What is it like to be extremely poor?
We know that the extremely poor are living on less than what $1.25 a day could buy in the United States. But this seems implausible. Wouldn’t someone with that little money just end up dying of starvation very quickly? Simulations like Living Below the Line can only go so far. It’s difficult to understand what it’s like to be that poor.
However, it’s now becoming a bit easier to understand. Abhijit V. Banerjee and Esther Duflo, authors of the popular book Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty and co-founders of The Abdul Latif Jameel Poverty Action Lab, have written a paper called “The Economic Lives of the Poor”. Using survey data from thirteen different countries, Banerjee and Duflo are able to tell the tale of life as a poor person.
Here’s an informative summary of their research.
The typical extremely poor households tends to be much larger than a US family. The extremely poor households have a median of 8 people living in them, compared to 2.5 in the US. However, it’s not typically a couple with many children like one might expect – there actually is a median of 3 adults in a household. This suggests a family structure where people live with their parents, siblings, uncles, cousins, etc., which makes sense given it is easier to pool resources when you are sharing a space.
However, poor households do have more children than US households, having about 3 children per woman of child-bearing age, as compared to 1.9 in the US or 1.6 in Europe. The population of extremely poor areas is also very young in general. While the US has about one young person (age below 18) for every old person (age above 51), extremely poor areas have a median of six young people for every old person.
This helps to explain why interventions targeted on children, such as school deworming, can have a large impact on the future of these countries - most of the population is young. It also helps to explain higher rates of violence or political instability in poor countries, as violence everywhere is overwhelmingly committed by young men according to Steven Pinker’s Better Angels of Our Nature.
What is Being Extremely Poor Like?
One of the most common traits of being extremely poor is weakness and disease. Because of low food consumption and poor nutrition, 65% of the poor in Udaipur, India (the area with the best data) are underweight.
43% of the adults report having difficulty with “activities of daily living”, and this includes 34% of adults under 50. Furthermore, 55% of the poor have an insufficient red blood cell count (anemia). In the last month, 72% of the poor in Udaipur report at least one symptom of a disease and 46% of the poor report seeing a doctor because of a disease.
Despite constant sickness, self-reported levels of health and happiness are not particularly low, but self-reported levels of stress (both financial and psychological) are very high.
Furthermore, infant mortality is still high. Surveys have asked women about the outcomes of their pregnancies, including whether the child is still alive. Infant mortality is the number of children who die before reaching their first birthday, as a percentage of the number of live births. Among the poor, this number is at a low of 3.4% in Indonesia and a high of 16.7% in Pakistan, compared to 0.5% in Europe. Notably, these numbers are likely to be underestimates because not all children are remembered, especially if they die very early.
What Do the Poor Eat?
The typical poor person could spend about 30% more on food if they wanted to, cutting out all other spending and all savings. Also, the poor don’t buy food optimally. In a surveyed region of India, the cheapest way to eat (in terms of calories per dollar) was to buy the grain “millet”. However, in this region, only about two-thirds of food spending was on millet, with another 20% on rice (which costs about twice as much per calorie), another 10% on wheat (70% more expensive than millets per calorie), and almost 7% on sugar (which is the most expensive per calorie and has no other nutritional value). I don’t know if this is true of other areas, though.
Despite having more ability to buy food, the poor don’t eat much – the households in the bottom 10% of per capita expenditure consume less than 1400 calories a day on average, which is about half of what is recommended for a man with moderate activity, or a woman with heavy physical activity.
Furthermore, going without food is quite common. In Udaipur, 45% of poor households reported adults cutting the size of their meal and 12% of households reported children having to cut the size of their meal as well. In addition, 37% of poor households in Udaipur reported going without a meal for an entire day within the last year.
GiveDirectly, one of GiveWell’s top charities that gives cash transfers to the extremely poor, notes that in their target area of Kenya, “well over half of adults skip meals, less than half of household members eat until they are content, people commonly go to sleep hungry, and a paltry 18% report having enough food for tomorrow”.
