Current Discussions

Current Discussions

Living on US$2 a Day

The World Bank and the United Nations use internationally defined poverty as living on less than US$2 a day on average, and they note that below this amount most individuals can’t afford basics such as food and shelter or even access to drinking water. Research studies have shown that half the world’s population (some 2.7 billion people) lives on less than US$2 a day; although in some countries, poverty figures are higher according to the World Bank. For example, in Uganda 64.7% of the population lives in poverty, 76.5% in Bangladesh, 68.7% in India, 78.7% in Mali, and 84.5% in Nigeria. Within this defined population, 1.9 billion people (or 22%) in 1990 lived in internationally defined ‘extreme poverty’ benchmarked by the World Bank as living on less than US$1.25 a day, and by 2015 the Bank forecasts that 1 billion people will still be living in ‘extreme poverty’.

In the United States, a survey conducted in 2012 by USA Today found that 1.4 million families in the US live on US$2 a day per person. Alarmingly, that number had more than doubled in the last 15 years. However, government benefits (such as food stamps, health care, college grants and energy assistance, totaling US$900 billion in 2011) blunted the impact of such extreme poverty; although not completely.

So, what is it like to live on US$2 a day?*

In the 2009 publication of Portfolios of the Poor: How the World’s Poor Live on $2 a Day, by Jonathan Morduch, et al, the authors interviewed impoverished villagers in Bangladesh, India and South Africa and recorded every penny that the households spend to live on an average of US$2 day. The researchers discovered that despite the meager income of the villagers, they managed to stay afloat and pay for their food and shelter, and even save a bit.

In an effort to experience what it means to live on US$2 a day and to build awareness of global poverty, several initiatives have been launched in the United States and elsewhere to replicate these conditions. A few notable initiatives are highlighted here.

The $2 A Day Challenge(TDC). Founded by Prof. Shawn Humphrey at the University of Mary Washington (UMW in the USA) in 2007 to bring together the youth movement to take on global poverty, the TDC asks students at participating colleges, universities, and high school campuses to limit their spending to $2 a day. This amount must buy all food, hygiene products, and any other “luxuries” they desire. Students also follow other rules designed to simulate the obstacles faced by those in poverty. TDC has prepared a toolkit for campuses to promote and create the $2 a Day Challenge, and has lead to the Student Microfinance Movement. Students at some schools emulate the living conditions of people living in poverty; others provide lectures on global poverty and sustainable solutions—like microfinance. Some create all-campus fundraising events.

At UMW, students live in tents set up on campus for one week. Those who complete the week-long challenge experience a visceral understanding of poverty that goes beyond anything they can learn in a classroom. Additionally, students raise funds for their non-profit partner of choice by donating the difference between what they would have spent on an average day of their life and their $2 a day income and/or seeking out donors who can sponsor them for each day they live on $2 a day or through a block donation. AT UMW they support La Ceiba, a microfinance organization founded in 2008 that provides financial, social and educational support to communities in El Progreso, Honduras. UMW also organizes the Month of Microfinance (in April) where students across the U.S. host and participate in educational events and raise funds and awareness for domestic and global microfinance. This year, seven student groups are undertaking a variety of activities, including hosting professional guest speakers, showing documentaries about microfinance, holding fund-raisers for microfinance institutions, and sponsoring a national student essay competition.

View videos:How to live on $2 a day; La Ceiba-microfinance.

Living on 100 rupees a day. In 2011, two Indian men, recently returned to India after working in the United States, decided to spend three weeks in Bangalore living on 100 rupees (or US$1.95), a day. This was followed by a one-week experience on living on India’s controversial new poverty line of 32 rupees a day – which equals about 60 cents. They went without ‘luxuries’ like toilet paper, eating meat or taking the bus. Tracking their “lifestyle experiment” on a Facebookpage and a blog that breaks down their spending into pie-charts and graphs, and tracks their grocery shopping and caloric intake. After completing their experiment, the men said that it humbled them in ways they never expected. Spending a month living at the global poverty line also made them realize that they, like a growing number of Indians, are often overfed. Based on the poverty line definition, 37% of India’s 1.2 billion are poor. that line is unrealistically low.

Servants to Asia’s Urban Poor. A family of three experimented on living on US$200 for one month in a poor Cambodian village. After paying rent (US$50) and other fixed expenses they had US$2 per day left to pay for food. While managing to live on a more local diet, unbudgeted expenses left little room for emergencies and presented other challenges.

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* While the cost of food and cost of living in developing countries is less than in developed countries, the $2 a day ‘poverty line’ is calculated by using “Purchasing Power Parities” (PPP). In basic terms, this is a method used to remove the differences in the cost of living by adjusting currencies and comparing costs between different countries, and obtaining an average figure. Thus PPP money can, for example, buy the same amount of food in the USA and in India.

Full disclosure -AboutMicrofinance.com is a partner of UMW’s Month of Microfinance.