://www.cid.harvard.edu/bread/papers/working/135.pdf. “The Economic Lives of the Poor” . Compiled by aratan, MSR India, July 2007. Survey article . Uses household survey data from 13 countries:
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Summary of survey article by AbhijitBanerjeeand Esther Duflo (MIT), November 2006
http://www.cid.harvard.edu/bread/papers/working/135.pdf“The Economic Lives of the Poor”
Compiled by aratan, MSR India, July 2007
Cote d’Ivoire, Guatemala, India (Udaipur – 100 villages, and Hyderabad – 2000 urban slum HHs), Indonesia, Mexico, Nicaragua, Pakistan, Panama, Papua New Guinea, Peru, South Africa, Tanzania, and Timor Leste
CONS 6Mental well-being
INCOME GEN 5Lack of specialization
MARKETS 3Market for savings
MARKETS 4Market for insurance - 1
MARKETS 5Market for insurance - 2
MARKETS 6Market for land
INFRA 2Education and healthcare services - 1
INFRA 3Education and healthcare services - 2
INFRA 4Education and healthcare services - 3
What are some of the questions around strategies to improve the economic lives of the poor?puzzles
PUZZLE 1 the economic lives of the poor?Why don’t the poor eat more/ better?
PUZZLE 2 the economic lives of the poor?Why don’t the poor expand cultivation?
PUZZLE 3 the economic lives of the poor?Why so little specialization?
PUZZLE 4 the economic lives of the poor?Why so many entrepreneurs?
PUZZLE 5 the economic lives of the poor?Why don’t the Poor invest more in Education?
PUZZLE 6 the economic lives of the poor?Why don’t the Poor save more?
PUZZLE 7 the economic lives of the poor?Why don’t the Poor migrate for longer?
A key finding of this article is around the high discount rate of poor households, which prevents the accumulation of small surpluses (saving) during good times, towards future consumption during crises.
The poor quality of infrastructure including sanitation, healthcare and education services accessed by the poor, prevents prolonged investment and specialization in any one occupation, which could fetch higher wages.
As a result, being involved in multiple, low-paying occupations (including one or more small informal enterprises) across locations, is common among the Poor.
Low ownership of physical assets to access cheap capital, and high aversion to risk given the lack of a strong financial safety net, prevent investments to expand own business (farm or non-farm) beyond a very small-scale of operations.
Hence the low incomes persist.