Econ Lives Poor Summ

“THE ECONOMIC LIVES OF THE POOR” : 

“THE ECONOMIC LIVES OF THE POOR” Summary of survey article by Abhijit Banerjee and Esther Duflo (MIT), November 2006 http://www.cid.harvard.edu/bread/papers/working/135.pdf Compiled by aratan, MSR India, July 2007

Survey article : 

Survey article

CONSUMPTION: 

CONSUMPTION What and how do poor families consume?

Demographics: 

Demographics CONS 1

EP HHs do face a range of choices around consumption: 

EP HHs do face a range of choices around consumption CONS 2

Food consumption: 

Food consumption CONS 2

Ownership of Consumer Durables: 

Ownership of Consumer Durables CONS 3

Ownership of Productive Assets: 

Ownership of Productive Assets CONS 4

Pursuit of physical health: 

Pursuit of physical health CONS 5

Mental well-being: 

Mental well-being CONS 6

Investment in education: 

Investment in education CONS 7

INCOME GENERATION: 

INCOME GENERATION How do the poor earn money?

Large share work as entrepreneurs: 

Large share work as entrepreneurs INCOME GEN 1

Involved in multiple occupations: 

Involved in multiple occupations INCOME GEN 2

Temporary migration for work common: 

Temporary migration for work common INCOME GEN 3

Permanent migration for work less common: 

Permanent migration for work less common INCOME GEN 4

Lack of specialization: 

Lack of specialization INCOME GEN 5

Problem of small-scale: 

Problem of small-scale INCOME GEN 6

ACCESS TO MARKETS: 

ACCESS TO MARKETS What is the market environment in which the poor transact?

Market for credit - 1: 

Market for credit - 1 MARKETS 1

Market for credit - 2: 

Market for credit - 2 MARKETS 2

Market for savings: 

Market for savings MARKETS 3

Market for insurance - 1: 

Market for insurance - 1 MARKETS 4

Market for insurance - 2: 

Market for insurance - 2 MARKETS 5

Market for land: 

Market for land MARKETS 6

ACCESS TO QUALITY INFRASTRUCTURE : 

ACCESS TO QUALITY INFRASTRUCTURE What infrastructure and services do the poor use?

Access to physical infrastructure : 

Access to physical infrastructure INFRA 1

Education and healthcare services - 1: 

Education and healthcare services - 1 INFRA 2

Education and healthcare services - 2: 

Education and healthcare services - 2 INFRA 3

Education and healthcare services - 3: 

Education and healthcare services - 3 INFRA 4

PUZZLES: 

PUZZLES What are some of the questions around strategies to improve the economic lives of the poor?

Why don’t the poor eat more/ better?: 

Why don’t the poor eat more/ better? PUZZLE 1

Why don’t the poor expand cultivation?: 

Why don’t the poor expand cultivation? PUZZLE 2

Why so little specialization?: 

Why so little specialization? PUZZLE 3

Why so many entrepreneurs?: 

Why so many entrepreneurs? PUZZLE 4

Why don’t the Poor invest more in Education?: 

Why don’t the Poor invest more in Education? PUZZLE 5

Why don’t the Poor save more?: 

Why don’t the Poor save more? PUZZLE 6

Why don’t the Poor migrate for longer?: 

Why don’t the Poor migrate for longer? PUZZLE 7

WRAP-UP : 

WRAP-UP Looking beyond market failures and immediate consumption compulsions

Designing ‘better-fit’ programmes: 

Designing ‘better-fit’ programmes

Summary: 

Summary 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.