Why "temptation goods" matter
Nicholas Kristof is catching a lot of flak these days for a recent column on what he calls an "ugly secret of global poverty." Citing conversations with people in Congo, as well as research by IPA Research Affiliates Abhijit Banerjee and Esther Duflo, Kristof explains that it is not necessarily true that the poor can't afford certain important purchases such as mosquito nets or school fees. Rather, funds that could have been spent on those crucial items are instead funnelled away to less than virtuous items such as alcohol, tobacco, or gambling.
But calling this tendency to spend money on small luxuries an "ugly secret of global poverty" is misleading. It's not only about global poverty. Everyone spends money on things they don't necessarily need, and could forego in order to save for bigger, important purchases. I, for one, would have around fifty more bucks a month in my savings account if I could kick my Diet Coke habit. (Ouch!) It's just that I'm fortunate enough to live in a space where that fifty bucks isn't the difference between whether or not I get a primary education, or a deadly malaria infection. I don't think it's that the poor are necessarily more susceptible to temptation than the rest of us. The poor just have less room for error.
Kristof's article has been criticized for, among other things, getting too close to a sort of "culture of poverty" argument that alludes to the poor's complicity in their own condition. (The title, "Moonshine or the kids?", certainly didn't help.) But perhaps the most important part of Kristof's piece is the one gaining the least attention. He writes: "...we need to look unflinchingly at uncomfortable truths -and then try to redirect the family money now spent on wine and prostitution."
So the question becomes how can we best help people (because it's not just the poor that could benefit here) make better decisions about how they spend their money? A number of IPA projects have explored these issues, from how commitment savings accounts can help people quit smoking, to how text message reminders can help people remember to save. Even simply providing access to finance may be a good start. One of the lesser-cited outcomes from the Spandana microfinance impact study is that for those most likely to start a business, access to microcredit helped them cut down on spending on "temptation goods" like tobacco, alcohol, and tea.
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make it local
Ideally, the pressure or incentives shouldn't come from Westerners or projects to change this behavior. That may show results in the short term, but it won't ever be sustainable. The question is how to create pressure & incentives from within the local community. Where are those structures, systems? Is it traditional chiefs, local elders, the guy's neighbors? How can they be reinforced?
This is an interesting
This is an interesting comment thread.
I don't think that interventions that try to induce people to make "better" choices necessarily need to be paternalistic as has been suggested. Dynamic inconsistency, the behavioral mechanism underlying "temptation goods", does not impose normative standards for 'optimal' behavior - it simply refers to the well-documented tendency of many people to make choices over time that are inconsistent with their own revealed preferences.
Saving is not culturally relative; implementation is
I respectfully disagree with Rohit. Development aid often comes under fire for imposing donor sensibilities on recipient moralities, and often rightly so. However, I do not think that, in this case, there is a question of cultural relativism. In order for aid to be imposing Western morals on recipients, there would have to be a question about the definition of welfare and standard of life. If it were the case that gambling was a social event that brought people together, or that prostitution was an expenditure that improved family togetherness - aspects that Western standards of welfare are generally bad at measuring - this would be different. Yet I suspect this is not the case, although it certainly would be the case if the discussion were of implementation of policies instead of whether or not policies were needed at all.
Therefore, it is not a moral statement to say that redirecting money to education or nutrition would improve life quality over expenditures on alcohol or gambling. This seems analogous to the obesity situation in the United States. There is no moral debate over whether or not increasing activity levels over remaining sedentary improves health outcomes and overall quality of life for overweight or obese people; it is just a fact, and policy makers have poured a lot of time and money into understanding the economics and behavior of eating in order to design policies that induce overweight people to make "better" health decisions.
As well, policies to help people save more, get more schooling, or buy another mosquito net are generally focused on reducing transaction and information costs, or structuring decisions to incentivize the socially desirable outcome; there are no forced decisions. Generally, these policies are for people that know they could achieve better outcomes if they could credibly commit. Individuals that do not desire these outcomes are not barred from continuing to spend their incomes on the types of goods that Kristof enumerates.
An African perspective
In every society there are those with the vision and the will to bring adversity on its knees, and equally those who could never live past instant gratifications. And where resources are scarce, it becomes more visible for all to see. In a small African country where I grew up, I had the privilege of seeing men and women alike working hard to build homes, send kids to school. These people were domestic workers, gardeners, factory workers, generally people on very very low wages. Some of them hardly had what in the western civilisations could be classifiable as education. That said, they understood that they were in bad situation and wanted better for their kids, so they took what ever opportunity came their way.
The flip side to those fine men and women are those who were happy to blow their wages on alcohol while their families go without food and have to rely on borrowing (and I use the word very loosely as they never return what they took) from neighbours. And in some very twisted situations, the husband will beat the wife for embarrassing him by borrowing food from neighbours!
I disagree that it is a question of "how can we best help people make better decisions about how they spend their money". In my opinion, we have to appreciate or acknowledge that in life there will always be moments when the urge to obtain instant gratification overwhelms the need to survive. That may explain why it becomes easy for some to make poor judgements.
How to help others
I agree that 'the poor' are really no different at the core from the rest of us; it makes sense that they also would desire things like alcohol and cigarettes. The poor are also like us in that the way that they spend their money has moral implications; all of spend money which could have been used to help others.
I think it interesting that the previous commenter uses a definitive moral statement to try to make the point that no one can make a definitive moral statement. Our unwillingness to acknowledge the absolutes of our universe is the most slippery slope of all, leaving us unable to help each other out of fear of presumption.
I actually think the problem
I actually think the problem with Kristof's piece runs even deeper than the "we all spend money on small luxuries one". The general thrust of his piece operates off the premise that we know whats best for the people that he identifies in developing countries, that we can tell them whats best for them and thus, that we need to help them make better decision.
Now, I (like many other people, such as Kristof and yourself) agree that a lot of the money spent on "drugs and gambling" would be better spent on education, mosquito nets et al. Thus, I can naturally ask the question "how best can I help these people make such decisions"? However, prior to that question must come the question "am I in a position where I should help people make decisions that I think are better"? As ludicrous as this seems- given the prostitution v. education debate- it is a question that needs to be asked, since not doing so would put us on a slippery slope. If we assume that we are naturally in a position to know what the right decisions are, what is to say that we don't just extend a Western liberal sensibility onto the lives of peoples in different settings? Its a broader issue that we need to think about in the development context, especially when we seek to help people make "better" decisions.
Thanks for the blog updates!
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