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PORTFOLIOS OF THE POOR
How the World’s Poor Live on $2 a Day

$29.95

The book explains how more than two billion people around the world survive on just two dollars a day or less.

The authors of Portfolios of the Poor asked villagers and slum dwellers in Bangladesh, India, and South Africa to keep track of how they manage their money over a period of one year. Their “financial diaries” show that they cope by using financial tools that tap informal networks and family ties. Some have run saving clubs and used microfinancing.

The authors believe that the experiences of these poor households reveal new methods to fight poverty and ideas to develop financial products for the poor.

Daryl Collins, who conceived and directed the most recent version of the financial diaries in South Africa, is a senior associate at Bankable Frontier Associates in Boston. Jonathan Morduch is professor of public policy and economics at New York University and coauthor of The Economics of Microfinance. Stuart Rutherford is the author of The Poor and Their Money, and founder of SafeSave, a microfinance institution in Bangladesh. Orlanda Ruthven recently completed a doctoral degree in international development at the University of Oxford and lives in New Delhi.

“In Portfolios of the Poor, authors Daryl Collins, Jonathan Morduch, Stuart Rutherford and Orlanda Ruthven tackle the question of how some 2.5 billion people, roughly 40% of humanity, survive on $2 a day. The answer? Creatively. Turns out that the poorest people on earth engage in the sort of sophisticated money management that would make Chuck Schwab proud… One key finding is that the poor do not live hand to mouth, exhausting every last cent on food and shelter. Earnings shift by season, job and health, so the poor spread them out… The diaries reveal a ‘real, ongoing, and substantial demand’ for better financial services, which poor families need to provide better health care and schooling for their children.”—Carlos Lozada, The Washington Post

“The research provides evidence of the sophistication with which poor people think about their finances. They are acutely aware, for example, of the importance of some psychological phenomena whose effects behavioral economists have only recently begun to explore.” —The Economist

“Ten years ago, the authors of this unusual study began collecting detailed year-long ‘financial diaries’ from households in Bangladesh, India, and South Africa... The diarists did things that might seem irrational—borrowing in order to save; paying interest on savings—but that made sense given their unpredictable incomes and limited options. While the authors do offer prescriptions for how to expand those options, it’s their scrupulous attention to actual behavior that makes this book invaluable.” —The New Yorker •