One type of food that is frequently bought in South India is a dosa, or a rice and beans pancakes that almost everyone eats for breakfast. This can be bought frequently for a rupee, which is approximately 15 US cents (PPP adjusted).
What Do the Poor Buy?
One might expect that an extremely poor person is working as hard as they can just to survive, putting every penny earned toward food. However, this actually isn’t the case – across the thirteen countries studied, food only accounted for 56% to 78% of the budget.
So what do the poor spend money on instead? Surprisingly, spending on education is very low – typically about 2% of budgets. This is mostly because governments provide free schooling. In every country sampled except Cote d’Ivoire, at least 50% of boys and girls aged 7 to 12 were in school. Unfortunately, there’s mounting evidence that the public schools aren’t that good.
A lot of spending varies region to region, but a typical extremely poor person spends about 4.1% to 8.1% of their budget on tobacco and alcohol. Furthermore, in every region except South America, around 10% of the budget was devoted to festivals, like weddings, funerals, or religious celebrations.
Why would the poor spend money on entertainment at the cost of more essential items? One possibility is that more food wouldn’t help, because they would just end up getting weak from contracting disease later on.
Another possibility is that entertainment is a strongly felt need that provides an escape from thinking about economic problems. Festivals and similar events also contribute to social bonds that are very important to everyone, but particularly those in poverty who live in riskier environments and more frequently require support from their connections to deal with financial or other difficulties.
What Does a Poor Person Own?
Even among the extremely poor, above 70% of households in South Africa and Peru owned a radio (though only 11% of the poor in Udaipur had a radio). Furthermore, while no one in Udaipur had a television, in Guatemala, nearly a quarter of households had a television and in Nicaragua almost half of the households did.
The poor generally don’t own many productive assets, but some do have some land. While only 1.4% of the poor in South Africa and 4% of the poor in Mexico own land, 65% of the poor in Guatemala, 85% of the poor in Panama, and 99% of the poor in Udaipur have land. Unfortunately, most of this land is dry scrubland that cannot be used for agriculture throughout most of the year. Furthermore, it’s not much land – a typical household’s plot, if they have land at all, is about one hectare (100m x 100m or 2.4 acres), which is small for a farm.
Other goods that could be used for productivity are in short supply. In nearly all the areas surveyed, less than 14% of poor households owned a bicycle. Less than 1% of poor households had sewing machines, bullock cart, motorized cycle, or tractor. Houses are also pretty sparse. Banerjee and Duflo’s data showed that while most households had at least one bed or cot, only 10% had a chair or stool and only 5% had a table. However, GiveWell’s site visit of Give Directly’s targeted areas in Kenya showed that living rooms they saw typically had many chairs, tables, and couches and that most homes owned a bicycle, but few houses had radios or television.
The poor also tend to lack access to basic infrastructure, but it is highly variable. Access to water varies from a minimum of 0% in Udaipar to 36% in Guatemala. Electricity varies from 1.3% in Tanzania to 99% in Mexico. Access to toilets range from 0% in Udaipur to 100% in Nicaragua. Moreover, infrastructure doesn’t always appear together. While 97% of poor households in Indonesia have electricity, only 6% have tap water.
GiveWell anecdotally noted that of the fifteen households they visited, most homes had three rooms – a sitting room, bedroom, and storage room – varying in size from 10’x12’ to 12’x20’ each. Generally, the husband and wife would sleep in the bedroom and the children would often sleep in the storage room. Houses frequently would have a separate kitchen structure.
GiveWell also observed that people would hang old calendars (like from 2003) for decoration and used kerosene lamps for light because there was no electricity. They also heard that people walk about 5-20 minutes daily to obtain drinking water. Furthermore, they observed people owning about 1-2 cows and 4-5 chickens for livestock.
How Do Poor People Get Money?
