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The Economic Lives of the Poor

Author

Listed:
  • Abhijit V. Banerjee
  • Esther Duflo
Abstract
The 1990 World Development Report from the World Bank defined the "extremely poor" people of the world as those who are currently living on no more than $1 per day per person. But how actually does one live on less than $1 per day? This essay is about the economic lives of the extremely poor: the choices they face, the constraints they grapple with, and the challenges they meet. A number of recent data sets and a body of new research allow us to start building an image of the way the extremely poor live their lives. Our discussion builds on household surveys conducted in 13 countries: Cote d'Ivoire, Guatemala, India, Indonesia, Mexico, Nicaragua, Pakistan, Panama, Papua New Guinea, Peru, South Africa, Tanzania, and Timor Leste (East Timor). These surveys provide detailed information on extremely poor households around the world, from Asia to Africa to Latin America, including information on what they consume, where they work, and how they save and borrow. We consider the extremely poor -- those living in households where the consumption per capita is less than $1.08 per person per day -- as well as the merely "poor" -- defined as those who live under $2.16 a day -- using 1993 purchasing power parity as benchmark. In keeping with convention, we call these the $1 and $2 dollar poverty lines, respectively.

Suggested Citation

  • Abhijit V. Banerjee & Esther Duflo, 2007. "The Economic Lives of the Poor," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 141-168, Winter.
    • Handle: RePEc:aea:jecper:v:21:y:2007:i:1:p:141-168
    Note: DOI: 10.1257/jep.21.1.141
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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