HOW TO LIVE ON ONE DOLLAR A DAY. Tim Horford (the Undercover Economist) reports in this article on how people live on one dollar a day. It is estimated that 21% of the people in the world lived on less than one dollar a day in 2001. The good news is that twenty years earlier, in 1981, 40% of the people in the world lived on less than a dollar a day. Horford relies on a moving description of the lives of the very poor by Abhijit Banerjee and Esther Duflo. These people are heartbreakingly poor. During the course of a year, in 37% of these households, the adults in the household went without a meal for an entire day. In Udaipur, India, 55% of the adult poor are anemic. Yet these extremely poor people do not spend all their income on food. They do not live on bread alone. The median extremely poor household in Udaipur spent 10% of its annual income on festivals, including weddings, funerals and religious festivals.
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I wonder whether pundits who measure the percentage living on a dollar a day have controlled for inflation and the buying power of the dollar. Moreover, I remember reading something that pointed out the following. Hypothetically 20% of people could move from 98¢ per day to $1.02 producing the sort of data described above, but with no meaningful change in their situation whatsoever.
These studies are supposed to have been corrected for price changes. At this level of income, measurement errors could make a large difference. And measurement problems mean for me that I am reluctant to draw conclusions except when the differences are quite large. And there is something baffling for us in the Western world: can it really be one dollar a day? Nevertheless, I think these conclusions hold up. This is how a lot of people live.
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I remember reading somewhere that if you have a checking account you’re wealthier than some shocking percentage of the rest of the world. I don’t think most people realize that even the very poor here in the United States suffer far less than the rest of the world. I’d even bet most cash-strapped young workers or students wouldn’t bat an eye at a $4 or $5 a day Starbucks habit.
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