Less Than 1 Billion People Living On $1 a Day

This month the World Bank announced that 986m people lived on the equivalent of less than one dollar a day in 2004—the first time it has counted fewer than 1 billion people in such a parlous state.

That is good news, and if you look at the graph, the percentage of people living in absolute poverty has been decreasing drastically over the last 1500 years.

Of course measuring poverty is a difficult thing to do.

India's line, for example, defined the poor as those who ate less than 2,250 calories a day.

By that definition the US has a 0% poverty rate in the US, or maybe 1% if you count models and wrestlers.

How do they spend their money?

A dollar a day would seem to leave little room for choice or discretion. Hunger is surely the most binding of constraints. And yet these pillages of privacy show that the poor do make choices. They also suggest they are not always the best ones.

The poor do not complain much, the two authors note. (Only 9% of people in their Udaipur survey say their life makes them generally unhappy.) But they have a lot to complain about. Beset by hunger and illness, many are scrawny (65% of adult men in Udaipur are underweight), over half are anaemic, and about a seventh suffer from impaired eyesight. Many had to go without food on at least one day in the previous year.

And yet they do not eat as much as they could. According to Mr Banerjee and Ms Duflo, the typical poor household in Udaipur could spend up to 30% more on food than it does, if only it stopped devoting money to alcohol, tobacco and festivals. That last item, which includes weddings, funerals and religious events, typically accounts for about a tenth of the household's budget. This spending might be motivated by escapism—the poor have a lot to escape—or perhaps by social emulation. Even those in absolute poverty care about their relative standing.

This reminds of the lyrics to the song Underwear Goes Inside The Pants:

This homeless guy asked me for money the other day.
I was about to give it to him and then I thought he was going to use it on drugs or alcohol.
And then I thought, that's what I'm going to use it on.
Why am I judging this poor bastard?

I was going to comment on their spending, but I think I will go buy myself a beer instead.

via The Economist