Lack of Self-Control - Reason for Poverty

Behavioral Economics suggests that lack of self-control and bad decisions leads to loss of money or failure to generate more money. Let us explore a few examples to discuss this problem of shortsightedness.

In South India, sugarcane plantations yield a lot of profit. But the crop is harvested just once in a year and a lump sum amount is got. Many farmers are not happy with this single cash flow for the whole year. So, they opt for daily or monthly money yielding options such as selling milk from cows.

Shortsightedness and the lack of self-control in saving and disbursing a single large amount of money has led to a loss in thousands. They settled for the cow instead of the sugarcane crop which is a cash cow.

Pregnant women in rural areas borrow money at huge interests for getting admission into a hospital. Or they decide to deliver the baby at home which is one of the reasons for high mortality rates during childbirth. Instead, knowing all along the need for money to deliver the baby, the women could saved money with a little self-control.

The above examples are similar to wasting a weekend watching TV while lying on the couch, instead of rushing to file your long pending tax returns. Self-control problems can be consequential for the well-off; examples include failures to eat well, get important medical checkups, or save enough for retirement. But they can be far more consequential for the poor.

Check out the link for more exciting insights on this article on fight against poverty :http://seedmagazine.com/content/article/poor_decision_making/