We all want to see a world without poverty. Existing approaches to economic and social development, such as microfinance, village savings, and loan associations, or healthcare interventions are important and respond to the need to build up financial systems and improve wellbeing in overwhelmingly poor areas.
However, if we continue to assume that the operating principals in poor areas are the same as in the first world, then we threaten to reduce the efficacy of decent projects. In many instances, people in the first world simply misunderstand the cultural, economic, and political complexity of impoverished villages and societies. Here are five examples of how to improve our understanding:
1. We are terrible at predicting how a given intervention will affect recipients. The freebie culture that surrounds much development work can be harmful and unintentionally encourage apathy. Why bother investing in zinc for your house if you knew that sooner or later someone will come along and give it away for free? Fortunately, development economists are becoming more adept about discerning which give-a-ways make a long-term, sustained impact by using randomized control trials (RCT). Pioneered by economist Esther Duflo and the Poverty Action Lab at MIT, RCTs measure efficacy of a given intervention with a control group to yield statistically-supported evidence of whether an intervention works. For example, one trial showed that giving away bed nets reduces malaria and increases long-term adoption Kenya.
2. A cultural system based on reciprocity. Like all cultures, many rural villages and poor areas operate according to deeply entrenched norms and values, often unwritten and simply understood by residents. Often, this includes a strong sense of mutual reciprocity, where ‘you scratch my back and I’ll scratch yours’ assumes a larger, yet more indirect role. Members of a community are expected to take care of each other. Where one member falls on hard times, the expectation is that the rest of the community will help. Neighbors will forgo financial benefit to complete this standard, which may puzzle us individualists. Can you imagine your local grocer agreeing to give food away to their neighbor because they are hungry? Not likely. And the smaller the community, the more intense the familial ties, and the greater certainty that each depends on the income, surplus harvest, or cash windfalls of other members of the community to support one another.
3. The poor have purchasing power. As individuals, purchasing power is scant, but as a group, it adds up quickly. According to research on the Bottom of the Pyramid, 4 billion people live on less than $1,500 a year and half still live in rural communities. Between 40-60% of economic activity takes place at this low-income level. Living rurally decreases the likelihood that residents will be reached by goods and services. It requires creativity and ingenuity to engage these far-away places. Here in rural Panama, a community may not have a passable road for human transport, but it’s almost guaranteed that some enterprising merchant has large enough tires to trudge to even the most far-reaching communities to sell basic dried goods to small-scale retailers.
4. Extra income is not necessarily spent on what you might expect. When people receive income, whether through short-term work, state welfare, or otherwise, they make any number of purchasing decisions. However, they may not spend money in ways that we would expect – on preventative healthcare, food, savings, or other provisions. The assumption may be that if 1 billion people are hungry, they would spend extra income to buy food. However, this is not necessarily the case. For better or worse, we are all susceptible to spending windfalls on leisure activities instead for our future benefit. Weighing short-term benefit with long-term value often is not enough motivation to spend differently.
5. Peer pressure gets things done. If your whole village has a latrine, you probably will build one too. If your neighbor tells you that she made oral-rehydration therapy to help her child’s diarrhea, you might be more inclined to try it yourself. The power of peer messaging greatly impacts acceptance and adoption rates. Rather than a litany of statistics or scare-tactics, it may suffice to convince one change-agent in the community to adopt a new practice. This influencer can then impact the way that others make choices as well. Peer-to-peer training, such as Central America’s Campesino a Campesino movement demonstrate a willingness to learn from one another, instead of from an outside institution that does not share the same culture, local knowledge, or work ethic.
Photo Credit: Jessica Rudder