We're told that financial stress reduces productivity at work -- this seems an obvious enough finding. If we're worrying about how we're going to be able to afford to feed the kids we might not be paying all that much attention to what we're supposed to be doing.
The finding comes from MetLife Bangladesh and they go on to point out that things like pension provision, health care insurance, and so on are the sorts of things that employers can provide to reduce that sense of financial stress.
Wholly true of course, even though MetLife is a provider of those things and so might be thought to have a certain interest in that answer. Possibly I should be a little less cynical at times.
But this does open up two interesting little bits of economics about paying people. Or even, our being paid.
The first is Maslow's Pyramid. This is the obvious, when we think about it, idea that as our income rises we spend proportions of our money on different things. When we're all worried about where the next rice and fish plateful is coming from then we don’t worry very much about the pensions we might not live to collect.
But as we solve the food problem then we do think about insurance against the possible problems of the future -- health, old age care, pensions and so on. So, as we get richer more of our income gets spent on those financial savings products.
Some of those things might well be provided, in part perhaps, by our employer as well. This is the way it happens in most places after all.
But we've also another issue here -- agency. We humans tend to like being able to make our own decisions -- have agency over what happens. This is especially true with our money, our income.
A major reason for this is that we all have different tastes, different desires. Even, different estimations of what we want to have now and what we think we will want in the future.
Some of us will save hard for big pensions, others would prefer to have things now and not wait for them. There's no right or wrong answer to that, it's a matter of personal taste.
Given these different desires, we find that when people gain things, they value them less than if they had been given the money with which to buy things. For the logical reason that if different people desire different things, then if they get money, they can get what they want. If they get things, then they're stuck with that thing.
This is so well known that the US Census notes this about the American welfare system. Much of how they alleviate poverty there is by giving goods and services to poor people, not money.
You can get subsidized rent, special vouchers to buy food, cheap cellphones, free medical care -- all sorts of things. But the poor people who get these things value them at less than it costs to provide them -- they'd prefer the money and instead buy their own selection of what they think makes them richer.
Exactly the same thing has been seen in India with the ration system. Even if we exclude how the rations often don't arrive, or are below good quality and so on, people would still prefer to have the money and buy their own selections of foods. That they get to choose -- that they have agency -- is valuable.
So it is true that as we get richer we desire more things like pensions, health insurance, and so on. But getting them as part of our wages might not be the best way to do it.
Instead, we get the money and then buy the selection -- variety, quantity -- of each of the things that we personally prefer.
That is, while we may want those financial services it's not entirely obvious that we want them as part of our job. Maybe we'd do better to have the money from the job and then buy what we want?
