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With a little help from my friends

June 5, 2015

Poverty is about who you know as much as what you earn

Jun 6th 2015 | From the print edition of the Economist

“I LIKE money and nice things, but it’s not money that makes me happy. It’s people,” says one woman in a World Bank survey. She’s not alone: research has found that social integration is more important for well-being than income, and also decreases poverty. Loneliness, conversely, can be deadly: one study found it did more damage to health than smoking. This week, policymakers from 40 countries met in Colombia to ponder ways to measure deprivation that take account of more than just income, including isolation. Several Latin American countries are devising or have already adopted such “multi-dimensional” measures of poverty. Income can be a misleading measure of need because poor people end up living in different degrees of hardship depending on their intangible resources. Having strong social bonds eases financial deprivation. Friends and relatives can lend money, pool risk, mind children and bring news of job openings. Researchers from the London School of Economics found that when a group of Bangladeshi women were given business training and free livestock, not only did they move up the income ladder, but their friends’ lot improved too. A year later the friends’ consumption had risen by almost 20%, and they claimed to have become savvier about business as well. The downside is that not having the right friends can cement hardship. The more concentrated the poverty, the less helpful social networks tend to be. In Atlanta, living in a poor neighbourhood decreases the chance of having a friend with a job by almost 60%, and of having a friend who had been to university by over a third. A global survey conducted in 2014 by Gallup, a polling firm, found that 30% of people in the poorest fifth of their country’s population had nobody to rely on in times of need, compared to 16% of the richest fifth. It is doubly unfortunate, then, that poor people are often socially excluded precisely because they are poor. Chileans and Venezuelans see poverty as a bigger cause of discrimination than gender or ethnicity, according to researchers from Oxford University. Several countries have experimented with schemes that connect lonely old people and deprived youth. Germany, for instance, has built “multi-generational” community centres where older visitors get computer coaching from teenagers. With luck, these connections will help: one American study found that in poor neighbourhoods, three-quarters of jobholders found work through friends. Perhaps Germany’s centres will furnish income as well as company.