William Easterly on “Portfolios of the Poor”

I read Portfolios of the Poor: How the World's Poor Live on $2 a Day earlier this year. It is a fascinating book. I suspect it will go down as a pivotal book in poverty policy.

Researchers collected financial diaries on the daily financial transactions of hundreds of poor families in India, Bangladesh, and South Africa. It is a bit dry and sometimes overwhelmed with data, but the book gives an unprecedented window into the complex financial lives of the poor in emerging nations. We tend to think of the poor as helpless victims and assume that their biggest problem is opportunities for saving and wealth creation. The book shows that cash flow management is the primary concern for the poor. One of my takeaways is the need for appropriate innovation and improvement in the financial instruments available to the poor, who are already remarkably resourceful … and that frequently means principled and reliable social and government institutions. The ability to stabilize cash flow would create a platform for other innovations.

William Easterly gives a helpful overview of some learnings from the book Financial Access Initiatives.