Tuesday, July 22, 2025

Blogaround

Links not related to the antichrist:

1. New Texas law aims to save lives by clarifying the state abortion ban. Will it work? (July 19) This law is probably a good thing, but it's still based on the premise that we have to separate those evil murderous women who want abortions because they're so evil, from those good innocent mothers who want abortions for the right reasons.

2. Replication Crisis (July 18) From xkcd.

3. One Minute Park (via) This is a cool little site which shows you 60-second videos of random parks.

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Links related to the antichrist:

1. Court Orders 19-Year-Old Asylum Seeker Released After ICE Unlawfully Arrested Him at Immigration Hearing (July 17) "This happened despite Oliver’s legal entry into the United States, lack of a criminal history, and compliance with all government orders when applying for U.S. citizenship."

2. 10 Americans are freed by Venezuela in a prisoner swap for migrants in El Salvador (July 18) I'm confused about this- so apparently now all the Venezuelans that the US sent to CECOT have been sent to Venezuela? Is that good? Why were they originally deported to El Salvador if Venezuela wanted them back? And what about getting justice for those who were falsely accused of being "gang members" and mistreated by the US and El Salvador?

More on that: Andry Is Free. Trump’s Barbarous Immigration Regime Is Just Getting Started. (July 21) "For 125 days Andry and hundreds of other men were held in a torture prison where they got a “beating for breakfast, for lunch, for dinner.” They had been kidnapped by our government and left in that hellhole to rot with no due process, no access to legal counsel, no phone call home. They were completely stripped of their humanity. In many cases their only crime was existing in Stephen Miller’s America while being Venezuelan. For some, their sin was having the wrong tattoo."

“We Were Kidnapped” (July 18) "On Friday, more than 200 Venezuelans disappeared to a megaprison in El Salvador returned home. The horror stories are already emerging."

3. Stephen Colbert Announces The Cancellation Of “The Late Show” (July 18) He says the show will end in May 2026.

4. Evidence challenging the Trump admin's immigration moves is now out in the open (July 11) "The evidence is damning on all fronts, but especially as to the Trump administration’s actions on March 15, 2025, when it attempted to begin carrying out President Donald Trump’s invocation of the Alien Enemies Act without a war and without — as was later detailed — as much process as was given to suspected Nazis during World War II."

5. Congress rolls back $9 billion in public media funding and foreign aid (July 18) "The House has approved a Trump administration plan to rescind $9 billion in previously allocated funds, including $1.1 billion for the Corporation for Public Broadcasting (CPB) — a move that cuts all federal support for NPR, PBS and their member stations — and about $7 billion in foreign aid."

6. “Even God Cannot Hear Us Here”: What I Witnessed Inside an ICE Women’s Prison (July 17) "No one deserves to live in cramped, unsanitary, inhumane conditions and have their medical needs ignored. No one deserves to have their religious needs ignored. And no one deserves to lack access to nutritious food. I am free, but my true freedom is interlinked with the freedom of many women I lived alongside in ICE prison." Written by Rümeysa Öztürk.

Monday, July 21, 2025

"The Case for Open Borders": Exploiting workers on both sides

US-Mexico border. Image source: By User Larsinio on en.wikipedia - Originally from en.wikipedia; description page is (was) here19:00, 11 April 2006 Larsinio 1152x862 (189,587 bytes) (from http://www.fmcsa.dot.gov/print.asp?URL=/cross-border/nafta-rules/new-mexrule.htm), Public Domain, https://commons.wikimedia.org/w/index.php?curid=791553

Here's another quote from "The Case for Open Borders". From page 208:

Simultaneously, 50,000 midwestern auto workers, mostly in the midwest, lost their jobs. Many of those jobs went to Mexico, where, Akers Chacón reports, productivity rates increased over 66 percent between 1990 and 1999. During the same period, however, real wages fell by about 20 percent. Unionization rates also dropped over the same period. In other words, the open-borders-for-capital and closed-borders-for-people schema is a lose-lose for both American and Mexican workers. Closed borders is a win only for the corporations, which use the border as a wedge to lower wages, undercut worker protections, and keep the assembly line zipping.

Opening borders would immediately strip corporations of a key tool of exploitation, offering workers easier access to decent wages and facilitating collaboration and collective organization.



Friday, July 18, 2025

Blogaround

Links not related to the antichrist:

1. Sting in the Tail: Life’s No Fairy Tale for Mermaid Dancers (July 11) "To make matters worse, to save on costs, many aquariums refuse to assign professional safety personnel to guard performers, and lack proper emergency response protocols. 'In scuba diving, we follow the buddy system — no one goes in the water alone,' Lin says. 'Why is such a critical safety rule suddenly ignored when the dive is a performance?'"

Also from Sixth Tone: The Promise and Pitfalls of China’s AI Sign Language Interpreters (July 9) "Deaf people reported having difficulty accurately understanding the signing regardless of whether they watched the video directly or read the transcribed records. On closer inspection, the movements of the avatars differed considerably from everyday sign language in terms of hand shape, position, direction, and movement."

2. Scientists find Uranus is surprisingly warm, heating up the case for a new planetary mission (July 14, via) Cool!

3. The Best 4x4 Sudoku Ever Made. (June 9) 1-hour-11-minute sudoku solve video. This sudoku is based on that genre of logic puzzles where one person says "I don't know the answer" and then another person says "I don't know the answer" and then the first person says "well now I know the entire answer." Love this.

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Links related to the antichrist:

1. ‘Perversion of Justice’ revisited (July 14) For those of us (like me) who haven't been following all the details about this Epstein thing since 2018, the Slacktivist has a timeline with links.

And: Trump doesn’t realize why MAGA needs the Epstein files (July 15) "For Trump, this has to be bewildering. His supporters do not treat sexual violence like it’s a bad thing. So why do they care about Jeffrey Epstein’s crimes, or the identities of his alleged co-conspirators?"

2. Will the Government Ever Do Right by Mahmoud Khalil? (July 15) "In a just country, Khalil would be entitled to legal recourse and monetary recompense for his unlawful arrest and imprisonment."

Monday, July 14, 2025

Blogaround

Links not related to the antichrist:

1. How China Built the Most Extreme Metro Ever (June 18, 14-minute video) This is really cool! It's about the subway system in Chongqing, China. I've been to Chongqing before- very mountainy.

2. You and translator microbes (June 19, via) "Serious multilingual nuances and complexities, which the real world offers in abundance, are cordoned off into a one-line tech explanation and forgotten. Category mismatches, unaligned conventions surrounding conversational maxims, and the fact that different languages have different approaches as to which grammatical features to encode explicitly and which ones to leave unspoken (unspoken, yes, but still very much mutually understood amongst a speaker population) are all things that will inevitably arise occasionally in multilingual communications, even with maximally competent interpreters present." !!!!! This! All of this!

3. The Fungus behind King Tut’s Curse is a LIE (July 10) "As best I can tell, some microbiologists thought they were being cute with 'the pharaoh hypothesis' and the general public just saw the title and said, 'Aha! It’s real and the cause is fungus.' No!"

4. How this long-lost Chinese typewriter from the 1940s changed modern computing (July 5) Cool!

5. ‘Biblical grounds’ for white Texan divorce (July 10) "That’s how divorce works in white evangelicaldom — it’s completely unacceptable unless you can demonize your former spouse and put 100% of the blame on them for sinning like a sinful sinner."

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Links related to the antichrist:

1. Save Our Signs (via) "Join our effort to build a community archive of the signs, exhibits, and texts that could soon disappear from our national parks."

2. This Is What Trump Paid El Salvador To Do To Kilmar Abrego Garcia (July 4) I shared a link about this last time, but there are more details here. 

3. Judge blocks Trump's order restricting birthright citizenship (July 10) "'Every court to have looked at this cruel order agrees that it is unconstitutional,' Wofsy, the deputy director of the ACLU’s Immigrants’ Rights Project, said in a statement announcing the lawsuit in late June. 'The Supreme Court’s decision did not remotely suggest otherwise, and we are fighting to make sure President Trump cannot trample on the citizenship rights of a single child.'"

