Barefoot businessmen

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Maitreesh Ghatak: Jan 12 2009, 02:58 IST

The poor, to paraphrase Hemingway’s well-known quip about the rich, are just like you and me, except they have less money. How much less? The 1990 World Development Report from the World Bank defines the extremely poor as an individual who lives on $1 or less a day (at the 1985 purchasing power parity exchange rate). This is close to poverty lines used by many countries (for example, the all India rural poverty line used by the Indian Planning Commission was Rs 328 per person per month, or $32 in PPP dollars in 1999-2000) and has become something of a standard measure.

The poor (as opposed to the extreme poor) are defined to be those who live on less than $2 per person per day. To put all this in perspective, the poverty line in the US works out to be something like $13 a day. How does someone live on $1 per person per day? Or for that matter, how does one live on $2 per person per day? What do they spend their money on? How do they earn their living? What kind of infrastructure do they have access to?

In a recent study, Abhijit Banerjee and Esther Duflo of MIT look at household level survey data from 13 countries, including India (listed in table 1), and describe the patterns of consumption and income generation of the extremely poor, as well as their access to markets and public goods.* This is based on the

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