Hesitantly, reluctantly, Nicholas Kristof today
suggests that the poor in many countries need to spend less money on alcohol and tobacco and more on education -- while also saving more. It's an "ugly secret of global poverty," he writes,
that if the poorest families spent as much money educating their children as they do on wine, cigarettes and prostitutes, their children’s prospects would be transformed. Much suffering is caused not only by low incomes, but also by shortsighted private spending decisions by heads of households.
Kristof's basis is largely anecdotal -- families he interviewed in Congo Republic. But he calls for backup from a study, to which he helpfully provides a link:
Two M.I.T. economists, Abhijit Banerjee and Esther Duflo, found that the world’s poor typically spend about 2 percent of their income educating their children, and often larger percentages on alcohol and tobacco: 4 percent in rural Papua New Guinea, 6 percent in Indonesia, 8 percent in Mexico. The indigent also spend significant sums on soft drinks, prostitution and extravagant festivals.
The results Kristof pulls from this study need some qualifying. First, Banerjee and Duflo reported findings from thirteen countries, with large variations in spending habits among them. It's true that Banerjee and Duflo find that the extremely poor in a range of countries spend between 4.1% and 8.1% of their income on alcohol and tobacco, and just about 2% on education averaged across the countries studied. But: "The reason spending is low is that children in poor households typically attend public schools or other schools that do not charge a fee" (9). Where fees are charged, the percentage of household income spent on education rises: it is 6% in Cote D'Ivoire. The study did not include Congo Republic, but one might imagine that since fees are ubiquitous there, school spending would also be relatively high.