And related to that: It must be amazing to be a Supreme Court justice (June 30) "Leaving parents hanging on the question of whether their newborn children have citizenship here, or somewhere, or nowhere; issuing abstract rulings opining that while presidents should of course strive to not do plainly criminal things, they can do plainly criminal things so long as they do it from behind the right desk; hurling grenades that blow up centuries of established law on the last day of the term and than getting the hell out of Dodge before the ink is dry, booking it at top speed to go off salmon-fishing or island-hopping."

4. Federal judge orders stop to indiscriminate immigration raids in Los Angeles (July 11) "In her order, Judge Maame Ewusi-Mensah Frimpong, of the U.S. District Court for the Central District of California, said there is "a mountain of evidence" to support the claim that agents are arresting people solely based on their race, accents, or the work they're engaged in, in violation of the Fourth Amendment's protection against unreasonable government seizure."

5. Freed from ICE detention, Mahmoud Khalil files $20 million claim against Trump administration (July 11) "'My beliefs are not wanting my tax money or tuition going toward investments in weapons manufacturers for a genocide,' Khalil said. 'It’s as simple as that.'"

Sunday, July 13, 2025

"The Case for Open Borders": Not a rush

World map. Image source.

Here's another quote from "The Case for Open Borders". This section is talking about the worry that opening the border will cause a huge dramatic rush of migrants to come. From page 194:

7. Open Borders Doesn't Mean a Rush to Migrate

Across the globe, about 14 percent of the global population-- around seven hundred million people-- would, according to recent Gallup polls, like to migrate. Financial burdens, family ties, and fear of the unknown, however, keep a lot of them at home. Plus, many of those potential migrants wouldn't migrate in the same direction. Despite the lure of the Hollywood-baked American dream and economic and political pressures in "sending countries," most people want to stay at home.

Puerto Ricans have enjoyed the unimpeded right to migrate to the far wealthier mainland United States since 1904, but they haven't left the island empty. Similarly, Eastern European countries added to the EU free-migration zone did not swarm Western European countries with their citizens. Absent lethal climactic or political threats, most people tend to want to stay where they are.




Wednesday, July 9, 2025

On Skipping My Daily $5 Starbucks

Starbucks cup. Image source.

I recently published my review of the book "Portfolios of the Poor." Here's the follow-up post.

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I want to talk about the different ways that people think about the math involved in a household's budget. I have some possible models here; none of these models can account for everything. Some are useful in some situations, others are useful in other situations. It all depends on whether the factors that are omitted from a particular model are a big deal or not in your own situation.

I have here 6 different models for how to mathematically conceptualize the way people make choices about spending their money. This isn't "here's 6 different ways to plan your budget- pick which one works for you" because they're not all aimed at addressing the question of how to plan one's budget. They're not all about the same thing. But they're all related to how to think mathematically about the choices people make with their money.

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Model 1: Skipping your daily $5 Starbucks

Here's some financial advice I've heard many times: "It's not hard to save for retirement! Just stop spending $5 every day buying Starbucks! If you save $5 a day, multiplied by x number of years, [insert some math here], then you'll have a million dollars!"

This has always struck me as a bit ridiculous, because why on earth are they assuming everyone spends $5 at Starbucks every day? Hey, actually I already never go to Starbucks- oh my goodness, that means I am therefore a millionaire? You know, before Starbucks was founded, everyone was a millionaire.

This financial advice assumes a budget model like this: You have a certain income each month, and certain expenses, and they are very precisely calibrated to match exactly. When you make this one little change- you quit going to Starbucks- nothing else in your life will change. Therefore, the result will be that the $5 each day accumulates in your bank account, eventually adding up to thousands of dollars.

The big problem here is the assumption that nothing else will change. If you don't spend the 5 bucks at Starbucks, maybe you'll end up spending it somewhere else. This won't *feel* like a conscious choice- you won't feel like "well I didn't spend $5 on Starbucks today, therefore I will spend $5 on something else"- but who knows how the chaotic pile of experiences and thoughts you have every day will shift when you stop going to Starbucks? Who knows how that is going to shake out and the effect it will have on the amount of money you spend that day? 

Honestly, I don't think people have a fixed plan of what they spend money on, where if they change 1 thing, nothing else will change. I think people don't really have a plan, but they have a vague awareness of how much money is in their bank account, and a belief about what sort of lifestyle is a match to that, and which things are "too expensive." (This model I am calling "vibes", see below.) If you stop spending money on Starbucks, and the money starts accumulating in your account, you'll end up thinking "oh yeah, sure, we can go out for a fancy dinner, I have enough money" and you won't even be thinking about "no, I can't spend that, that is the I-don't-go-to-Starbucks-anymore money."

There's so much variation in a person's spending, from one day to the next, one week to the next- it's hard to say how to even measure the difference that $5 here and there would make. (I'm really interested to know if anyone has done a randomized controlled trial of some kind.)

No, to make this "skip your daily $5 Starbucks" advice useful, you have to say it like this: "Stop spending $5 at Starbucks every day, and instead, put that money in a separate bank account that you don't touch." Or, why do we even need to mention Starbucks, why not just say to regularly transfer small amounts of money into a separate account? Or, hey, this would work too: "You can spend $5 at Starbucks every day, and also put another $5 in a separate account every day."

Why even mention the Starbucks? The Starbucks is a red herring! The actual key here is to have that money saved in a separate account, an account that is explicitly dedicated to long-term savings, and you're not going to spend it on everyday stuff just because you have a vague feeling that you can afford to do so.

(And, okay, actually, some variations of the Starbucks advice go like this: "If you stop spending $5 at Starbucks every day, and you put that in a retirement account which earns 10% interest per year, then [insert math here] and you'll be a millionaire." So yes, sometimes it does mention the idea of putting it in a separate account- but it's framed like the reason to put it in a separate account is to earn interest on it. Rather than to keep it separate from the money you spend on everyday stuff.)

I guess it would make sense if the logic is like this:

"You should transfer $5 a day into a savings account."

"$5 a day? No way, that's too much, I can't spare $5 a day."

"Well, stop going to Starbucks every day and put that money in a savings account instead."

But this still doesn't make sense. If someone genuinely believes they can't come up with $5 a day, then would that person really be going to Starbucks every single day? 

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Model 2: Vibes

I mentioned the "vibes" model above, so I want to elaborate on it here. 

I'm really curious about this, actually. Do people make decisions about spending money based on a general feeling about how much money is in their account and what sort of price range feels right for them? I think they do. Realistically, I don't think people make their purchasing decisions by consulting a carefully-planned-out budget. I mean, I think about math all the time, and I don't even base my everyday spending choices on an explicitly-planned budget. I just go on vibes. Like, yeah I can spend x amount of money on something, because it's basically in the range of what I usually spend. And when I look at my bank account, it's never a dangerously low number, so that means I'm doing fine.

To be a little more mathematical in how we define the "vibes" budgeting model, it's like this: For each type of thing you might buy, you have a *feeling* about what a normal price should be, and a *feeling* about how frequently you should buy it. When faced with a choice about buying something, you check if the price matches your feeling about what a good price would be for that thing, and you search your memory for the last time you bought it. (For example, when thinking about buying a new computer, you think "I've had my old computer for 5 years already, so it makes sense to buy a new one." When thinking about going out to eat, you think "we've already gone out to restaurants 3 times this week, we can't go again.") That's all. And every now and then, you look at your bank account balance. If it's reasonably high, then no need to do anything. If it's way lower than you expected, then you temporarily change your behavior and put off buying stuff as much as you can, until the next time you get paid and your bank account is normal again.

I feel like, this is basically what my parents did when I was growing up. There wasn't a big overarching household budget, but if I asked my mom for fruit roll-ups at the grocery store, they were "too expensive." Like, it wasn't precisely defined anywhere, but we just had a sense of what's a reasonable amount of money to pay for things, and what's "too expensive." I don't mean we literally didn't have money to afford fruit roll-ups. I mean that we had a strongly-held belief that it's just not right to pay x amount of dollars and all you get is fruit roll-ups. That is- in some absolute, objective way- not worth the money, and therefore it just feels wrong.

And sometimes something is "too expensive" but then you come up with a reason to buy it anyway, like "we're on vacation."

