Does your culture support saving?

by Philip Brewer on 30 June 2008 10 comments
Photo: Philip Brewer

My brother told me once that, when he was in college, he handled money this way: "When I got paid, I set aside enough money for cigarettes, then spent the rest buying pizza and beer for everyone until the money ran out.  The other people I hung around with did the same."

As I was researching my previous article (on a way to raise capital to start a business without banks or saving) one of the advantages mentioned was that it was an alternative to saving for people whose cultural or family values frowned on saving.

I started wondering if there were other cultural mechanisms to support accumulating capital for people whose culture frowned on saving, and that got me thinking about why a culture would frown on saving.  That actually turns out to be pretty easy to explain:  Saving only works when there are things to save, and there are plenty of circumstances where there isn't much to save.  

Hunter-gatherers, for example, probably had very little that was worth saving.  Trying to hoard meat or berries beyond what you could use immediately would just mean that they'd go to waste.  Everyone would be better off if the general rule was to share any bounty--less went to waste, and fewer people would starve just because they had a string of bad luck.  Making it a cultural value made everyone more secure, because you could count on others reciprocating.

Agriculture worked a change, of course.  Suddenly there were both reasons to save, and the means:  Grain could be stored, and you had to keep seed, or you couldn't plant next year.  On top of that, a culture of sharing didn't help the community as much as it had for hunter-gatherers, because you and your neighbors all got your harvest at the same time.  When things got tight, you couldn't expect anyone else to have stuff to share with you--their supplies would be running out at the exact same time as yours.

The fine points of these pressures for and against saving versus sharing would be different, depending on the kind of agriculture.  Wheat can be stored for decades.  Root vegetable for a season.  Milk hardly at all.  Live animals can live for a long time, but they need to be cared for right along--you can't just stick them in a granary--and once you slaughter them, they're gone whether you use the meat or not.

You'd expect, then, for different kinds of agriculture to lead to different kinds of cultural traditions about saving.  The more your crops could just be saved (such as wheat or rice), the more the culture would tend to encourage families to be self-relient.  The more your crops tended to be hard to preserve--and especially if they produced their bounty in irregular bursts, rather than all at once--the more the culture would tend to discourage saving in favor of sharing any surplus.  

Fishing might be an example of the latter, and among the Native Americans of the Pacific Northwest coast (where fishing provided ample food), there were cultures that encouraged sharing to the point of making big ritualized productions out of it.

Other things besides agriculture might influence this.  Feudal social structures often specify how the harvest is supposed to be divided up, but details matter.  If any surplus tends to be seized by the lord, then there's not much advantage to saving over consuming, and no reason not to share any surplus with others.  On the other hand, if there's a strong tradition of the peasants keeping their surplus, traditions of saving could begin to form.

My brother calls the way he managed money the "three musketeers model for financial management," since they did much the same thing.  They not only provided for one another whenever any one of them had money, they would also treat all their friends when they were flush, and then mooch off them when things got tight.  From chapter 8:

The hungry friends, followed by their lackeys, were seen haunting the quays and Guard rooms, picking up among their friends abroad all the dinners they could meet with; for according to the advice of Aramis, it was prudent to sow repasts right and left in prosperity, in order to reap a few in time of need.

Among Wise Bread readers, I would expect the "three musketeers model" to be generally considered improvident at best--irresponsible, reckless, and foolish all come to mind as well.

You'd think that the fact that American English even has a word for "improvident" told you where our cultural traditions come from, but we also have words like stingy, miserly, niggardly, and tightfisted, which shows considerable diversity of tradition.  If your natural inclination is to be a saver, you can find endless support and role models, from the "millionaires next door" back to Benjamin Franklin.  On the other hand, if your natural inclination is to spend money as fast as it comes in (or faster), you can find lots of only half-joking references to debt as "the American way."

Even where the culture strongly supports saving as a way to get ahead, there are still tensions when people try to put money aside, mostly from members of the household that would like to have a higher standard of living, but also from friends who feel threatened if one of the group takes steps to move ahead, and from neighbors who fear that property values will be threatened if someone doesn't spend as much as they do on conspicuous consumption.

I can think of a few other structures that provide the advantages of saving without running afoul of social prohibitions against saving, although none as clever as ROSCAs.  Most of the ones I can think of really are "saving," just with a bit of a disguise.  (I'd be interested to hear of others in the comments.)

Many kinds of insurance policies include a savings element, such as providing dividends or a lump sum to anyone who pays up the policy for its full lifetime.  (Most such insurance policies are poor deals, by the way--one of the costs of lying to yourself and your family about what you're doing is that you can't get the best value for your dollar.  But, if your family will let you buy insurance, but will insist on spending any money that you put in a savings account, then even an expensive insurance policy might be better than nothing.)

If lottery tickets were fair (as they are some places), they could serve this function--you buy a ticket every week, and then eventually get a lump sum when you win.  Lotteries in the US are such a poor deal they don't provide an alternative to saving (although some people seem to treat them as if the did).

Anything you do to improve your land or your business--planting trees or buying tools--can serve the same function as saving.  In fact, this is often a better investment than just putting money in the bank.  (Which may explain why frowning on saving persists as a factor in many cultures.)

And, of course, sharing your bounty with your friends and your neighbors builds up a kind of good will that can bring some of the benefits of saving--food when you're hungry, for example--which brings us full circle.

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Linsey Knerl's picture

How did you get your pig to sit still for that picture?  Mine is always squirming around...

