Poor Economics

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Poor Economics Page 5

by Abhijit Banerjee


  WHY DO THE POOR EAT SO LITTLE?

  Who Knew?

  Why did anemic Indonesian workers not buy iron-fortified fish sauce on their own? One answer is that it is not clear that the additional productivity translates into higher earnings if employers do not know that a well-nourished worker is more productive. Employers may not realize that their employees are more productive now because they have eaten more, or better. The Indonesian study found a significant increase in earnings only among self-employed workers. If the employers pay everyone the same flat wage, there would be no reason to eat more to get stronger. In the Philippines, a study found that workers who worked both for a piece rate and for a flat wage ate 25 percent more food on days they worked for piece rate (where effort mattered, since the more they worked, the more they got paid).

  This does not explain why all pregnant women in India aren’t using only iodine-fortified salt, which is now available for purchase in every village. A possibility is that people may not realize the value of feeding themselves and their children better. The importance of micronutrients was not fully understood, even by scientists, until relatively recently. Although micronutrients are cheap and can sometimes lead to a large increase in lifetime income, it is necessary to know exactly what to eat (or what pills to take). Not everyone has the information, even in the United States.

  Moreover, people tend to be suspicious of outsiders who tell them that they should change their diet, probably because they like what they eat. When rice prices went up sharply in 1966–1967, the chief minister of West Bengal suggested that eating less rice and more vegetables would be both good for people’s health and easier on their budget. This set off a flurry of protests, and the chief minister was greeted by protesters with garlands of vegetables wherever he went. Yet he was probably right. Understanding the importance of popular support, Antoine Parmentier, an eighteenth-century French pharmacist who was an early fan of the potato, clearly anticipating resistance, offered the public a set of recipes he had invented using potatoes, including the classic dish Hachis Parmentier (essentially what the British call shepherd’s pie, a layered casserole composed of ground meat with a covering of mashed potatoes). He thereby set off a trajectory that ultimately led, through many twists and turns, to the invention of “freedom fries.”

  Also, it is not very easy to learn about the value of many of these nutrients based on personal experience. Iodine might make your children smarter, but the difference is not huge (though a number of small differences may add up to something big) and in most cases you will not find out either way for many years. Iron, even if it makes people stronger, does not suddenly turn you into a superhero: The $40 extra a year the self-employed man earned may not even have been apparent to him, given the many ups and downs of his weekly income.

  Consequently, it is no surprise that the poor choose their foods not mainly for their cheap prices and nutritional values, but for how good they taste. George Orwell, in his masterful description of the life of poor British workers in The Road to Wigan Pier, observes: The basis of their diet, therefore, is white bread and Margarine, corned beef, sugared tea, and potato—an appalling diet. Would it not be better if they spent more money on wholesome things like oranges and wholemeal bread, or if they even, like the reader of the New Statesman, saved on fuel and ate their carrots raw? Yes it would, but the point is, no human being would ever do such a thing. The ordinary human being would sooner starve than live on brown bread and raw carrots. And the peculiar evil is this, that the less money you have the less you are inclined to spend it on wholesome food. A millionaire may enjoy breakfasting off orange juice and Ryvita biscuits; an unemployed man does not. . . . When you are unemployed, you don’t want to eat dull wholesome food. You want to eat something a little tasty. There is always some cheap pleasant thing to tempt you.30

  More Important Than Food

  The poor often resist the wonderful plans we think up for them because they do not share our faith that those plans work, or work as well as we claim. This is one of the running themes in this book. Another explanation for their eating habits is that other things are more important in the lives of the poor than food.

  It has been widely documented that poor people in the developing world spend large amounts on weddings, dowries, and christenings, probably in part as a result of the compulsion not to lose face. The cost of weddings in India is well-known, but there are also less cheerful occasions when the family is compelled to throw a lavish party. In South Africa, social norms on how much to spend on funerals were set at a time when most deaths occurred in old age or in infancy.31 Tradition called for infants to be buried very simply but for elders to have elaborate funerals, paid for with money the deceased had accumulated over a lifetime. As a result of the HIV/AIDS epidemic, many prime-age adults started dying without having accumulated burial savings, but their families felt compelled to honor the norm for adults. A family that had just lost one of its main potential earners might have to spend something like 3,400 rand (around $825 USD PPP), or 40 percent of the household annual per capita income, for the funeral party. After such a funeral, the family clearly has less to spend, and more family members tend to complain about “lack of food,” even when the deceased was not earning before he died, which suggests that funeral costs are responsible. The more expensive the funeral, the more depressed the adults are one year later, and the more likely it is that children have dropped out of school.