(My parents also had savings accounts for various long-term things, and followed all the standard good financial advice- it wasn't all "vibes." But the day-to-day stuff, the feeling of things being "too expensive" but never defining what that means- that's vibes.)

And honestly, if you aren't going to do the work of planning an actual budget, a general aversion to spending money on things that are "too expensive" probably will serve you well. Yeah, I feel like this is the strategy I internalized about money, and overall it has been a positive thing for me, though there are things I don't like about it.

But also, for some people, vibes-based budgeting is more like, "I feel like it's fine to spend money on this thing because I have more money than that in my bank account." I don't think this is good- just because you have money available to you doesn't mean it's a good idea to spend it. You should do some long-term planning and then reach a conclusion about how much money it's okay to spend on stuff you don't exactly need. Or, if you don't want to do that much work, set up an automatic transfer to move 10% of your income to a separate account every month. That's a good start.

And for my husband and I, our current strategy for the big picture is based on the envelope method (described below), but for day-to-day stuff, I just use vibes. I feel like, it's fine to spend x amount of money on dinner, because I often spend x amount of money on dinner, that's just the lifestyle I have, and it's working fine for me.

There are a few problems with "vibes" though: First of all, it doesn't apply to long-term savings goals. It's just about your feelings about your current situation, your current bank account balance, and the potential purchase that's right in front of you. People don't really have a feeling about the fact that, in order to be on track for their kid's college savings account, they need to have some certain amount saved when the kid is 5, or when the kid is 10, and so on- that's not a feeling, that's something you actually have to do the math on.

Also, the vibes model has no mechanism to match your income to your expenses. It's just about what "feels" like the right amount of money to spend on things- but in reality, there is no "absolute truth" about the right amount of money to spend on things. It should be based on how much income you have. If you're using vibes and your feelings are miscalibrated and you're always spending too much and then panicking when you look at your bank account, well that's not good- that could be avoided if you planned things out better. And if you're using vibes and you're very frugal, you won't need to panic about your bank account being low, but you're missing out on things that your extra money could be used for (investment, charity, buying nice stuff that makes you happy), if you had a more clear plan about it.

Another problem: The "vibes" strategy is extremely vulnerable to lifestyle creep. You say "oh I can't buy that, it's too expensive" and then at some point later you say "well just this one time it's fine" and gradually your feelings about what's "too expensive" completely change.

Another problem with vibes is you're not able to figure out which things give you better value for your money. For example, let's say you often spend $20 for dinner, and you often spend $20 to buy a bunch of snacks at the grocery store, and you often spend $20 for whatever other things. In the vibes model, all of those feel about the same, because all of them are within the normal range of what you spend money on. But there may be a huge difference in how much benefit you're getting out of them. Maybe the $20 is just 1 dinner, but if you spend the $20 on snacks from the grocery store instead, you can get a huge amount, and that will last you for weeks- a way better use of money than just 1 meal at a restaurant.

I think it would be really useful to have a budgeting strategy which could help you pinpoint which things you're spending money on but aren't really giving you much value- and then you can eliminate those and it will make a big difference. I don't know of any budgeting strategy that does a good job at this- you would have to assign some kind of score to every single thing you buy, it would be an incredible amount of work, and I can't even imagine how one would come up with a standardized scale for that- but surely the vibes model is the worst one if that's your goal.

And another thing about vibes: Have you ever heard "people spend less when they pay for things with cash instead of a credit card"? There are some financial advice people really walking around saying "you should NEVER use a credit card, you should pay cash for EVERYTHING" because of this supposed "fact." I have my doubts about this- I haven't tracked down whatever scientific study this supposedly comes from, but I feel like it would depend on a lot of things, and it just doesn't make sense to claim that this is true about *everyone*. 

But anyway, this idea that people spend more when they are using a credit card than with cash, this makes sense in a "vibes" model. Having access to as much money as you want, via your credit card, is a different "vibe" than having access to only the limited amount of cash in your wallet.

If someone follows a "monthly limits" or "envelope" model (both described below), and they do just fine with planning their budget in that way, then the "use cash instead of a credit card" tactic won't make any difference to them. It only really makes sense in a "vibes" model.

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Model 3: Monthly limits

In the "monthly limits" model, you have a bunch of categories of things to spend money on, and for each one, you set a limit of how much you can spend on it each month.

This is similar to the "skip your daily $5 Starbucks" model. The difference is, "skip your daily $5 Starbucks" assumes everyone has this kind of "monthly limits" model going on subconsciously in the background, whereas the "monthly limits" model as I'm describing it here means you actually made a detailed plan about how each category is defined and how much money you can spend per month.

For example, each month you can spend up to w dollars on rent, x dollars on car insurance, y dollars on clothes, z dollars on groceries, etc. When you add up all the limits, it must be less than or equal to your income. You make a plan which sets these limits for yourself. Every month, ideally you should be under the limit in each category. If you go over the limit in some categories, that means you're not sticking to your budget. That's bad.

Note that this is a different thing than if you asked someone to describe their monthly budget and they said "I spend w dollars on rent, x dollars on car insurance" and so on. They're just telling you what the averages are. That's different from the "monthly limits" budgeting strategy, because in the "monthly limits" budgeting strategy, it's not about averages, it's about making rules for yourself, and if you break those rules sometimes, this model doesn't really have any way to deal with that.

This is what I always thought it meant, when people said "you should have a budget." And at various times in my life, I tried this, but I find it really doesn't work well for me, for the following reasons:

First of all, every month I'm all over the place in terms of which categories I was under the limit, and which categories I was over the limit. And then the next month, I'm again all over the place, but in a different way. So how do I judge whether I'm doing okay or not? Obviously if you're always under the limit in every single category, then you're not in danger of running out of money (at least in the short term). But if you're over the limit in some categories, and under the limit in others, well, that seems like it should also be fine, right? But how do you quantify that? Well you could just add them all up and see if it's a positive or negative number. But then what was the point of breaking things down into separate categories?

(I mean, one possible benefit of breaking things down into categories is that you will realize if you spend more than you expected to in some categories. Like "oh crap, every month I'm spending xyz dollars on taxis? Wow, I don't think it makes sense to spend that much, let's stop doing that." Maybe when you figure out in which categories the reality is very different from the plan, that can help you know how to change your behavior to spend money on the things you actually feel are worth it.)

A second drawback of the "monthly limits" strategy is that it doesn't have a mechanism for long-term planning. In a given month, you spend however much you spend, and then the slate is wiped clean for the next month. But you could modify this strategy to add long-term planning in this way: Maybe one of your budget categories is something you're saving up for, like your kid's college education, and you set some "monthly limit" for it, and every month you "spend" that money (equal to the monthly limit) by transferring it to a dedicated account for your kid's college education. (This would then be a hybrid between the "monthly limit" model and "envelope" model, which I describe below.)

And a third issue is, let's say you're really good at sticking to your plan, and every month you are under the limit in every category. So, as a result, your bank account is always accumulating more and more money (equal to the difference between the limit and how much you actually spent). And then, what? How much savings do you have, and what are you doing with it? This budgeting model can't address those questions at all.

Really, it doesn't make sense to say that you're always supposed to be under the limit in every single category. Then you'll always be accumulating the extra, and not doing anything with it. Wouldn't it make more sense to have a plan for what to do with that extra? Rather than just wiping the slate clean every month. That money still exists in your bank account, but your budget strategy is not keeping track of it anywhere.

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Model 4: Envelope

The envelope model might, at first, look the same as the monthly limits model. In both models, you have a bunch of categories, and you decide how much money should be spent for each category every month. 

The difference is this: In the "monthly limits" model, the number for each category represents the maximum that you feel you should spend for that category. It's sort of a goal, a hypothetical. In reality, your spending might end up being less than that number, or more, but this result isn't really used for anything, except making yourself feel worried if it goes over the limit. 

But in the "envelope" model, you decide how much money goes to each category, and then the money *is* in that category. In your bank account, every dollar is allocated to one of the categories. "Every dollar has a job," is how I've heard the envelope budgeting method described. And then when the next month begins, whatever unspent money remains in each category simply rolls over to the next month. 

