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Sunday, 27 May 2007

Spending $2 a day...

An interesting survey this week apparently shows that "Zambians consider the settling of water bills as a least priority on their expenditure list". You can read more here. Apparently this is due to "competing needs" and taking water for granted because we have so much of it around us - at least that is what NWASCO director Osward Chanda reckons.

Actually this story reminds me of a recently published paper by Banerjee & Duflo called "Economic Lives of the Poor", that appears to give Mr Chanda more ammunition. The authors note that our poorest members of society retain some choices on how they spend the little they have. The poor don't seem to put every cent (or ngwee) into essential items like food or water, they do spend a larger proportion of it on non-essential items like entertainment (television sets, festivals) and alcohol. The paper is wonderfully written, but I'll let you be the judge on the substance!

4 comments:

  1. Cho
    As usual great stuff on your blog. Though i dont leave comments most of the time i do read your postings.
    I will be sure to read the article cited in your post but I thought it was interresting that they point out that the poor spend alot of their resources on non-essentials. Am always puzzled by that but I've come to the conclusion that the poor have an inferiority complex and subconsciously compare themselves with the well to do. Therefore, the poor seek to create a front that does not dipict the reality of their poverty and the only way to do this is to spend thier resources on clothes and entertainment.
    I rememeber a woman walking into our church very upset that some church down the street had rejected her request for food assistance. In seeking to calm her down and find out why the social worker at the other church turned her down; we found out that she was given a choice to either pay her cable tv bill or buy food and she thought this was unfair and stormed out. Wow! but such is the mind of most poor people.

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  2. Thanks!

    What did your Church do about the woman, having found out? I am curious :)

    "Am always puzzled by that but I've come to the conclusion that the poor have an inferiority complex and subconsciously compare themselves with the well to do" .

    The authors would certainly agree with your assessment - here is their own brief version:

    "The need to spend more on entertainment rather than on food appears to be a strongly felt needd, not something that would go away if the poor could plan better. One reason this might be the case is that the poor want to keep up with their neighbours".

    But in general I think this question has never been properly investigated.

    Another thing is alcohol - its a big issue among the poor. The poor spends a lot of money on it less than one would expect.

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  3. Well Cho
    We ended up helping the woman. But for such a case we would obviously opt for some informal counselling to help her see the point. In fact we've been thinking of how we can reach out to our largely immigrant community to start teaching some basic financial management.

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  4. Glad to see your local church teaching financial management. Wish my local Church can adopt a similar approach. Very so often churches tend to treat anything outside the 10% as not "God's business". But I think such practice leads to members finding themselves in a lot of debt and of course God doesn't want his children to be in debt! If the Church won't advise you on how to spend your money, your credit company will - and thats not a good position to be in.

    I am digressing, but I think my point is that for the poorer members of the church and society, financial management is even more important and getting them to make financially wise decision becomes even more paramount because the pressure to "copy" the neighbours carries even deeper consquences for them.

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