Bags of rice don’t pay the bills


ACCORDING to the Department of Statistics Malaysia’s Salaries and Wages Survey Report, median salaries and wages recorded a double- digit decrease of 15.6% in 2020 to RM2,062. This decline means median household income may have similarly declined, possibly leading to more households slipping into the B40 (lower income) group.

Thus, it is not surprising that the White Flag movement (where people in need hang a white flag outside their homes) picked up recently. It is heart-warming to see Malaysians coming out to help those in need. Of late, there’s anecdotal evidence to suggest that in-kind assistance (such as food, free laptops, etc) has become the popular method of helping. However, I feel this approach is deeply flawed.

Economic theory tells us that when compared with in-kind assistance, cash assistance is undoubtedly much more efficient. Why? Because the recipients are able to choose how they spend the assistance to maximise their well-being – whether on utilities, rent or food.

But why does in-kind assistance seem to be preferred by those giving aid? A 2020 study found that it is due to“paternalism” – i.e. people do not believe the poor will spend cash assistance on the “right things” so they choose the basket of aid for them. The same study also discovered the poor, unsurprisingly, preferred cash assistance. If we want to assist fellow Malaysians, let’s stop deciding what’s best for people as if we know their needs the best. Do they really need another can of sardines or would cash be more helpful – that could be used for rent or even for desperately needed soap?

WONG TECK JIN

Petaling Jaya

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aid , poverty , white flag

   

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