Posts Tagged ‘Swaziland’

“Foolish Spending Habits” of the Poor – Now Explained by Economists

June 24, 2015

steak

In America, middle-class people get angry when they see the poor buying steak and lobster with their food stamps, especially when they themselves can’t afford these items.

In India, the middle and upper classes get angry when they see the poor without enough food to eat, wasting money on lavish religious festivals and funerals (up to 40% of their household’s yearly income).  The King of Swaziland banned lavish funerals in 2002 for this same reason.

In Morocco, the middle and upper classes wonder how the village poor can have a satellite dish, a television, a DVD player, and a cell phone, and yet, are subsisting merely on bread and sugary tea!

In all countries, many of the poor seem to be making very poor food choices, spending their very limited food money splurging on junk-food items, rather than on healthy foods which would provide adequate nutrition for their families.  For example, in Britain, George Orwell describes poor British workers as subsisting  on an appalling diet of white bread and margarine, corned beef, sugared tea, and potato.  They prefer this to living on a more healthy diet of brown bread and raw carrots.

So why are the poor, the world over, making these seemingly bad decisions?

The answer, according to economists who have studied this question (Banerjee & Dufflo, Poor Economics, 2011),  is that  things that taste good, or things that make life less boring are a priority for the poor.

“The less money you have, the less you are inclined to spend it on wholesome food…When you are unemployed, you don’t want to eat dull wholesome food.  You want to eat something a little tasty.” Examples of tasty food might be cake, fried foods, chocolate,  a bag of chips, or even just a cup of sugary tea.

In America, a poor man in in his early 20’s, with numerous debts to other people, spent his paycheck on personal pleasures.  He purchased new tattoos, new clothes,  a weekend vacation, and some upgraded accessories for his car, instead of making payments to his creditors.

In rural villages, life can be quite boring for the poor.  “There is no movie theater, no concert hall, no place to sit and watch interesting strangers go by.  And not a lot of work, either.”  In modern Morocco, Banerjee & Dufflo found that many men lived in small houses without water or sanitation, and struggled to find work.  “But they all had a television, a satellite dish, a DVD player, and a cell phone,”  even though their families had very little food to eat.  When asked why, one of them responded, “Oh, but television is more important than food!”

So how do the poor survive depressions?  George Orwell explained it perfectly.  “Instead of raging against their destiny, they have made things tolerable by reducing their standards.  But they don’t necessarily reduce their standards by cutting out luxuries, and concentrating on necessities; more often, it is the other way around…Hence, in a decade of unparalleled depression, the consumption of all cheap luxuries has increased.”

According to economists Banerjee & Duflo, “The poor are skeptical about their supposed opportunities, and the possibility of any radical change in their lives…Therefore, they focus on the here and now, on living their lives as pleasantly as possible, and on celebrating when the occasion demands it.”

–Lynne Diligent

 


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