This is the budgeting strategy that I have set up for me and my husband. We have a few big categories, and I've calculated the expected cost per year for each one, and divided it by 12 to get the average for each month, and then every month we allocate our salary money to the categories. 

The great thing about this is it doesn't make any kind of distinction between short-term and long-term budgeting. You have short-term stuff, like "how much do we pay for daycare every month?" and longer-term stuff like "how much do we spend on Christmas gifts every year, divide that by 12" and really long-term stuff like "let's save up for both of our kids to go to college." It doesn't matter at what frequency you will actually *spend* the money from each category- they're all treated the same. For each one, calculate how much it works out to on average per month. (For example, for the kids' college savings, it's like "if we want to save x dollars before the kid is 18, how much do we need to save every month?")

When I first heard about the envelope model, and how "every dollar has a job", I thought it meant you have to spend every dollar, every month. I thought "wow that sounds like a bad idea, what about savings?" But it's not about spending, it's about allocating. And then when it comes time to spend, whenever that may be, whether it's now or 18 years in the future, you withdraw from the applicable category.

(See also: Here's How We Do Our Budget, where I wrote about the monthly limits model and the envelope model.)

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Model 5: Priority list

In the "priority list" model, you always have a list of urgent expenses, and when you get paid, you use the money to pay for the items on the list, sorted by which is the most urgent. The sorting is necessary because this model would be used by people whose income is not really high enough to actually pay for everything they need. So there will always be things that they have to say no to, because they just don't have the money for it.

(Disclaimer, I don't have any experience with this myself, so I may be missing some key factors about what it's really like.)

A long time ago I read an article about being poor, which mentioned something like this- "There are sitcoms about families that are supposedly poor, but they're not realistic at all. In one episode, someone made a huge scratch in their wall, and in the next episode, it was gone. It was fixed. That's so not what it's like when you grow up in a poor household. That scratch would have stayed there forever, because you never have the money available to fix it." This fits with the idea of the "priority list"- you never have enough money for all the things you want/need, so you might have things which languish on the list forever, never a high enough priority to actually get paid for.

Similarly, people talk about how, when you're poor, smaller problems can snowball into bigger problems because you don't have the money to fix them right away. For example, maybe something is wrong with your car, and you should get it fixed, so this is on your list but there are always other things which have a higher priority. Until the car problem gets worse, and the car is so bad you can't even drive it any more, and so it moves way up to the top of the list, but it costs a huge amount of money to fix it, much more than if you had just gotten it fixed at the beginning. Same thing for health problems- spending a little money on preventative health care can save a huge amount of money in the long run, but there are always other things which are more urgent, so you keep putting off the health care.

Another example: If you loan someone money, as a friend, it's likely that they'll be more slow to pay you back, compared to how fast they pay back their loans from a bank. Because you're their friend, it feels less urgent. And so if they don't have enough money for everything on their priority list, it's likely they will put off repaying you. Actually, in "Portfolios of the Poor," it said some people actually prefer to take loans which require them to pay interest, because this pushes them to pay it back faster. Yeah, under the "priority list" model, it might actually make sense to artificially increase the urgency of a potential expense, in order to force it to actually get done.

I once read something on the internet about buying paper towels in bulk, and now it lives in my head rent-free, as the kids are saying. It was about how it's so difficult to save money by buying in bulk if your income is low. And maybe you get a group of friends to all pitch in on the bulk paper towels purchase- that could work! But the risk is, what if your friends flake out, and you have paid for the whole huge package of paper towels yourself?

I read that and it didn't make any sense to me, because I was imagining a "monthly limits" model. I imagined that this internet person had a line item in their budget for how much they spend on paper towels every month, and even though their friends didn't come through and pay their share, it's okay because then this buyer gets to keep all the paper towels, so then next month they will continue to use them, and save the money that was in the "paper towels" budget category. And every month thereafter, they can accumulate the money budgeted for paper towels, and then buy in bulk again when they need more- they're off to a great start in getting their whole financial situation turned around, through their bulk paper towel savings. I couldn't understand why this person on the internet was saying it's a problem to buy the whole bulk package.

But, no, how about this: It's a priority list. If they are out of paper towels, then paper towels are on the list. If they have a good supply of paper towels, then they're not even thinking about that at all, because they have much more urgent money problems to deal with. There is no budget line item for paper towels. There is no "wow I'm spending so much less than expected on paper towels." It's nice that they don't have to worry about buying more paper towels, but they have so many other things that they're worried about because they can't afford them- they don't really have the bandwidth to realize "wow it's so nice that I don't need to buy more paper towels."

For people whose incomes are too low to afford all the things that they need to have a decent lifestyle, they're pretty much forced to use the priority list budgeting method. You can't judge them for that.

And then, every once in a while, they get paid and they don't really have an extremely urgent thing on their priority list. So finally, FINALLY, they can buy something nice for themself.

There will definitely be people who would judge them for that, and say "you're always struggling because you don't have enough money, and now you finally have some- you should put it in a savings account, to be ready for the next emergency. It's irresponsible to use it to buy something you don't need." But... when you're forced to live with this priority list model, I can imagine that when you happen to have money and don't have anything urgent you need to use it for, it probably feels like "the future will be full of financial emergencies, regardless of whether I put this money in a savings account or not. But right now, I finally have a chance to take a break from that, and just buy something nice that I can enjoy." We shouldn't judge them for that.

However, there are people who use a "priority list" model when they really shouldn't- their income is high enough that if they planned it better, they *would* be able to afford everything needed to have a decent lifestyle. But they get paid and they feel that their priority list doesn't have anything urgent (you can also view this as using the vibes model), so they decide "let's go out and party" and then a week later when the rent is due, it comes as a TOTAL SHOCK, and they're like "where did my money go?" Yeah, not cool to think you can just spend your money on whatever, just because you don't have any bills due at that exact moment. Maybe plan better!

(Or maybe we could say, this hypothetical bad planner can still use the priority list model, but the first priority on the list should be putting aside the money they will need for rent/ bills/ normal expenses that month.)

It's not good to be using a priority list budget model, because it means you're not really making intentional choices about what you're spending money on- you just spend money on whatever's most urgent, until you run out of money, and for the remaining things, however urgent they may be, well, too bad. It's not good, and you should avoid it if you can, but if your income isn't enough to realistically live on, then you're forced into this.

Here's another example: Let's say that you're giving money to someone (maybe a family member) for some expense coming up in the future. You give them the money, tell them to use it for this specific thing in the future, and then time passes, and then it's time for them to pay for that thing, and they tell you they don't have money. So you're like "What? I gave you money for this. You spent it? How could you be so irresponsible?" You're imagining it like an envelope model, where it's clearly stated that this money is for this thing, and so obviously it doesn't get spent on anything else. But maybe they are using a priority list model, and they feel like you are being really unrealistic for expecting a big sum of money to just sit there untouched for a few months. So really the ideal thing to do here would be give them the money at the point in time they need it to pay for the thing- at that specific point in time, that thing is the most urgent on the priority list.

And there are other variations that you could conceptualize as a priority list, though they're a little different than what I've been describing so far. For example, I've heard of Christians saying "when you get paid, the first thing you should do is set aside 10% to give to the church. And then live on the rest. Our responsibility to tithe should be our first priority, not something we do at the end if we have money left over." This advice seems to assume a "priority list" model- because in the "monthly limits" and "envelope" budgeting strategies, it's not really meaningful to say which category is "first"- you make a plan that includes all the categories, and tweak all of them until the plan fits your income. (Or you could say that this advice falls under the vibes model; one of the inputs to the vibes model is the amount of money you have in your bank account, so you remove that money from your bank account immediately, so your "vibes" don't make you feel like it's okay to spend it.)

Or, you could even conceptualize the envelope model as a priority list model, like "when I get paid, first I allocate x dollars to this category, then I allocate y dollars to this category..." But since the order doesn't change, and you have enough money that you don't run out partway down the list, I feel the "priority list" model is not the ideal way to view it.

See, that's the thing with models- the same situation can be described using several different models. No model is going to be ideal for every situation. Each model emphasizes certain things, and has certain assumptions about your income and about human behavior. It's not that a model is "true" or "not true" of a particular situation, it's that a model may be more or less helpful in understanding someone's choices in a given situation.

