I recently came across a paper (https://www.microsave.net/wp-content/uploads/2019/08/Micro-entrepreneurs-and-Occupational-Hazard-1.pdf) that is co-authored by Stuart Rutherford (author of "The Poor and Their Money", a qualified architect, Chairman of SafeSave and an expert in microfinance) with Rahul Chatterjee (a development professional) and I would like to share my observations on the question 'Why do poor people prefer to settle for low-return employment?'
Before I do that, I would like to place on record that I am not a trained economist and therefore not qualified to speak authoritatively on scholarly economics papers. I am just an observer of life and I will forever be a student of life and in case I have made any errors in observation, please feel free to correct me.
Coming to the question on hand, I have observed that there are several angles to this. Do allow me to table them one by one:
1. There is a "Dharmic economics" angle that has been ingrained in most southeast Asian cultures by the Sanatana Dharma (the ancient way of life that people across the world call Hinduism). From Pakistan to Cambodia, the region had followers of the ancient way of life.
This way of life teaches us to be austere and frugal in every aspect of life. It teaches us to see divinity in everything around us and therefore when something fails or breaks down, replacing is the last thing on our minds. We believe in repairing and reusing before throwing anything away. This mentality is termed as 'middle-class mentality'. And we would see this attitude even amongst the most highly educated and wealthiest people in the region. So one can only imagine how it would be with the lower sections of the society.
The question therefore is 'how is this linked to earning and spending habits?'. We would be interested to note that in India (and I am sure it would be the same in the region as well), we always keep aside 20-25% of our earnings as saving for the future and we then try and live a comfortable life in the remaining 75%.
AT THIS STAGE, I must highlight that this 'middle-class mentality' is vanishing here and there amongst some demographic groups, but it would never be completely erased from our psyche. Even a business tycoon who wants to buy a luxury car in India would consider its 'resale value'.
So, this "middle-class" mentality makes us quite comfortable in status quo.
2. Let me now talk about the philosophical angle. In the sub-continent, we have a very circular and cyclical concept of life. We believe that life is a constantly-turning wheel of destiny and depending on our karma (actions), our fate is decided. Do good and good comes back. Do bad and bad will return. Therefore we would notice that people in this region are neither too thrilled upon winning the lottery nor are they too disheartened when faced with a loss.
When a person here wins a jackpot two thoughts run through his mind: 'well, I have sacrificed a lot in the past and this windfall is a result of my sacrifices' AND/OR 'I shouldn't be carried away by this because one day all this will go away'.
Similarly when a person suffers a setback (financial or otherwise), he tells himself: 'well, we brought this upon ourselves because of our misdeeds' AND/ OR 'don't lose heart as this is a test and things will turn in the future'.
How this affects our view on earning and spending is that we tend to be wary of windfalls or earning too much money. Why? Because we could get used to the new lifestyle and therefore our fall will be harder when it eventually happens.
If we notice, India's economy is shielded from global recession mainly because of our conservative regulatory fiscal and economic policies.
AT THIS POINT, I must state that a lot of people in India feel guilty about being wealthy. Whether this is because of years of Nehruvian socialist policies or the two angles that I have mentioned, there are some interesting notions that arise in an Indian's mind when he sees someone like him earning a lot. These notions could be: 'he must be taking a bribe' OR 'he must be making some moral compromises' OR 'he must be a cheating his customers' and so on.
3. Then there is the professional caste angle. While there have been injustice meted out in the name of caste, when implemented properly in its right form, the caste system is a beautiful skill-based system of 'division of labour' and 'delegation of duties' that is followed across the world and in every office and organization.
So we have the fisherman's sons and grandsons pursuing the family vocation and excelling at it; the weaver's daughters and granddaughters become weaving poetry in thread and so on.
How this affects the outlook towards money, career and earning is that there is a lot of familial conditioning that encourages people to do something that is now in their blood and part of their psyche. Of course there will be and are exceptions to this, but generally this is a common occurrence in this region.
This "known devil is better than unknown angel" mindset manifests itself into "known low-income career is better than unknown high-income career". In simple terms, this is risk management.
As a market researcher I have come across so many people in life who DO NOT want to take the next leap of faith. Examples:
1) A stand-alone road-side eatery owner who has been attracting millions of fans from across the city and even tourists doesn't want to consider opening multiple outlets, leave alone launching franchises.
2) A freelance (self-taught) carpenter who has the skill and dedication and drive for excellence laughed away the thought of opening a store. I personally offered to design contemporary customized furniture which I know will sell. But he said he is happy with what he is doing.
4. The need money to earn money angle. Here I want to recall the lines of a song from an old Bollywood Hindi film titled 'Golmaal' (meaning hanky panky). The line is 'paisa kamaane ke liye phir paisa chahiye' which translates to 'I need money to earn money'.
This is like a chicken and egg conundrum. I would like to elaborate on this with a personal example.
I counsel unemployed graduates on career planning, self-improvement and related areas. Recently a young man who has topped his class approached me and after helping him make a proper resume, I shared his resume with a few of my contacts. When I began coaching him for the interview process I realized he doesn't even have a full-sleeved formal shirt or a pair of formal shoes which he could wear for his interview. He said he couldn't afford to buy them, leave alone travel to metros like Mumbai or Bangalore to attend interviews.
I am sure that there are a lot of deserving candidates across the region who are scared to dream and therefore stop dreaming because they cannot afford to dream.
In conclusion...
I believe that poor people tend to settle for low-return employment because:
That's all that I wanted to share. I hope this provides us and other researchers working on these areas some perspective on why people behave the way they do. In case I have erred in my observations, do correct me.
