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Portfolios of the Poor: How the World'sPoor Live on $2 a DayKarl T. Muth aa Northwestern University , USAPublished online: 21 Dec 2012.

To cite this article: Karl T. Muth (2013) Portfolios of the Poor: How the World's Poor Live on $2 aDay, Forum for Development Studies, 40:2, 369-371, DOI: 10.1080/08039410.2013.750193

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Portfolios of the Poor: How the Worlds Poor Live on $2 a Day

Daryl Collins, Jonathan Morduch, Stuart Rutherford and OrlandaRuthvenPrinceton, NJ: Princeton University Press, 2009, 312 pp. Subsequent edi-tions and translations co-published by Oxford University Press, 283 pp.

Portfolio management is generally thought of as an esoteric, interdisciplinary art,

drawing from finance, historical investment data, law and regulatory expertise, and

economics. Portfolios of the Poor introduces the concept of portfolio analysis (or

cash flow analysis, which is a more accurate description of much of the discussion

in this book) for the poor. As early as the 1970s, Samuel Popkin and others began think-

ing of the poor as investors and market actors (rare at a time when development

studies was still termed peasant studies at most universities). Collins, Morduch,

Rutherford, and Ruthven conduct a socioeconomic audit of poverty and by examining

the lives of the poor at the household level reveal the constraints and intricacy of

poverty portfolio management.

With a recipe of one part financial case study for each part qualitative evaluation, the

authors voyage through the surprisingly complex network of financial relationships that

allow poor households to survive. The story is told through the financial diaries of poor

people and families in Bangladesh, India, and South Africa. In telling these stories, the

authors dodge many of the methodological questions and traps that so many pieces of

development literature fail to traverse elegantly. Their decision to design and execute

such a labour-intensive methodology is admirable and their explanation of their

methods and findings is exemplary.

In undertaking a financial diaries approach that risks becoming an accountancy

treatise, the authors thankfully avoid simplifying a series of transactions into the

language of debits and credits. What emerges instead is a wonderful story of how

and why poverty can look so similar globally something nearly everyone who has

travelled in the developing world has noticed, but few can explain in much detail.

The reader also enjoys the luxury of rich context for the decisions made by impover-

ished actors, something too often discarded in white papers and non-governmental

organisation reports.

The level of precision with which Ms Collins and her team chronicle the lives of the

poor sets Portfolios of the Poor apart from other contemporary literature in this area,

and illustrates why no matter how many great datasets are compiled fieldwork

and in-person experiences are still a vital part of our professional work as development

Forum for Development Studies, 2013Vol. 40, No. 2, 369371

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economists. The reader feels as though he or she is not merely riding in the researchers

passenger seat, but privy to the researchers ongoing observations. Take, for instance,

this passage where the authors describe a familys financial situation in a slum in

Bangladesh:

. . . Iqbal[] got a job in a garment factory for $27 a month . . . [h]is younger brother Sal-auddin, 10, continued to rag-pick, and earned $6 in a good month. After the new babywas born, [the mother] returned to a job working as a maid, earning some $10 a month. . . together, total household income peaked at an average of $3.15 a day for the sevenof them. In bad times, it fell as low as $1.90 a day. (p. 29)

The analysis of Collins et al. reaches beyond the field notes and storytelling that

defines the qualitative, anthropological development genre. This next layer of expla-

nation deals with nuanced decision-making without reading like a non sequitur primer

on behavioural economics. The authors third chapter, discussing risk mitigation in

developing countries (my area of study and expertise), takes on a voice at

the intersection of mainstream readability and scholarly contribution, fluently

discussing some of the more difficult concepts in accounting, finance, and

microeconomics.

This voice, scholarly yet approachable, is nearly as much an achievement as the

books substantive content. It is rare for a lone author to craft a book with this attribute,

and even rarer for a team of several collaborators. Portfolios reads, in parts, more like an

able translation of economics to colloquial English than like a fieldwork narrative. This

allows tables on South African burial insurance or Bangladeshi budgets to be master-

fully interspersed with explanation rather that buried in appendices or simplified

beyond intelligibility.

The most impressive bit about Portfolios of the Poor is its ability to sort thousands

of pieces of data and volumes of field notes into a volume scarcely more lengthy or

technical than The Great Gatsby. In this sense, it is a decisive victory of economical

communication. Portfolios finishes victorious, too, in its efforts to make those in

poverty seem more human, more intelligent, and more hungry for better financial

choices than for better financial supervision. Its treatment of poverty as a pecuniary

challenge rather than as a birth defect plants it firmly in a modern, post-colonial age

its language is refreshingly empirical rather than imperial, something that cannot

be said for much recent writing in our discipline.

For the reader intrigued by the financial lives of the poor, I sincerely commend and

recommend Portfolios of the Poor. For the student of development, I suggest finding a

copy of this title in the local library. It may be the closest one can come to spending an

afternoon on fieldwork abroad. This volume has already proven a landmark study and I

suspect it will set a new standard for the prose that must surround development research

if it is to be accessible, useful, and palatable to the layperson. Any author in the social

sciences would do well to match this mixture of amicable presentation and detailed

explanation in a single work.

370 Karl T. Muth

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Karl T. Muth

Lecturer, Northwestern University, USA

Email: rhetoric@uchicago.edu

# 2013, Karl T. Muth

http://dx.doi.org/10.1080/08039410.2013.750193

Notes on contributor

Karl T. Muth is Lecturer in Economics at Northwestern University, where his course discussesthe economics of developing countries. He is also a postgraduate research student at the LondonSchool of Economics and Political Science.

Book Reviews 371

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