If you had $12 extra, would you buy a few drinks or send your kids to school?

Nicholas Kristof recently wrote a column discussing an often-ignored detail about poverty-stricken cultures — that the poor are prone to the same vices as the rich.

The poorest of the world certainly don’t have much to live on — the World Bank claims it’s as little as $1 a day — but what is even more startling is how wasteful people can be when they have so little.

Kristof sums up the problem this way:

“[I]f 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.”

We often hear about how the West is prosperous because of unfettered greed, but what many fail to see is how greed is an inherently human characteristic that rarely leads to any sustainable good.

Kristof provides several instances where the extremely poor choose to put self-indulgent (and self-destructive) habits in front of basic necessities (e.g. education, mosquito nets, medicine, etc.). For one Congolese family, the Obamzas, the father chooses to spend $12 a month on alcohol rather than pay $2.50 a month for each of his children’s school tuition. He also refuses to pay $6 for a mosquito net, even though two of his children have already died from malaria.

In this case, it appears that irrational self-interest is the primary culprit. The socio-economic conditions of the Congo Republic are bad enough as it is, but here we can see how one man’s greed is working to keep himself and his entire family in poverty. His choice to consume alcohol may feel good in the moment, but in the long run he is limiting his quality of life. Similarly, when an entire culture begins to follow these preferences, the potential for a resourceful and stable economy is severely diminished.

This isn’t to say that such choices are limited to the poor or even the Third World. Indeed, the most prosperous are prone to this type of behavior no matter how well their societies are structured. What I want to emphasize is that critics of capitalism fail to make a distinction between selfishness and properly defined self-interest. Instead of opposing self-interest altogether, we must focus our efforts on defining it properly and leveraging it effectively.

There are plenty of ways societies can structure themselves to encourage this (e.g. via capitalism, free trade, etc.), but good governance and economic freedom are not solutions in and of themselves. At the core, this is a cultural issue that depends on individuals properly identifying self-interest for themselves. No matter how corrupt and backward the Congo may be, Mr. Obamza still has the freedom to choose between moonshine or the social mobility of his family. His freedom may be limited in many other ways, but it remains clear that his lack of rational self-interest is a significant poverty trap.

But even putting aside the talk about properly defining self-interest, what Kristof’s column tells us is that throwing money at the poor is not the proper solution if we care anything about permanent culture-wide prosperity. We cannot heal broken economies by simply dropping mosquito nets or medicine and pretending modernization will automatically follow.

Humans are humans, and prosperity doesn’t come by pretending we are moral angels that can wave a magic wand to put bread on the table. Until we get a handle on overcoming cultural depravity, we cannot create widespread prosperity.

What are your reactions to Kristof’s article? Is poor decision-making inevitable? As societies progress, do you think poor decision-making generally runs proportionate to income levels? Is this lack of resourcefulness a cause or a symptom of poverty? Is it both?

I’m interested in your thoughts.

(Note: The image above is provided by 4028mdk09 / / CC BY-SA 3.0)

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