  Not surprisingly, both the king of Swaziland and the South African Council of Churches (SACC) have tried to regulate funeral expenditures. In 2002, the king simply banned lavish funerals32 and announced that if a family was found to have slaughtered a cow for their funeral, they would have to give one cow to the chief’s herd. The SACC, rather more soberly, called for a regulation of the funeral industry, which, they felt, was putting pressure on families to spend more than they could afford.

  The decision to spend money on things other than food may not be due entirely to social pressure. We asked Oucha Mbarbk, a man we met in a remote village in Morocco, what he would do if he had more money. He said he would buy more food. Then we asked him what he would do if he had even more money. He said he would buy bettertasting food. We were starting to feel very bad for him and his family, when we noticed a television, a parabolic antenna, and a DVD player in the room where we were sitting. We asked him why he had bought all these things if he felt the family did not have enough to eat. He laughed, and said, “Oh, but television is more important than food!”

  After spending some time in that Moroccan village, it was easy to see why he thought that. Life can be quite boring in a village. 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. Oucha and two of his neighbors, who were with him during the interview, had worked about seventy days in agriculture and about thirty days in construction that year. For the rest of the year, they took care of their cattle and waited for jobs to materialize. This left plenty of time to watch television. These three men all lived in small houses without water or sanitation. They struggled to find work, and to give their children a good education. But they all had a television, a parabolic antenna, a DVD player, and a cell phone.

  Generally, it is clear that things that make life less boring are a priority for the poor. This may be a television, or a little bit of something special to eat—or just a cup of sugary tea. Even Pak Solhin had a television, although it was not working when we visited him. Festivals may be seen in this light as well. Where televisions or radios are not available, it is easy to see why the poor often seek out the distraction of a special family celebration of some kind, a religious observance, or a daughter’s wedding. In our eighteen-country data set, it is clear that the poor spend more on festivals when they are less likely to have a radio or a television. In Udaipur, India, where almost no one has a television, the extremely poor spend 14 percent of their budget on festivals (which includes both lay and religious o
ccasions). By contrast, in Nicaragua, where 56 percent of rural poor households have a radio and 21 percent own a television, very few households report spending anything on festivals.33

  The basic human need for a pleasant life might explain why food spending has been declining in India. Today, television signals reach into remote areas, and there are more things to buy, even in remote villages. Cell phones work almost everywhere, and talk time is extremely cheap by global standards. This would also explain why countries with a large domestic economy, where a lot of consumer goods are available cheaply, like India and Mexico, tend to be the countries where food spending is the lowest. Every village in India has at least one small shop, usually more, with shampoo sold in individual sachets, cigarettes by the stick, very cheap combs, pens, toys, or candies, whereas in a country like Papua New Guinea, where the share of food in the household budget is above 70 percent (it is 50 percent in India), there may be fewer things available to the poor. Orwell captured this phenomenon as well in The Road to Wigan Pier when he described how poor families managed to survive the depression.

  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—the more natural way, if you come to think of it—hence the fact that in a decade of unparalleled depression, the consumption of all cheap luxuries has increased.34

  These “indulgences” are not the impulsive purchases of people who are not thinking hard about what they are doing. They are carefully thought out, and reflect strong compulsions, whether internally driven or externally imposed. Oucha Mbarbk did not buy his TV on credit—he saved up over many months to scrape enough money together, just as the mother in India starts saving for her eight-year-old daughter’s wedding some ten years or more into the future, by buying a small piece of jewelry here and a stainless steel bucket there.

  We are often inclined to see the world of the poor as a land of missed opportunities and to wonder why they don’t put these purchases on hold and invest in what would really make their lives better. The poor, on the other hand, may well be more skeptical about supposed opportunities and the possibility of any radical change in their lives. They often behave as if they think that any change that is significant enough to be worth sacrificing for will simply take too long. This could explain why they focus on the here and now, on living their lives as pleasantly as possible, celebrating when occasion demands it.

  SO IS THERE REALLY A NUTRITION-BASED POVERTY TRAP?

  We opened this chapter with Pak Solhin, and his view that he was caught in a nutrition-based poverty trap. At the most literal level, the main problem in his case was probably not a lack of calories. The Rakshin Program was providing him with some free rice, and between that and the help his brother was giving him, he would probably have been physically able to work in the field or on a construction site. Our reading of the evidence suggests that most adults, even the very poor, are outside of the nutrition poverty trap zone: They can easily eat as much as they need to be physically productive.

  This was probably the case with Pak Solhin. This not to say that he was not trapped. But his problem may have come from the fact that his job had vanished, and he was too old to be taken as an apprentice on a construction site. His situation was almost surely made worse by the fact that he was depressed, which made it difficult for him to do anything at all.

