Where does a street beggar spend?

The Economics behind street begging

By : Faisal Sultan Qadri Published in The daily News 05 Sep 2012

It has been increasingly difficult to ignore the rapid growth of street beggars in Pakistan specifically in the urban areas. This exponential growth of street beggars is the ramification of nations willingness to contribute in charity. The population of beggars tends to increase at a much higher rate than general population because of the economic incentives associated with more children. The current legal barrier has proved to be ineffective in controlling any form of street begging. One of the important reasons for ineffective legal barrier against begging lies behind the economic cost and benefits of this activity. Street begging can be analyzed as an economically motivated activity where the revenue side instigates the producers to increase their production and hire more labor (which may lead to increase the incentives for more children either biologically or the other ways like kidnapping etc). Every rupee given to the street beggars increase their profitability and thereby increase the negative externalities associated with this activity. It has been reported in various news articles that the daily earnings of street beggars are significantly higher than the daily wages of some specific worker categories. It is also true that social status, self respect and personal satisfaction work as a barrier for the workers who earn less than a street beggar but still prefer to be a worker and not a beggar. However, if the earning differential among workers and beggars becomes large, the lower class workers may substitute the work with begging. The economics behind street begging leaves very serious questions for the social scientists and policy makers. For instance, Where do the beggars spend their income? Do they save? If they do, where and why do they save? An average Pakistani spends his more than 88 percent of income in 7 distinct categories as reported in the HIES 2010-11. Specifically, around 68 percent of monthly consumption expenditure belongs to food, cloth and shelter. Almost all the heads in the pie chart does not seem to apply on these street baggers. Have you ever observed a street beggar spending on food? The most probable answer is No. Do they purchase the clothes, they wear? No. Neither they live in rented properties, nor send their children for studies in schools. And worse still, illness is treated as an additional

productive factor for their economic activity so they are less likely to spend on health. So the question remains unanswered, where do they spend?

Percentage distribution of monthly consumption expenditure among households

Food, beverage and tobacco 10.78 7.6 13.93 48.91 Apparel,textile and footwear Transport and communication Cleaning, laundary and personal appearance Recreation and entertainment 3.49 0.44 3.71 6.01 5.11 Education Rent Fuel and lighting Miscellaneous

Source: Household Integrated Economic Survey 2010-11.

If they save their monetary earning in total or at least a fraction of that, than the next question arises: Where do they keep their savings? A common street beggar cannot operate a bank account so their savings are not likely to flow towards financial institutions. If they manage to save a fraction of their revenue anywhere, the next question arises: why do they need to save? The beggars do not need to save for the reasons, but a common person saves. If they use their savings in enhancing their activity, this may lead to increase the demand for illegal activities such as kidnapping. What will happen if the beggars are put in jails? They get food, cloth and shelter which are somehow same or even better than what they generally have. In this case, the real cost of being in jail for them is the daily forgone earning. At the other hand, if they are put in jail in a large number, they occupy the space for the other criminals. It means that the cost of putting them in jail is higher than the expected benefit of this action. The situation demands for a careful analysis of the economics behind street begging, especially the pattern and composition of their consumption should be analyzed. This analysis may illuminate the root causes of various social evils in the country particularly in the urban areas. (Courtesy: Zarnigar, Govt Premier College)