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Model 6: Giving your neighbors a feast

I read this blog post a while ago, Collections: Bread, How Did They Make It? Part I: Farmers! (by Bret Devereaux). It's about subsistence farmers throughout history, and the strategies they used to not starve to death if they occasionally had a bad harvest or other problems which affected their ability to farm. Check out this part:

The answer was often to invest in relationships rather than in money. ...

The most immediate of these are the horizontal relationships: friends, family, marriage ties and neighbors. While some high-risk disasters are likely to strike an entire village at once (like a large raid or a general drought), most of the disasters that might befall one farming family (an essential worker being conscripted, harvest failure, robbery and so on) would just strike that one household. So farmers tended to build these reciprocal relationships with each other: I help you when things are bad for you, so you help me when things are bad for me. But those relationships don’t stop merely when there is a disaster, because – for the relationship to work – both parties need to spend the good times signalling their commitment to the relationship, so that they can trust that the social safety net will be there when they need it.

So what do our farmers do during a good harvest to prepare for a bad one? They banquet their neighbors, contribute to village festivals, marry off their sons and daughters with the best dowry they can manage, and try to pay back any favors they called in from friends recently. I stress these not merely because they are survival strategies (though they are) but because these sorts of activities end up (along with market days and the seasonal cycles) defining a great deal of life in these villages. But these events also built that social capital which can be ‘cashed out’ in an emergency. And they are a good survival strategy. Grain rots and money can be stolen, but your neighbor is far likelier to still be your neighbor in a year, especially because these relationships are (if maintained) almost always heritable and apply to entire households rather than individuals, making them able to endure deaths and the cycles of generations.

The farmers described here used this kind of strategy: When you have a good harvest, you should have a feast and invite your neighbors. This way, you are investing in relationships with your neighbors, and if you have hard times later, they will help you.

I think there are likely people today who are in a similar kind of situation- where the best way to protect yourself from financial hardship is not necessarily to save your money in an individual savings account, but to spend it on social connections, with people you can rely on to come through if you ever need help.

Related to this, here's what Jesus said in Luke 14:12-14,

Then Jesus said to his host, “When you give a luncheon or dinner, do not invite your friends, your brothers or sisters, your relatives, or your rich neighbors; if you do, they may invite you back and so you will be repaid. But when you give a banquet, invite the poor, the crippled, the lame, the blind, and you will be blessed. Although they cannot repay you, you will be repaid at the resurrection of the righteous.”

As an American, I had always read this passage and found it confusing- what does Jesus mean about being "repaid"? When I invite people to go somewhere, it just means I'm inviting them to go somewhere- there's not really more to it than that. I don't really think about being "repaid."

But now that I've read Bret Devereaux's article about giving a banquet to one's neighbors, I'm thinking maybe Jesus was speaking to a culture that had this sort of perspective: When you invite people to a feast, that creates very real social obligations. One of the key reasons to hold such a feast is so that your guests will be obligated to help you in the future. But Jesus is saying here, you should invite "the poor, the crippled, the lame, the blind" because they aren't able to repay you in that way. You invite them solely as a way to be kind to them.

And even in Chinese culture, we have this to some extent. If someone gives you a hongbao (a red envelope full of cash) as a gift, you're obligated to give them an equivalent hongbao at some point in the future. Chinese people really keep track of these things. I've heard people say, "We didn't want to have a big wedding, but my parents said we needed to, so they could get back all the hongbaos they've given to people over the years- we invited all my parents' friends, and my parents kept all the hongbaos that people gave us at the wedding."

My husband (who is Chinese) finds it very uncomfortable to have that kind of obligation to people- he tries to avoid it as much as possible. When our first child was 100 days old, and traditionally you would have a party to celebrate, he only invited a couple relatives, and took them out to eat dinner. He didn't want to invite a ton of people, because then they would all give us hongbaos, and we would have to keep track of it, and find some occasion in the future to give them equivalent hongbaos, like maybe for their kid's birthday. Sounds exhausting.

Related to this, it's common that if people come from a poor background and then get a good education and well-paying job, they will be obligated to send some of their money to help their family members. Especially family members who made sacrifices in order to help them pay for their education. The financial advice I always heard assumes you're just an individual, and you're able to freely make choices about what to spend your money on- but that's not true for everyone. For some people, it would be wrong to not send money to help their poorer family members who need it, because those family members helped them get to where they are.

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In this post, I've described 6 different models for how people decide what to spend their money on. Each model is incomplete, and is based on certain background assumptions- therefore this can't be a "one size fits all" thing- it depends on your own specific circumstances. I grew up around a lot of Republicans who had the opinion that "you should be responsible, save your money, have a 6-month emergency fund, if you're not doing all of that, then it's your own fault that you're poor (and you should stop going to Starbucks so much)." But actually, it's more complicated than that. 

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Related:

Here's How We Do Our Budget

Tuesday, July 8, 2025

Blogaround

Links not related to the antichrist:

1. How Classic Star Trek Actually Missed the Point About Racism (June 25, 43-minute video) "Captain Kirk never felt it was necessary to pull McCoy aside and say, 'Hey, man, next time you disagree with Spock, maybe try not to mention what color his blood is.'"

2. Israel kills over 300 Palestinians in 48 hours as Gaza runs out of graves (July 3, via)

Also from Gaza: Knives, bullets and thieves: the quest for food in Gaza (July 6) "At the distribution site, I pushed people aside and grabbed whatever food I found tossed on the ground under torn cardboard boxes: cooking oil, biscuits, a bag of rice that had been torn open and was mixed with sand from the ground. I didn't care. It's food. I can wash it."

The destruction of Palestine is breaking the world (July 6, via) "This collapse began with the liberal world’s lack of resolve to rein in Israel’s war in Gaza. It escalated when no one lifted a finger to stop hospitals being bombed. It expanded when mass starvation became a weapon of war. And it is peaking at a time when total war is no longer viewed as a human abhorrence but is instead the deliberate policy of the state of Israel."

3. AI chatbots oversimplify scientific studies and gloss over critical details — the newest models are especially guilty (July 5, via

I've started using Deepseek at work, asking it for help with programming tasks. There are some things it's good at, but also, sometimes it just has no idea what it's talking about, and it's not immediately obvious when those times are. Its output reads as equally authoritative and confident regardless. One trick I've figured out is, if I read Deepseek's output and I feel like "I didn't quite understand this, let me read it again more carefully"- that's a red flag, it's likely that reading more carefully is just going to be a waste of time.

See, normally when you encounter text that sounds like it knows what it's talking about, but you can't quite understand it, it DOES help to spend more time reading it carefully. Because a person wrote it, and they had an idea of what they wanted to say, and they made decisions about what details to include. If it turns out their answer is not useful for you, that might be because they were working on a different thing than what you are doing, or they were wrong about it, or they made typos when writing. But for an AI-generated text, the concepts of having an idea it's trying to communicate, and being right or wrong about it- these concepts don't have any meaning when we're talking about AI-generated text. The LLM simply generates something that comes across as the sort of thing that would be an answer to your question. That's it. 

I've found that it's especially misleading when you're trying to write code to do something, which could be done in several different ways, with different groups of functions applying to each way (and some of them are deprecated, and some of them only work with certain versions of certain software packages, etc)- the LLM will sort of combine these seamlessly so you don't *at all* get the understanding that, if you use *this* function, you need to also be using *this other* function, but not *that other* one.

Like this one time Deepseek gave me some code to use that had 2 different functions in it, and then later as I continued to debug, Deepseek brought up the point that if I'm using this one approach, I shouldn't use this other approach, and I'm like "you literally gave me code that said to do it that way" and Deepseek is all like "you're right to point that out!" and then I got mad at it, but there's nothing to be gained from arguing with Deepseek, so don't do that. It's never going to actually understand what it did wrong and do better.

Anyway, sometimes it's really helpful. But when it's not helpful, it's very deceptive, because the output text is so friendly and easy to read and makes you feel like you're just 1 step away from solving your problem. This is the sort of thing that I think we as a society need to spend more time really thinking through what the use-case is, and what strategies we should use so it's actually effective and useful. Education about best practices.

