Saturday, February 26, 2011

When Fighting Poverty, It's Better to Give Money to Women Than Men

Let's say that you're a big aid agency and you want to fight poverty. You've attended the Harvard Kennedy School or Columbia or somewhere with a lot of economics courses, so you know that if you want to maximize your positive impact on the lives of the poor, you should just give the poor cash instead of giving them food, services, housing, etc.

In Bangladesh, Nobel Prize-winner Muhammad Yunus, creator of the micro-credit phenomenon, has found that women not only repay loans more often than men, but that when women control the money, their families were more likely to benefit from the income.
And a study in the Philippines reported that when women have control over a couple’s savings accounts, expenditures shift towards the purchase of family-targeted durable goods, such as washing machines or kitchen appliances.
In the traditional view of economists, all money is interchangeable, seamlessly fungible, and “free” from social or cultural influences. All that matters is how much money, not which money or whose money.
But money is far from impersonal. A growing body of research by sociologists and behavioral economists finds a dazzling array of cognitively, culturally and socially distinct ways in which people approach money. Some of the most intriguing differences are in the ways that women and men approach spending–and those studies are already influencing how some policy-makers and organizations around the world allocate their funds.
Last year, for instance, Haitian authorities distributed food vouchers only to women in the aftermath of the devastating earthquake. They said the food would be more likely to be divided equitably within the household this way than if men got the vouchers. And Oportunidades, Mexico’s innovative anti-poverty program, successfully targets its cash transfers to mothers, conditional on their children’s school attendance and health clinic visits by family members. Follow-up studies find that the money usually goes for food, children’s clothes and school supplies.
The pattern seems to transcend generations. A study by MIT economist Esther Duflo finds similar results comparing South African grandmothers’ and grandfathers’ usage of their old-age pension funds. And it’s not just a peculiar feature of developing economies. Sociologist Catherine Kenney reports that in low- to moderate-income two-parent U.S. households, children are less likely to experience food insecurity when their parents’ pooled income is controlled by their mother rather than their father.
I also remember an anecdote from an NPR report - I can't find a link, but let me know if you hunt it down. When Mexican men were asked if Oportunidades should give the cash to men or women, just about every man said something like, "Well, I would spent the money responsibly, but other men would spend it on cigarettes or alcohol, so they should give it to the women."

For some reason, their response reminds me of this old riddle:
A traveler is heading along a nearly deserted country road. He encounters an old man sitting by the roadside and inquires about the way to town. The old man replies, "I don't exactly know, but there's a fork about a mile down the road. At the fork, there's a house; two brothers live in the house. Those guys know the way to town but there's a problem. One brother always lies, and the other brother always tells the truth. 'Course I don't recall which one is which." Then he adds, "There's another problem. It seems these brothers are so cantankerous that they'll only answer one question. After that, you get the door slammed in your face!" Our intrepid traveler continues on down the road, pondering this situation. Reaching the house, he knocks on the door. When a surly, ill kempt man answers the door, the traveler asks him one question. The brother answers gruffly and abruptly slams the door. The traveler confidently proceeds along the correct fork of the road toward town. What question did the traveler ask the brother in order to learn the way to town?
So, I'll ask the age-old question - why will women spend money on their families more willingly and reliably than men?


  1. Which leads to the obvious question... Does this research convince you to turn over your money to Ali to manage?

  2. Ali does indeed handle most of the money issues, the taxes, etc. ;)