Welfare Economics

“Forty-five, maybe fifty, I don’t remember anymore,” seventy one year old Juan Chúl Yaxon tells me through a warming toothless chuckle that causes his leathery skin to crease around his eyes as we talk about his grandchildren. “If they study, they get lazy and do not want to work. There is no use for someone who has an education title but no land or job… and the women, they should cook and do housework.”

Juan makes his assertions over the noisy hustle and bustle of market day in Sololá, the capital of a district of the same name, half an hour North of the volcano-lined lake Atitlán. The plaza of this small rural Guatemalan city  is overwhelmingly filled with tipica- (traditionally-) clad indigenous faces curiously watching our interaction. In his eyes, his five sons and three daughters are better off working the land on their family finca. He wants his grandchildren to follow suit. Read More »

In June 2011 this article was shortlisted as a finalist for the Blog4Girls competition held by Plan UK and was one of two eventual runners up.

Her bosom swells with the type of pride that is rare to see in anyone. Heartfelt and genuine, it is completely disarming and induces uncontrollable ‘sonrisas’ (smiles) in everyone in the room. Anastasia, a 37 year old indigenous woman originally from a small rural community in Guatemala is showing us a photograph of her children and husband. He is five years her junior and they married for love when she was 24. All their kids are still in school and she will ensure it stays that way, especially for her girls. Anastasia is the only one of her whole family and five siblings to ever finish secondary school, let alone go on to university. She is currently top of her class and will graduate next year to become a social worker. She now speaks five languages: three local indigenous dialects, Spanish and a little bit of English. Whilst finishing her studies, she is working two days a week at Pencils of Promise, an NGO working towards providing Schools4All. Read More »

It is no secret that the world is getting fatter. Lazy, greedy gluttons! If only you would just put down the burger, eat a banana and go for a jog. Right? Is it really that simple? I mean Weight Watchers tells us it’s all about point scoring and will power and the occasional leaflet from the NHS insists it’s a matter of your 5-a-day, so what is wrong with us? Why are there now 1.5 billion adults and 43 million children overweight or obese worldwide, rising by a staggering 214% since the 1950s? Yes, some of it lies in self-control. We are not stupid, we all know a stick of celery is healthier than a stick of Twix. But since this is such a widespread phenomenon, I don’t think it all lies in the choices we make. Is it perhaps also genetic? I find it hard to believe that the rate of evolution is so rapid that in a generation or two a third of Americans and Brits and 24% of all Mexicans have now developed the obesity gene, with around another third being at least overweight. So if it is not entirely us or our DNA, then what on earth is going on? Well, the fact that the rate of childhood obesity in Mexican kids is highly correlated with their proximity to the US border should serve a clue. Read More »

The challenges for poor residents in urban areas can be different to those living in rural areas when it comes to achieving basic food security in developing countries. Firstly, they are likely to have less access to – or likely to have access to less – land, thus self-reliance on own production is reduced. Urbanites’ diets also typically vary to those of ruralites. For example, in Guatemala rice is almost exclusively consumed in urban and peri-urban areas (1). Both these factors make urban dwellers more reliant on the purchase of foods, leading to higher vulnerability to fluctuations in domestic and international prices: for instance, almost all Guatemala’s rice is imported(1). In addition, food insecurity in urban areas is less visible than say sanitation problems, over-crowding and so on, and therefore is not on the policy priority agenda for city ministers (2).

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“Money often costs too much.”
–Ralph Waldo Emerson –

The development community has for years been heralding microcredit as a means to escape poverty, but some very simple math suggests that we need to be cautious about pushing it too much.

To do this simple math, let’s compare the life-stories of two fictional boys who are both born poor. Let’s call them Micky and Savvy. Both work part time from age 10 earning 1 dollar per day, but they live at home with their parents, who provide for their basic needs. Micky spends his hard earned 7 dollars every week-end with his friends, while Savvy saves them and manages to invest his modest funds at an average real rate of return of 10% per year (mostly by lending money to needy friends and relatives).

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“Sanity and happiness are an impossible combination.”
– Mark Twain –

As most economists, I have been thoroughly educated to believe that people maximize utility (well-being). Sometimes people do not appear to do so (at all!), but if you correctly take into account all benefits and costs, and the information set available, a good economist can explain almost every decision as being rational and utility maximizing.

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As a visitor to INESAD and La Paz, I am staying in a friendly hostel downtown. Last week I happened to stumble onto a Casino night organised by the owners. It was all for fun and no real money was exchanged. Everyone received 250 fake bolivianos (fbs) worth of chips. If you managed to do well and double your pot to 500 fbs then you could exchange them for a free drink.

I happened to be having dinner with some other travellers I had just met on a table which was destined for Black Jack. Now this was not like a real casino which to me can seem rather boring and somewhat lonely as players silently make bets and collect their winnings or losses. Instead the 10 players around our table had really gotten into the spirit of things and supported each other cheering and laughing through the whole game. Even the dealer was on our side. The positive atmosphere led Read More »

“We would like to believe that we are not in the business of surviving but in being good, and we do not like to admit to ourselves that we are good in order to survive.”
Dorothy Rowe
“But goodness alone is never enough. A hard cold wisdom is required, too, for good-ness to accomplish good. Goodness without wisdom invariably accomplishes evil.”
Robert Heinlein
“Never let your sense of morals get in the way of doing what’s right.”
Isaac Asimov

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 “Give me the children until they are seven and anyone may have them afterward”
St. Francis Xavier
“Having children makes you no more a parent than having a piano makes you a pianist.”
Michael Levine

Bolivia spends at least ten times as much on each senior citizen as it does on pre-school children. This seems odd to me as the children are our future, and every dollar spent on them represents an investment, whereas spending on old people is just that…spending.

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Two years ago, I wrote an article entitled “Economics from the Internet to Reality” which showed first how the Internet had changed the study of economics by facilitating and universalizing it and second how the real world shows us situations where the economics is fully carried out. I cited the example of the 16th of July Fair in El Alto as the leading exponent of what is a market and how it functions in allocating resources. There is no doubt that in these years the economy has become even more universalized, for example, today anyone can hear and see real-time conferences through the Internet; and for sure the market remains the main institution of the economic science.

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