Before I do that, I would like to place on record that I am not a trained economist and therefore not qualified to speak authoritatively on scholarly economics papers. I am just an observer of life and I will forever be a student of life and in case I have made any errors in observation, please feel free to correct me.
Coming to the question on hand, I have observed that there are several angles to this. Do allow me to table them one by one:
1. There is a "Dharmic economics" angle that has been ingrained in most southeast Asian cultures by the Sanatana Dharma (the ancient way of life that people across the world call Hinduism). From Pakistan to Cambodia, the region had followers of the ancient way of life.
This way of life teaches us to be austere and frugal in every aspect of life. It teaches us to see divinity in everything around us and therefore when something fails or breaks down, replacing is the last thing on our minds. We believe in repairing and reusing before throwing anything away. This mentality is termed as 'middle-class mentality'. And we would see this attitude even amongst the most highly educated and wealthiest people in the region. So one can only imagine how it would be with the lower sections of the society.
The question therefore is 'how is this linked to earning and spending habits?'. We would be interested to note that in India (and I am sure it would be the same in the region as well), we always keep aside 20-25% of our earnings as saving for the future and we then try and live a comfortable life in the remaining 75%.
AT THIS STAGE, I must highlight that this 'middle-class mentality' is vanishing here and there amongst some demographic groups, but it would never be completely erased from our psyche. Even a business tycoon who wants to buy a luxury car in India would consider its 'resale value'.
So, this "middle-class" mentality makes us quite comfortable in status quo.
2. Let me now talk about the philosophical angle. In the sub-continent, we have a very circular and cyclical concept of life. We believe that life is a constantly-turning wheel of destiny and depending on our karma (actions), our fate is decided. Do good and good comes back. Do bad and bad will return. Therefore we would notice that people in this region are neither too thrilled upon winning the lottery nor are they too disheartened when faced with a loss.
When a person here wins a jackpot two thoughts run through his mind: 'well, I have sacrificed a lot in the past and this windfall is a result of my sacrifices' AND/OR 'I shouldn't be carried away by this because one day all this will go away'.
Similarly when a person suffers a setback (financial or otherwise), he tells himself: 'well, we brought this upon ourselves because of our misdeeds' AND/ OR 'don't lose heart as this is a test and things will turn in the future'.
How this affects our view on earning and spending is that we tend to be wary of windfalls or earning too much money. Why? Because we could get used to the new lifestyle and therefore our fall will be harder when it eventually happens.
If we notice, India's economy is shielded from global recession mainly because of our conservative regulatory fiscal and economic policies.
AT THIS POINT, I must state that a lot of people in India feel guilty about being wealthy. Whether this is because of years of Nehruvian socialist policies or the two angles that I have mentioned, there are some interesting notions that arise in an Indian's mind when he sees someone like him earning a lot. These notions could be: 'he must be taking a bribe' OR 'he must be making some moral compromises' OR 'he must be a cheating his customers' and so on.
3. Then there is the professional caste angle. While there have been injustice meted out in the name of caste, when implemented properly in its right form, the caste system is a beautiful skill-based system of 'division of labour' and 'delegation of duties' that is followed across the world and in every office and organization.
So we have the fisherman's sons and grandsons pursuing the family vocation and excelling at it; the weaver's daughters and granddaughters become weaving poetry in thread and so on.
How this affects the outlook towards money, career and earning is that there is a lot of familial conditioning that encourages people to do something that is now in their blood and part of their psyche. Of course there will be and are exceptions to this, but generally this is a common occurrence in this region.
This "known devil is better than unknown angel" mindset manifests itself into "known low-income career is better than unknown high-income career". In simple terms, this is risk management.
As a market researcher I have come across so many people in life who DO NOT want to take the next leap of faith. Examples:
1) A stand-alone road-side eatery owner who has been attracting millions of fans from across the city and even tourists doesn't want to consider opening multiple outlets, leave alone launching franchises.
2) A freelance (self-taught) carpenter who has the skill and dedication and drive for excellence laughed away the thought of opening a store. I personally offered to design contemporary customized furniture which I know will sell. But he said he is happy with what he is doing.
4. The need money to earn money angle. Here I want to recall the lines of a song from an old Bollywood Hindi film titled 'Golmaal' (meaning hanky panky). The line is 'paisa kamaane ke liye phir paisa chahiye' which translates to 'I need money to earn money'.
This is like a chicken and egg conundrum. I would like to elaborate on this with a personal example.
I counsel unemployed graduates on career planning, self-improvement and related areas. Recently a young man who has topped his class approached me and after helping him make a proper resume, I shared his resume with a few of my contacts. When I began coaching him for the interview process I realized he doesn't even have a full-sleeved formal shirt or a pair of formal shoes which he could wear for his interview. He said he couldn't afford to buy them, leave alone travel to metros like Mumbai or Bangalore to attend interviews.
I am sure that there are a lot of deserving candidates across the region who are scared to dream and therefore stop dreaming because they cannot afford to dream.
In conclusion...
I believe that poor people tend to settle for low-return employment because:
- One... austerity and frugality (I call it dharmic economics) is ingrained in our psyche.
- Two... the what goes around, comes around' philosophy makes us wary of getting too rich.
- Three... the 'known low-income career is better than unknown high-income career' risk-management is at play
- Four... the 'need money to earn money' and 'need to be rich to stay rich' fact is at play.
That's all that I wanted to share. I hope this provides us and other researchers working on these areas some perspective on why people behave the way they do. In case I have erred in my observations, do correct me.