Very enjoyable article.  I'll have to share it with some folks!

 

Linsey 

Guest's picture
John Krumm

Enjoyed reading this, thanks. I like how you laid out the differences in incentive between hunter-gatherers and farmers. I must say that something closer to the hunter-gatherer mode seems to bring far greater pleasure to life. But as Hillary used to say..."it takes a village."
Here in Southeast Alaska "sharing the bounty" is still pretty normal with family and friends when it comes to fishing and hunting and berry picking. But I think a much stronger sense of solidarity is needed with my neighbors before I can experience real community happiness. There is so much more people can achieve working together, whether sharing money or labor or goods, it just shows you how strong our ideology of individualism must be if we can ignore those benefits.

Philip Brewer's picture

It's not surprising that hunter-gatherer lifestyles feel more natural--it's what we were evolved for:  It's the only way people lived from the dawn of man until just a few thousand years ago.

The thing is, though, when farmers and hunter-gatherers want the same land, the farmers win.  The same amount of land can support so many more farmers than it can hunter-gatherers, the farmers can always send in more people--enough more to win any battle.

The farmer lifestyle is so successful, in the sense that it can feed so many people and produce such a large surplus, that I expect we're stuck with it.  But, because the hunter-gatherer behaviors are so natural, I think we'll go on seeing the sort of tensions I'm talking about.

Thanks for your comment!

Guest's picture
John Krumm

Of course there is lots of variations between farming communities. If you look at a small farm in the U.S. today, say about 100 acres, you likely will find them living much closer to hunter-gatherer mode than anyone in the city, with lots of sharing with neighbors, both of goods and labor. A corporate style farm is something different.

Philip Brewer's picture

Although once farmers move in, it's tough to live hunter-gatherer style, because all the land is owned by the farmers.  In places where much of the land isn't really suitable for farming, hunter-gatherers can still eke out an existence around the edges.

You're right, though, that it's wrong to view it as an either/or.  There's a whole spectrum from the corporate farmers, to the big family farms, to the small family farms, right on through to the scruffy guy living in a lean-to on Bureau of Land Management land, making do as best he can.  They all save a bit when they can, and they all share at least some of the time (the corporate farm too, even if it's just donating some not-first-quality product to the local food bank).

Guest's picture
Curious

I have to admit I cringe every time I hear "since the dawn of man" generalizations. The article and the comments are interesting, no one is addressing consumerism and competition for wealth and status. (There were feudal lords, heads of tribes, etc for a reason!)

If we are really playing out our hunter-gatherer instincts by not saving, then why are we spending all of our money on ourselves and not other people? Part of the whole hunter-gatherer lifestyle is sharing with people in the community who haven't had good luck. Our society encourages us to spend our money on ourselves and our family and friends... While others starve in our own communities and live in appalling conditions in third world countries.

My point is that when we have more money, we buy bigger houses and fancier cars rather than living modestly so that someone else can do the same. All I can say is that we're lucky we live in a society where the lower classes can't successfully revolt against the higher classes!

Philip Brewer's picture

People were just as selfish, greedy, and status-seeking when everyone was a hunter-gatherer as people are now--and grain farmers were and are just as generous and willing to lend a hand.  Everybody has all these impulses, and culture provides a guide for what's the appropriate expression of them.

The part that I find interesting (and the reason that I wrote the post) is how "what's appropriate" varies from culture to culture. 

The notion "save to get ahead" looks to be a very successful notion, at least from the perspective of a person living in a rich, western country.  That poses the question: Why don't more people do that?  There are a lot of answers--some people are happier where they are than they would be if they were "ahead," some people think it's wrong to get ahead, some people think "getting ahead" hurts the planet and their neighbors, some people would rather enjoy their small pleasures now than save for possible bigger pleasures in the future, etc.  But one key piece of the answer is that there are whole cultures where "saving to get ahead" simply gets dismissed out of hand--it's not what's done.  Sometimes it's even hard to have a conversation about why not, because the question just doesn't make any sense.

That's the part I find so interesting (and is the reason I wrote the post).  Of course, I'm just speculating about the reasons for those variations, but I think it's a plausible hypothesis that culture tends to reinforce useful practices and discourage harmful ones, and that such cultural practices don't always keep up with changes in circumstances. 

Of course, another useful question to ask is: Why do so many people try to "get ahead," in the face of terrible inequality plus evidence that bigger cars and bigger houses hurt the planet?  I expect the answer is about the same--those people are following the exact same impulses, within the range of what their culture says is appropriate.  (And, of course, some people everywhere push the envelope on culturally appropriate behaviors.)

Guest's picture
Guest

I think hunter-gatherers (and certain cultures even today) stressed interpersonal relationships over saving-to-get-more-in-the-future. "Having more in the future" means/meant more "things." The drive to "get more things" strains relationships; therefore, solace is sought in having yet more "things," and materialism was born. I think a return to less-is-more is needed in our culture.

Guest's picture
Sam

If we're talking about Filipino culture, hell yeah. Our culture supports savings. Why? We have a very poor medical insurance policies (they don't cover critical illness like heart disease, cancer etc) hence, we don't want to end up emptying all our savings just for medicines. We start saving early. Thats just the way of life living in 3rd world country...

Hey I added your blog into my blog-roll! Cheers!

Sam
http://fixmypersonalfinance.com/

Andrea Karim's picture

Thanks for taking the time to write this, Philip. I think it's one of my favorite articles on Wise Bread so far.