What Does $1 a Day Really Mean?
We hear a lot about people who live on “less than a dollar a day.” But a dollar buys a lot more in some countries than it does in others. That’s why some economists believe a better way of understanding the relative income of people around the world is through something called Purchasing Power Parity.
A simple way of understanding this concept is through the words of BBC Reporter Mukul Devichand, who explains how the “Big Mac Index” — first coined by The Economist — is a good way of understanding price differences between countries.
The idea, says former World Bank economist Michael Ward, is that the Big Mac is an almost identical product no matter where in the world you buy it — bread, cheese, meat, lettuce and labour costs. But in fact, Big Macs end up costing much less in places like Beijing or Mumbai than London or New York.
So economists use the different prices of Big Macs across the world to judge the relative buying power of people in different countries. For example, if a Big Mac costs a dollar in America, but only 25 cents in Mumbai, then a PPP "dollar" in Mumbai is actually worth only 25 cents.
It’s a good idea to keep the dollar’s relative worth in mind when checking out the portfolio of pictures on onedollaroneday.org, sponsored by our sister site Global Citizen Corps. The site is challenging its visitors to submit photos that answer the question, “What can you eat on a dollar a day?”
With Global Citizen Corps’ global audience, it’ll be interesting to see how submissions from the U.S. differ from those from, say, Spain or Syria or Sudan.
Students aged 14-25 can register with Global Citizen Corps and submit their photo on flickr.com. The grand prize is a digital camera, with Amazon.com gift cards for second and third place. The deadline is August 20.
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We really do live in an
We really do live in an excessive world.
financial struggles
Everyone will remember where they were when the largest bank failure in U.S. history went down. On Thursday, September 25, Washington Mutual voluntarily filed for Chapter 11 bankruptcy protection. The Federal Deposit Insurance Corporation seized the struggling savings and loan’s assets and the company went into receivership. This could have been shattering to America’s economy. "Consumer watchdogs" who hound payday cash advance lenders would slink off with their tails between their legs. J. P. Morgan Chase came in to buy them out at zero hour, preventing the worst of the carnage, but the menacing warning signs remain. Will more banks fail? What would have happened if J. P. Morgan Chase hadn’t bought WaMu and the FDIC had had to pay customers back? That would have meant up to $100,000 per individual and $200,000 per joint account, as well as $250,000 for IRAs and so on. Many economists are fearful that such a bailout would have drained at least half of the FDIC’s reserves, which would, without doubt not mean well if more banks fail. Much of this can be chalked up to too many banks becoming too greedy and too deep into the depths of the subprime home lending market. There is some fear that we'll go even deeper into the dilemma, others think the problem will fix itself. In times like these, payday loans can can offer short-term relief when the banks can’t.
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