About 50% of the poor living in Indonesia, 72% in Cote d’Ivoire, 84% in Guatemala, and 94% in Udaipur report working multiple jobs in order to get their income – typically one agricultural and one non-agricultural, though not always.
Most non-agricultural jobs involve self-employment as a business owner. Typically, a member of the poor household will migrate (about 60% of families), leaving for a median of one month to find employment in a nearby city. Others will perform a job earlier in the day, like selling food, and then go out and perform another job, like selling textiles, collect trash, or general labor.
Generally these entrepreneurial jobs done by the poor do not require skills. In Hyderabad, jobs of the poor breakdown to 17% general stores, 11% tailors, 8% fruit and vegetable sellers, 6.6% telephone booth operators, 6.3% milk sellers, and 4.3% auto owners. Of these, only tailoring requires a specialized skill that takes awhile to acquire.
Additionally, about 76% of the poor report at least one member of their household working for a public employment program. Many governments provide safety-net “food for work” programs, which entitle some days of physical labor under government employment at a pre-announced, low wage. Unfortunately, this kind of work is rare and is often given out in a way that discriminates against the poor.
Another interesting question is how the poor would spend additional money, if they got it. GiveDirectly, by giving cash transfers in $1000 chunks, has been able to find out. An informal survey conducted by them and shared with GiveWell found that 67% of the money spent went into home improvement (replacing a thatched roof with an iron-sheet roof), 9% went to other (like school uniforms or a motorcycle), 9% went to livestock, and 4% went to food. However, this survey was only in Kenya, and other areas might spend differently.
How Do the Poor Save and Get Credit?
Typically, the poor don’t actually have access to a safe place to save money at a reasonable rate of return. Only 14% of poor households have a savings account (with the exception of Cote d’Ivoire, where the number is 79%). Even stashing cash in a pillow or a home doesn’t work well because of high inflation and rates of theft. Additionally, the poor, like everyone else, have problems resisting the temptation to spend money they have at hand, both when family members demand access to it, or when given the option to buy the same indulgences people in developed countries struggle to resist.
There also is little access to insurance. Less than 6% of the poor have access to any kind of health insurance. Generally, insurance is instead provided through friends and relatives as a type of loan exchange – 75% of poor households report making loans, 65% report borrowing money, and 50% report both. The most common form of “insurance” to handle economic stress is eating less, taking children out of school, and foregoing medical treatment.
This lack of insurance or saving leads the poor to under-invest because they cannot accumulate financial assets, or afford to take risks. Poor families do not specialize in skills and they operate their businesses at a remarkably small scale. Poor families have access to very limited markets and infrastructure and suffer from a lack of access to credit.
Overall, a life in extreme poverty is one that can be endured and survived, but still not one that is particularly fun. A life in this kind of poverty is a life without basic utilities, food security, and without many possessions we take for granted. Instead, it’s a life of malnutrition, disease, and unpredictability.
However, it’s not quite as terrible as it sounds. The extremely poor people still smile, still laugh, and still play. They put money into their families and their festivals. They still appear to be happy, for the most part. Their lives still contain joy.
Some people have told me that it’s pointless to try and cure the extremely poor of malaria, because this means that they’ll just continue their miserable lives and catch a new disease a few months later, and die from that. However, this is contradicted by the evidence. Curing people of malaria still allows them to live a better life than they otherwise would and helps contribute to the economic development necessary to make things better. And people who survive beyond their fifth birthday are more likely than not to live a full life.
As GiveWell writes in “What a ‘Life Saved’ Means”:
Maybe the life you saved is a life without iPhones, but we’re still talking about a person who, at the very least, can be expected to grow up, make friends, fall in love, get in arguments, watch the sunset, have ups and downs, etc.” I agree. I’d never say things “aren’t that bad”, because they are. Things are bad. But not impossible.
We can turn things around, and we should.
This article was originally written for the Giving What We Can blog, but has not yet been published there. All pictures are from GiveWell’s site visit to Kenya for Give Directly, used with permission from Elie Hassenfeld.