Because right now, people are treating LLMs like the output they give you is the answer to your question, and oh yikes, no, that's not what it is. The output is the sort of thing that we might imagine someone might say in response to your question, but that has an tenuous connection to what's actually true and/or makes sense.

4. The ultra-selfish gene (2024) Really interesting article about how gene editing can be used to wipe out the subspecies of mosquito which carries malaria- which could potentially save hundreds of thousands of people's lives every year. But, releasing an edited gene into the wild, to wipe out a whole subspecies- uh, better think carefully about if you really want to do that. A lot of unexpected things could go wrong. This article takes those risks seriously and talks about strategies to reduce the risk. There is a lot of potential for this technology to be used for good.

5. A Rough Ride: ‘Dirty’ Workers Stand Up to Subway Stares (July 4) "This leaves manual workers who need to commute in dusty clothes in a bind: they can either take a seat and potentially face the ire of fellow passengers, sit on the floor and risk injury, or stay on their weary feet throughout the journey."

6. I released my game (July 5) This is a cool game if you like math~

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Links related to the antichrist:

1. 4 things to know about the vaccine ingredient thimerosal (July 6) "Fiscus, from the Association of Immunization Managers, says the committee's decision to only recommend single-dose flu shots without thimerosal shows that it is willing to make a decision without following protocol and considering the scientific evidence. 'Is this now going to be the standard?' she says. 'That's very concerning if that's where this is heading.'"

2. Arlington woman detained by ICE after her honeymoon speaks publicly for the first time (July 3) "'I did lose five months of my life because I was criminalized for being stateless,' she said. 'Something that I absolutely have no control over. I didn't choose to be stateless, I didn't do a crime that made me stateless. I had no choice.'"

3. Abrego Garcia says he was severely beaten in Salvadoran prison (July 3)

4. UPenn updates swimming records to settle with feds on transgender athletes case (July 2) "The University of Pennsylvania on Tuesday modified a trio of school records set by transgender swimmer Lia Thomas and said it would apologize to female athletes "disadvantaged" by her participation on the women's swimming team, part of a resolution of a federal civil rights case." They're really going to a lot of effort just to be mean to Lia Thomas specifically. 

5. All the children of the world (July 7) "That committee also organized our annual Missions Conference, which began each year with young people from our church parading through the sanctuary carrying the flags of every nation our missionaries served. “World Missions” was an integral part of that church’s identity and the faith taught, learned, and lived there."

6. Projected Mortality Impacts of the Budget Reconciliation Bill (June 3, via) "Including that impact, the researchers project that these changes will result in over 51,000 preventable deaths."

7. Bombshell report alleges El Salvador disclaimed responsibility for those U.S. sent to CECOT (July 8) "El Salvador, per the U.N. working group’s report attached to the filing, acknowledged that it had 'facilitated the use of the Salvadoran prison infrastructure' by the U.S. — but also stated that, '[i]n this context, the jurisdiction and legal responsibility for these persons lie exclusively with the' U.S."

Sunday, July 6, 2025

"Portfolios of the Poor" (book review)

Book cover for "Portfolios of the Poor"

I read the book Portfolios of the Poor: How the World's Poor Live on $2 a Day by Daryl Collins, Jonathan Morduch, Stuart Rutherford, and Orlanda Ruthven. I enjoyed this book! Here's my review of it.

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Overview of the book

This book is about research into the financial lives of people whose income is somewhere around $2/day. The researchers tracked several hundred households in Bangladesh, India, and South Africa, asking them very detailed questions, in order to get a clear picture of every single inflow and outflow of money in their household. This even includes really informal stuff like if you owe a shopkeeper $3 because you bought groceries on credit. The kind of stuff that people wouldn't really think to mention normally, and/or that researchers usually wouldn't think to ask about. (The authors reported that they needed several conversations with the participating households in order to really get all the details, because at the beginning they didn't have a good enough understanding of all the things they should ask about.) The book refers to the data collected as "financial diaries" because the goal is to track all the small day-to-day transactions.

(This research took place around 1999-2005 and the book was published in 2009.)

Usually, when you see statistics on global poverty, it's about people's annual income or average income per day. But if you only measure those things, you're missing a lot of what's actually happening. These researchers found that the turnover that these poor households had was very big, compared to their total income. They were constantly lending or borrowing money, in various types of formal or informal arrangements, they had all kinds of different strategies for saving, etc. 

The actual reality of what it means to live on $2/day is much more sophisticated than you'd expect.

The book says that for the households that participated in these studies, the problem isn't just that their income is low. There are actually 3 problems that make their financial lives difficult:

  1. Low incomes
  2. Irregular, unpredictable incomes. Most of the people in the study didn't have regular, salaried jobs. (Some of them did, and that was definitely a huge benefit to them.) Their income often came in irregular amounts, at unpredictable frequencies. Also, farmers often get most of their income during certain seasons of the year, and hardly anything during other seasons.
  3. Lack of financial tools. Poor people don't have access to the same financial tools (savings accounts, credit cards, etc) that I am familiar with. The fact is, though, that poor households need these tools even more than rich households do. One of the big messages of this book is that it would make a big difference if a wider variety of financial services was available to poor people.
So it's not just about "they live on less than 2 dollars a day." It's actually worse than that.

The book says that there are 3 main areas that should be considered when we look at how people manage their money. 

  1. Normal, day-to-day expenses
  2. Saving up for big expenses. For example, capital for a business, weddings, paying for children's education.
  3. Emergencies. When you suddenly need to borrow money because of medical expenses, a funeral, replacing an asset that was damaged or stolen, etc.

For each of these, there is a chapter in the book that talks about the strategies that the diary households used.

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Making it relatable and human

There's something that has bothered me for a long time about the way that people talk about global poverty. It's like... when I hear statistics about how many millions of people don't have access to clean water, or how many millions of people are living on less than $2 a day, etc, I feel like, I can't even imagine what that's like. It sounds so terrible, I can't even picture how a person can live under those circumstances. It's the sort of thing that makes one want to just throw money at a charity so then one can stop thinking about it. 

Hearing statistics about millions or billions of people living on $2 a day- it doesn't feel like they're real people, like me or anybody I know. It comes across like they are caricatures who don't really do anything or have any thoughts besides just sitting around being sad and desperate (and they need YOU to swoop in and donate money so they can get out of that state).

I once saw an article about a photographer in Africa who would take 2 different photos of each person- one photo that portrayed that kind of one-dimensional, people-in-Africa-are-just-sad-and-poor message, and another photo that showed some personality, showed the person in a setting that communicates something about who they are as a unique person. (I can't find a link to this- but if you have also heard of this and you happen to have a link, please leave it in the comment section.) I'm really interested in the way this photographer explored the stereotypes that western people have about Africa, and how that feeds into the sorts of images that are shared, and the way we talk about people.

And the ads that a lot of global poverty charities use- like, they find the saddest picture of a poor child they can find. It comes across like the child is not a whole person- that the only thing that matters about them is they don't have food/water/etc, and they don't really have a personality or feelings or dreams beyond that.

So I like this book because it takes these big scary statistics about "$2 a day" and shows you what that really looks like, how humans whose lives are just as complex as mine or yours or anybody else's keep their lives moving forward in those circumstances. 

The authors point out that none of the households in the study lived "hand to mouth", ie, spending all of their money immediately after getting it. All of them had some kind of savings strategy.

And also, you can see in all the examples throughout the book, which described the circumstances of specific households in the study, that there's a whole range of personality types here. Some people talked about how they didn't like to ask others for money, and preferred to be independent as much as they could, while other people were constantly getting into financial arrangements with everybody. Some people chose not to take microfinance loans because it felt like too much of a risk, others were happy to have access to such loans. Some people were very skeptical the first time they heard about microfinance institutions offering savings accounts, and weren't willing to open one until their friends tried it and told them how it went. All of this feels very real and human to me. It feels very different from just hearing a statistic about global poverty and thinking it's so terrible that I can't even imagine it.

The thing is, though, for some reason learning about the practical human details makes it feel like... less urgent that we take action to help? Charity appeals are like "oh noooo this is so bad, these people are so desperate, if you don't donate money then what are they going to do?????" (The book isn't about charity at all, but this is something I think about.) But the reality is more like, they have ways to scrape by. They are able to plan ahead, and ask family members or neighbors for loans, and so on. Does that make global poverty seem less bad? 

