Portfolios of the Poor: How the Poor Live on Less Than $2 a Day
The Financial Access Initiative (FAI) – a consortium of development economists funded by the Gates Foundation – is at the forefront when it comes to financial research for base of the pyramid markets. I have long admired the work of Jonathan Morduch and Sendhil Mullainathan, two of FAI’s directors.
Earlier today, I received word that Morduch – with 3 co-authors – has written a new book, entitled Portfolios of the Poor: How the Poor Live on Less Than $2 a Day. According to the FAI web site:
The book reports on the yearlong “financial diaries” of villagers and slum dwellers in Bangladesh, India, and South Africa–records that track penny by penny how specific households manage their money. The stories of these families are often surprising and inspiring. Most poor households do not live hand to mouth, spending what they earn in a desperate bid to keep afloat. Instead, they employ financial tools, many linked to informal networks and family ties. They push money into savings for reserves, squeeze money out of creditors whenever possible, run sophisticated savings clubs, and use microfinancing wherever available.
I have not read the book, nor have I spoken to its authors; therefore, I must reserve judgement until it’s released. But knowing the quality of FAI’s work – and Morduch’s in particular – I cannot help but get excited by its prospects. There is preciously little known about the micro-level spending patterns of low-income individuals. With 4 co-authors, I attempted to tackle this question a couple years ago, which culminated in a macro-level estimate (The Next 4 Billion: Market Size and Business Strategy for the Base of the Pyramid).
Micro is relatively virgin territory. A notable exception is the excellent scholarship coming out of MIT’s Poverty Action Lab. Still, it’s exciting to see this new book on the horizon. In conjunction with the book launch, the FAI is hosting an event at NYU next month with Morduch, co-author Daryl Collins, Economist editor Matthew Bishop and White Man’s Burden author (and NYU professor) William Easterly.
The eponymous event will be held Thursday, May 7 from 6:00 to 8:00 PM in New York. I plan to attend – if you’re coming, let me know and maybe we can meet up.