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.”

One Child Policy, Sex Ratio and Crime in China

Over on Voxeu.org, Esther Duflo has a very readable piece on the potential rise in crime caused by gender selection as a result of China’s one child policy. As Duflo points out there are nearly 110 young males (age 15-25) for every 100 young women. As the only child generation has reached adulthood, crime rates have increased over 13%.

Duflo cites a recent study by Chinese and American researchers: “Sex ratio and crime: Evidence from China’s one-Child Policy” (by Edlund, Li, Yi, and Zhang). The study compares regions that had different rates of enforcement of the one-child policy, which led to differences in the male to female sex ratio. Overall, Duflo says that the increase explains about 1/7 (2% ish) of the increase.

I went to look at the paper and the abstract posted (here) says that crime had increased 5-6% from the change in sex ratio. Even though the downloadable working paper (here) is more in line with the 2-3% number Duflo cites?

A couple of questions arise though. What is the impact of 3-6% rise in the crime rate? Could this impact China’s economic growth prospects, particularly since the ratio is now 120 boys to 100 girls?

My solution to the problem. Bring more Chinese males to American Universities (see here). (OK that won't work either).

How about paying households who have girls in China?

h/t to Chris Blattman