  The fact that the basic mechanics of a nutrition-based poverty trap do not seem to be at work for adults does not mean that nutrition is not a problem for the poor. But the problem may be less the quantity of food than its quality, and in particular the shortage of micronutrients. The benefits of good nutrition may be particularly strong for two sets of people who do not decide what they eat: unborn babies and young children. In fact, there may well be an S—shaped relationship between their parent’s income and the eventual income of these children, caused by childhood nutrition. That is because a child who got the proper nutrients in utero or during early childhood will earn more money every year of his or her life: This adds up to large benefits over a lifetime. For example, the study of the long-term effect of deworming children in Kenya, mentioned above, concluded that being dewormed for two years instead of one (and hence being better nourished for two years instead of one) would lead to a lifetime income gain of $3,269 USD PPP. Small differences in investments in childhood nutrition (in Kenya, deworming costs $1.36 USD PPP per year; in India, a packet of iodized salt sells for $0.62 USD PPP; in Indonesia, fortified fish sauce costs $7 USD PPP per year) make a huge difference later on. This suggests that governments and international institutions need to completely rethink food policy. Although this may be bad news for American farmers, the solution is not to simply supply more food grains, which is what most food security programs are currently designed to do.The poor like subsidized grains, but as we discussed earlier, giving them more does little to persuade them to eat better, especially since the main problem is not calories, but other nutrients. It also is probably not enough just to provide the poor with more money, and even rising incomes will probably not lead to better nutrition in the short run. As we saw in India, the poor do not eat any more or any better when their income goes up; there are too many other pressures and desires competing with food.

  In contrast, the social returns of directly investing in children and pregnant mother nutrition are tremendous. This can be done by giving away fortified foods to pregnant mothers and parents of small children, by treating children for worms in preschool or at school, by providing them with meals rich in micronutrients, or even by giving parents incentives to consume nutritional supplements. All of this is already being done in some countries. The government of Kenya is now systematically deworming children in school. In Colombia, micronutrient packets are sprinkled on kids’ meals in preschool. In Mexico, social welfare payments come with free nutritional supplements for the family. Developing ways to pack foods that people like to eat with additional nutrients, and coming up with new strains of nutritious and tasty crops that can be grown in a wider range of environments, need to become priorities for food technology, on an equal footing with raising productivity. We do see some instances of this across the world, pushed by organizations such as the Micronutrient Initiative and HarvestPlus: A variety of orange sweet potatoes (richer in beta carotene than the native yam) suitable for Africa was recently introduced in Uganda and Mozambique.35 A new salt, fortified both with iron and iodine, is now approved for use in several countries, including India. But there are all too many instances where food policy remains hung up on the idea that all the poor need is cheap grain.

  3

  Low-Hanging Fruit for Better (Global) Health?

  Health is an area of great promise but also great frustration. There seems to be plenty of “low-hanging fruit” available, from vaccines to bed nets, that could save lives at a minimal cost, but all too few people make use of such preventive technologies. Government health workers, who are in charge of delivering basic health-care services in most countries, are often blamed for this failure, not entirely unfairly, as we will see. They, on the other hand, insist that plucking these low-hanging fruits is much harder than it seems.

  In winter 2005 in the beautiful town of Udaipur in western India, we had an animated discussion with a group of government nurses. They were very upset with us because we were involved in a project that aimed to get them to come to work more often. At some point in the proceedings, one of them got so exasperated that she decided to be blunt: The job was essentially pointless anyway, she announced. When a child came to them with diarrhea, all they could offer the mother was a packet of oral rehydration solution (or ORS, a mixture of salt, sugar, potassium chloride, and an antacid to be mixed with water and drunk by the child). But most mothers didn’t believe that ORS could do any good. They wanted what they thought was the right treatment—an antibiotic or an intr
avenous drip. Once a mother was sent away from the health center with just a packet of ORS, the nurses told us, she never came back. Every year, they saw scores of children die from diarrhea, but they felt utterly powerless.

  Of the 9 million children who die before their fifth birthdays each year, the vast majority are poor children from South Asia and sub-Saharan Africa, and roughly one in five dies of diarrhea. Efforts are under way to develop and distribute a vaccine against rotavirus, the virus responsible for many (though not all) of the cases of diarrhea. But three “miracle drugs” could already save most of these children: chlorine bleach, for purifying water; and salt and sugar, the key ingredients of the rehydration solution ORS. A mere $100 spent on chlorine packaged for household use can prevent thirty-two cases of diarrhea.1 Dehydration is the main proxy cause of death from diarrhea, and ORS, which is close to being free, is a wonderfully effective way to prevent it.

 

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