What Is it Like Living on $1 a Day?

I was rereading an article this morning by Abhijit Banerjee and Esther Duflo, which describes the lives of people consuming less than $1 a day. The $1 a day measure was originally created because it approximated what it would cost to feed a person.

The paper uses household surveys from 13 countries to get an overview of what the poor spend their money on. Not surprisingly, food is the highest expenditure with anywhere from 50-75% of the budget. Spending on alcohol and tobacco is not uncommon. But, in many countries these families also spend 10% of their budget on festivals, weddings and funerals.

Even if the poor had more money the article cites studies that have shown that not all of the additional money would be spent on food. Some would be spent on “entertainment.” I like how the study puts it into perspective in these lines:

“In other words, many poor people save money that they could have eaten today in order to spend more on entertainment in the future, which does not immediately fit the idea of their lacking self-control.

“The need to spend more on entertainment rather than on food appears to be a strongly felt need, not something that would go away if the poor could plan better.”