It *is* bad; we shouldn't lose sight of that. The world has enough resources that nobody should live in poverty like that, where they don't know if they'll be able to get their basic needs met. The people described in this book... yeah, the book is about how they're able to manage, and take care of themselves even on such low incomes, but the reality is that it just doesn't work as well when you're living on so little money. People die from medical issues which are no big deal to those of us who have access to good medical care. They have to deal with constant annoyances- unreliable housing, low-quality food, chronic health issues, physically demanding jobs- which could be avoided if only they had more money.

They get by, but not as well as people who aren't impoverished. They get by, but with a much lower life expectancy than people in "developed" countries.

When a potential donor hears "oh nooo these people are so desperate, they need you to send money, or what are they going to do????" that comes across differently than "these people are really in need and you should help by donating money. If they can't raise enough money, their back-up plan is xyz." Like, realistically, usually there is a back-up plan. But you don't *mention* the back-up plan, or else that will make the donors suddenly decide "oh, never mind then."

Or, I guess you can mention the back-up plan if it sounds really terrible, like maybe on a gofundme someone might write "if they're not able to raise enough money, they will be forced to sell their home!"

Has anyone studied the psychology of this- the way potential donors feel like they're off the hook if the potential recipients are portrayed in a realistic human way, taking charge of their lives and making choices about how to move forward even in a bad situation? 

People living on $2/day truly are impoverished and it would make a big difference if we donated money to help them. *But* they're not just sitting around hoping that will happen. They manage their own lives. They make plans related to their finances. Why does that make me *feel* like I don't have an obligation to help them? It's something about being unable to realistically weigh other people's needs and my own needs, I think.

But anyway, the book isn't about charity at all. It wasn't anything about "we should donate money to help them." Its message about how to help them was more like "their government and/or private businesses should invest in infrastructure that can provide them with savings accounts and loans." People manage their own financial lives- but it really helps a lot if they have access to tools that enable them to do that, just like rich people have access to such tools.

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Some financial tools that poor people use

The book described some financial tools that the diary participants used, which I wasn't familiar with. For example:

Savings clubs. This is an informal arrangement where a group of people get together at regular intervals, and each time, they all contribute a certain amount of money, and they take turns taking home the whole pot. For example, you get together with 4 friends (5 people total) once a week, you each put in 6 dollars, and then once every 5 weeks you get to take home the whole $30.

What's the point of this? Well, for some people, depending on their situation, they find it doable to put in small amounts of money at frequent intervals, as a way to save up a usefully large amount of money. Yeah, but why do they need the savings club? Why not just save up the money on their own? Well, they may find it helpful having the social pressure to stick to their plan. And they might not have a good way to keep money safe in their home- there is a risk that it could be stolen, or spent by family members, or just spent by themself when they're not really paying attention to whatever their savings target is supposed to be for that week.

A similar example: Some poor households in South Africa received grants from the government every month. But, receiving the money at a frequency of 1 time per month did not work well for managing their day-to-day cash flow. So some people would pair up and make an arrangement where 1 person receives their money at the beginning of the month, and gives part of it to the other. And when the other person receives their money in the middle of the month, they give part of it to the first person. In this way, the government grant money is split up so they receive it twice a month instead of once a month- which was much more convenient.

Funeral insurance. In South Africa, funerals are expensive, and people have come up with various ways to insure themselves in case a family member dies and they need to pay for a funeral. There are formal arrangements with insurance companies, and there are informal arrangements with "burial societies." For example, there are burial societies where, if a member dies, all the other members need to contribute a certain amount for the funeral. Or, there are also burial societies where everyone contributes money on a regular basis, and it is kept in some kind of savings account, and then if someone dies, their family receives a payout.

Many of the South African diary households had multiple forms of funeral insurance, because none of them paid out enough to cover the full cost.

Moneyguards. Sometimes people deposit money with the moneyguard, for safekeeping. This is helpful if you are concerned about money being stolen or being spent by your family members. But there's a risk- what if you want your money back, but the moneyguard doesn't have it at that moment?

Also, sometimes the researchers had trouble understanding what exactly was going on when the diary participants said they put some money with the neighbor. Does this mean you gave the neighbor a loan? Does it mean you deposited money with them for safekeeping? The tools that poor people use to manage their money don't always easily match up with the categories of financial tools we are familiar with.

The financial tools varied a lot in terms of how convenient they were, and how reliable they were. There were examples in the book of people who joined a savings club, and the savings club fell apart and they ended up losing money. You always have to consider the risk that comes with any of these options.

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It's about how to add up small sums to make big sums

The book emphasized that for the people in this study, they don't have big sums of money laying around to pay for big expenses, but they *do* have small incomes which can be used to save small sums on a regular basis- so they need financial tools which can help them turn these small amounts saved up over time into big amounts.

For example, various kinds of savings accounts or savings clubs, where people are required to frequently pay in small amounts of money, and then at some point they can withdraw a big amount. Or loans- they get a big lump sum of money and then pay it back in small frequent payments. From the perspective of the poor people in this study, savings accounts and loans were pretty much the same thing. Both of them allow you to make small, regular payments, and then withdraw a big amount of money when you need it. This was surprising to me because I always heard that saving money is good and taking out loans is bad- in my mind, savings accounts and loans are complete opposites.

This concept of "these people *can't* pay for big things, but they *can* put aside small amounts of money frequently, and pay for big things that way, so they need access to financial tools that do that" is hard for me to get my head around. If you can't pay $30 one time, but you can pay $3 every week for 10 weeks, well, what? Isn't that the exact same thing? Why can they do one but not the other? Why do they need tools to help them?

I feel like I'm missing something about how to understand the psychology of this. Or rather, I feel like the way the people's budgets actually work in the real world (not just the poor people in this book, but basically everyone) is like this: It's not about "we planned out the correct amount for each category in our budget, which is more or less the minimum we feel we need to have a good life, and all the rest goes to savings." It's more like, you have a vague sense of how much money is available to you, and your lifestyle sort of naturally expands to match.

I think that "personal responsibility" Republicans might frame it as being "self-disciplined" and view it as a moral failure if you can't manage to save up money because you lack good financial tools. But the truth is, it really does take work. Let's say you want to save up $3 a week for 10 weeks. So, every week, you need to have an awareness of what your savings amount is supposed to be, and you need to make sure that you don't accidentally spend it as you pay for your normal life expenses. Remembering what the number is supposed to be, remembering to update the number in your head every week, communicating this number and its importance to your family members so they don't spend it (and/or just hiding the cash from them, maybe that's easier), always knowing how much you have left every time you make a purchase- this is work. And what if you're saving up for multiple things, with different timelines... 

If it was me, I would make a Excel sheet to keep track of this. (Actually, many of the study participants were illiterate, and were just mentally keeping track of their informal loans with their neighbors. Interesting.)

It truly is work to continually make sure you're saving the right amount of money for future expenses. So of course it's helpful for poor people to have access to financial tools which will do that work for them. Even though sometimes those financial tools will charge fees. Here's a quote from pages 148-149:

An example from India shows us just how important these elements [reliability, flexibility, structure that works with a household's cash-flow timing] are to the poor saver. Jyothi works in the southern city of Vijaywada and was described in an earlier book by one of our authors. Jyothi is a middle-aged woman living in the slums she served, and her service consisted simply of walking round the slum each day collecting small deposits from her customers, most of them housewives. She gave them a crude passbook, just a card divided into 220 cells made up of 20 columns and 11 rows, so that savers could keep track of their progress. When all 220 cells were ticked off, Jyothi returned the savings to the value of 200 of the 220 cells, holding back the remaining 20 cells' worth as her fee for her service. Thus someone depositing a total of $44 with her, as 20 cents a day, would get back $40. If we consider this 20-cell fee as interest, and we assume a growing balance as 220 deposits are made over 220 days, then Jyothi is effectively paying her customers a negative rate on the savings-- minus 30 percent a year. Put this fact to the savers and they will tell you to forget your fancy calculations: the fact is that they needed their $40 to ensure that they could pay school fees to keep their children in class for another year. With husbands earning irregularly, the only sure way to build up this sum was to take pennies from the housekeeping money each day and hand it over to Jyothi. It costs them only $4 to form the $40, and Jyothi did all the work. Taken within this context, this is a reasonable price to pay to build badly needed savings.

