Nabila Tabassum Chowdhury > Recent Status Updates

"Three years later, when the same families were visited again, only 41 percent of these businesses were still in operation. Out of those that were observed in both periods, one in five of the businesses that had zero employees in 2002 had one by 2005."

"Three years later, when the same families were visited again, only 41 percent of these businesses were still in operation. Out of those that were observed in both periods, one in five of the businesses that had zero employees in 2002 had one by 2005. But almost one-half of those that had one in 2002 had none by 2005. "

"the vast majority of the businesses run by the poor never grow to the point where they start having any employees or much in the way of assets. In Mexico, for example, 15 percent of those living on less than 99 cents per day had a business in 2002."

"There are, however, two troubling shadows in this otherwise sunny picture. First, while many of the poor operate businesses, they mainly operate tiny businesses. And second, these tiny businesses are, for the most part, making very little money."

"Given the chance, it seems that even people who had been hit by extreme hardship were able to take charge of their lives and start their exit out of extreme poverty."

"Another program, conceived by BRAC, a large MFI in Bangladesh, and now imitated in a number of developing countries, shows that when given the right kind of help, even the poorest of the poor have the ability to succeed in running small businesses, and these small businesses can change their lives."

"The very fact that they are still about as likely to go into business as their richer counterparts is often interpreted as a sign of their entrepreneurial spirit."

"Compare this to the Organization for Economic Co-operation and Development (OECD) average: 12 percent of those in the workforce describe themselves as self-employed."

"Even among the rural extremely poor, many—from 7 percent in Udaipur to up to 50 percent in Ecuador (and 20 percent on average)—operate a nonagricultural business, in addition to the large number who run a farm. The number of entrepreneurs is roughly the same among the somewhat less poor in the same countries."

"Second, the market so far has mostly ignored the bottom of the pyramid. As a result, it is argued, innovations that better the lives of the poor have to be the low-hanging fruit, and who better than the poor themselves to think of what they could be?"

"there are two distinct reasons the poor may be particularly likely to find amazing opportunities. First, they haven’t been given a chance, so their ideas are probably fresher and less likely to have been tried already. "

"the idea of the entrepreneurial poor is helping to secure a space within the overall anti-poverty policy discourse where big business and high finance feel comfortable getting involved."

"We discussed the surprisingly low demand for microcredit. In particular, we went back to the story of Ben Sedan, who was convinced that he had no use for more money. "

"In the words of John Hatch, the CEO of FINCA, one of the largest microfinance institutions in the world: “Give poor communities the opportunities, and get out of the way.” Yet there are some perhaps surprising instances when, after you have gotten out of the way, the poor do not seem so ready to roll."

"This, the uncle reckoned, was true entrepreneurship: If you have very little, use your ingenuity to create something out of nothing."

"It is too hard to stay motivated when everything you want looks impossibly far away. Moving the goalposts closer may be just what the poor need to start running toward them."

"The bigger point is that a little bit of hope and some reassurance and comfort can be a powerful incentive."

"The sense of security that any of these would provide would encourage savings for two reasons: by creating a sense that the future holds promises, and by lowering the stress level, which directly impedes decisionmaking ability."

"Or insurance against health or weather disasters, so that they don’t worry that any nest egg that they manage to accumulate will just get wiped out. Or even a social safety net: a minimum income support that people would be entitled to if their income fell below a certain range that would free them from having to worry about finding money to survive."

"Microcredit, of course, is just one of many ways in which we can help the poor think in terms of a future where some of their long-term goals can become attainable. Better education for their children would probably have the same effect. So would a steady and secure job, a theme to which we will return in the next chapter."

"one of the clearest impacts of getting access to microcredit was to reduce exactly the items that the women had told us they would like to give up—tea, snacks, cigarettes, alcohol."

"Thinking about long-term goals and getting used to making short-term sacrifices in order to get there are the first steps, she thinks, toward liberation from one of the most frustrating aspects of poverty."

"Conversely, optimism and hope can make all the difference. Hope can be as simple as knowing that you will be able to buy the television you are looking forward to having."

"On the other hand, almost all of them eventually fell back into debt. It was usually a shock (an illness, an emergency need) that pushed them back into debt, and once that happened, they did not manage to pay the debt back on their own. This asymmetry between managing to stay free of debt and not managing to get out of debt shows the role of discouragement in making it harder to impose self-discipline."

"The fruit vendors are a good illustration. Dean Karlan and Sendhil Mullainathan fully repaid the loans of a random subset of these vendors (in India, and in the Philippines).13 For a while, many of the vendors managed to stay debt-free: After ten weeks, 40 percent were still debt-free in the Philippines. So these fruit vendors seem to have enough patience to stay out of debt for a while."

"Those who feel that they have nothing to lose, by contrast, will tend to make decisions that reflect that desperation. This may explain not only the differences between rich and poor but also the differences among different poor people. "

"Saving behavior crucially depends on what people expect will happen in the future. Poor people who feel that they will have opportunities to realize their aspirations will have strong reasons to cut down on their “frivolous” consumption and invest in that future."

" Then as people get richer, they start saving a higher fraction of their resources, which means that they will have, relatively, a lot more resources in the future than the poor. Finally, when people get rich enough, they don’t have to save as much of their wealth to meet their aspirations for the future, unlike middle-class people (for whom this may be the only way, for example, to buy a house)."

"For both reasons, we would expect the rich to save a higher fraction of their current net worth (think of wealth plus income). And because saving today is one ingredient of net worth tomorrow, this will have the tendency to create an S-shaped relationship between net worth today and net worth tomorrow. The poor save relatively little and therefore their future resources tend to be low."

"The problem is that self-control is like a muscle: It gets tired as we use it, and therefore it would not be a surprise if the poor find it harder to save."