Portfolios of the Poor

Daryl Collins, Jonathan Morduch, Stuart Rutherford and Orlanda Ruthven set out to explain systematically how households living on two dollars a day or less manage their money. Their core evidence is yearlong financial diaries, built from interviews with households in Bangladesh, India and South Africa, from rural villages to urban slums, tracking cash down to the penny. The diaries show that most poor families do not simply live hand to mouth: they save for reserves, borrow wherever they can, join savings clubs, use microfinance where it exists and lean on family and informal networks. The authors draw lessons for fighting poverty and for designing banks for the bottom billion, and the work rests on a decade of research.

Mark Zuckerberg said it explains how families living on very little invest their money to support themselves, and hoped it would give readers insight into how to help them better.