I don't think we should view this as "poor people are not self-disciplined enough." I think there are plenty of examples in our lives where people choose to put pressure or restrictions on themselves, to force themselves to follow through with good habits they are trying to maintain. You might know someone who paid money to join a gym, even though they could just exercise at home by following workout videos on youtube for free. Why pay the money for the gym? Because they know that if their plan is just to exercise with youtube videos at home, in reality they're not going to do it. But if they're paying money for the gym, they will feel obligated to actually go and exercise. There really is value in these strategies to make yourself do something you know you should do.

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Microloans

The diary households in this book used a wide range of loans, from informal, semiformal, and formal sources. Some examples:

  • Buying groceries on credit
  • Getting an advance on one's salary
  • Interest-free loan from a neighbor
  • Loan from a local moneylender
  • Loan from a microfinance organization

Let's talk about the microfinance organizations.

When I was in college, sometime around 2010, I heard a lot about Kiva, a charity that provided microloans to people in developing countries. The story that was presented went like this: These people have such low incomes, and they can't get loans from normal financial institutions because those institutions don't think it's worth the trouble of doing business with such small amounts of money. If they need a loan, they have to go to a shady moneylender- and the moneylenders charge something like 300% annual interest, oh my goodness, that's terrible. But if they had access to loans with reasonable interest rates, wow, that could really turn their lives around. That could lift them out of poverty. The microloan recipients will be able to start their own businesses- whereas, without the microloan, they never would have been able to save up enough money for the initial capital investment to start their business. And having a business would totally change their life.

"Portfolios of the Poor" shows us that the reality is not really like that.

The reality is more like: 

Okay, so those predatory moneylenders you've heard about? It doesn't really make sense to talk about their annual interest rate, since the loans are often paid back very quickly. It makes sense to think of this cost as more of a fee, rather than interest. Also, people often renegotiate with the moneylenders about their interest payments and the term of the loan. It's very common for part or all of the interest to be forgiven. So if you see a moneylender loan presented as "it's x dollars, for y period of time" and then you use those numbers and calculate the annual interest rate, and your jaw hits the floor, well, no, that's not really an accurate way to look at it. When all is said and done, the total interest might be much lower, and the repayment schedule might be much longer. And there may be benefits in using a moneylender- like convenience, and how the moneylender may be someone who's been a member of your community for a long time, so you know they are reliable, and will probably be understanding if you need extra time to pay back the loan.

And the formal microloan organizations: Yes, it is good that those exist. It is an extremely useful resource to have. But the loans are not all used for entrepreneurial purposes. There was one example in the book of a household that used part of the money from a microloan to buy a cabinet to store their rice in. Something like that, which I would never think of as something one would need a loan for. I would take it for granted that you already have that. Something that doesn't really make for a good story about how these microloans are so amazing and they're rescuing people from poverty. No, it's not really like that.

There weren't any examples in the book where having microloans allowed someone to get to a standard of living that *in my opinion* can be described as "rising out of poverty." These people all had very hard lives- but having financial tools like microloans allowed them to get by, more or less, rather than having a financial emergency cascade into a disaster that affects every part of their life.

The book emphasized how extremely important it is that options such as microloans from formal providers are available to poor people. This is something that helps them a lot. But it doesn't look like the glamorous stories that charities tell, about how everyone is going to be an entrepreneur and escape from poverty. (The book emphasized that it would be most helpful if the loans could be used for any purpose at all- rather than requiring them to only be used for entrepreneurial reasons.)

The microloan organizations are a good thing. Don't misunderstand me. It is a very helpful resource to have. It's good that such organizations exist. But the reality doesn't match the romanticized story that we in the US have heard about microloans.

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The point is that poor people need a variety of financial tools

The book is all about how, when people's incomes are so low and irregular, it's even more important that they have access to financial tools to help them manage their money. The financial lives of these diary households were very complex. They had various methods of saving money, and chose to take different kinds of loans in different circumstances.

They use so many different financial tools, and it would benefit them even more if they had better ones. If they had reliable savings accounts. If they had access to loans with flexible repayment schedules. And so forth.

(And this was published in 2009, based on research from 1999-2005. So probably the situation has changed since then.)

I found this book extremely interesting and I'm glad I read it, because it paints a picture of what life is like for people in extreme poverty, in a way that actually feels *real* to me. I've always felt that, when I read statistics about global poverty, or see ads for charities, it doesn't make them look like real people. It makes them look like, their lives are so terrible I can't even imagine, so I should feel bad, until I give money to a charity, then I can stop feeling bad. Not so with this book. This actually shows poverty in human terms. People making plans, making choices based on their own preferences related to risk and so on. 

"Portfolios of the Poor" was not about charity at all (it was about how governments and private businesses should invest in building the kind of financial infrastructure that would help poor people), but I have some thoughts. It makes me think, maybe charity should actually be really boring. It shouldn't be about me swooping in and making a big payment that feels like a very dramatic, emotional sacrifice. It shouldn't be about how I'm gonna make a big difference and save people so easily. Instead, maybe we should think of it like, people who have high enough incomes should have a habit of regularly giving money to charities. Like, just really really boring stuff, just regular automatic donations that you don't really think much about, but you'll notice them if you look at your bank statements. It's not okay that poor people don't have good options for savings accounts, but at the same time, it doesn't make for an exciting story that people will rally around. (Though the issue about access to bank accounts should really be addressed by governments and businesses, rather than charities, so maybe this is not a good example for talking about charity.) So I think, it shouldn't be a big emotional thing, like it's super meaningful and you're saving people's lives and you have all kinds of feelings about it. It should be that, when you think about it morally, rich people *should* have the habit of giving money to charity. And those boring regular payments do make a difference- but it's sort of in terms of what's going on in the background, rather than being a really dramatic "wow I saved a child's life just now."

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Follow-up post: On Skipping My Daily $5 Starbucks

Related:

My Weird Hangups About Charity

"Winners Take All": Businesspeople Only Want To "Change The World" If It Makes Money

Friday, July 4, 2025

Blogaround

Links not related to the antichrist:

1. Dehumidifier (June 30) From xkcd.

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Links related to the antichrist:

1. ICEBlock, an app for anonymously reporting ICE sightings, goes viral overnight after Bondi criticism (July 1, via) "With ICEBlock, users can lawfully share information about where they have seen ICE within a 5-mile radius of their location."

2. RFK is Going to Murder a Million Babies (July 1) "As Edward Nirenberg commented on BlueSky, 'if I were HHS Secretary and my goal were to kill as many children as possible, it would be difficult to distinguish the actions I would take from those that Kennedy has taken.'"

I don't *get* this. It seems to be a common thing that when you try to pin anti-vaxxers down, they say they're not anti-vax, they just want to be more careful and informed about things. (This is what RFK was saying in his confirmation hearings.) But then the actions they take are like... like they don't believe these vaccine-preventable diseases are real and deadly. 

3. New insight into Texas family detention reveals adults fighting kids for clean water (June 22) "One family with a young boy with cancer said he missed his doctor’s appointment after the family was arrested following their attendance to an immigration court hearing. He is now experiencing relapse symptoms, according to the motion. Another family said their 9-month old lost over 8 pounds (3.6 kilograms) while in detention for a month."

4. Federal judge strikes down Trump's order suspending asylum access at the southern border (July 2) "Asylum has been part of U.S. law since 1980, allowing those who fear for their safety to seek refuge in the U.S. as long as they can show a credible fear of persecution in their home country."

5. CBS is the latest news giant to bend to Trump's power (July 2) "Last year, as he campaigned for the White House, Trump promised to protect free speech and end censorship." He was lying.

6. Trump Admin Begins Processing Some Trans Passport Updates, Though It Will Maintain Data On Requests (July 2) "As of Wednesday morning, multiple transgender individuals have reported successfully obtaining updated passports at in-person passport offices."

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