It was when attempting to clearly distinguish between patterns of cash flow in the formal vs the informal economy, using the concept of the degree of control granted to the end user over the variables of time (duration, frequency, periodicity) and money (amount, cash or kind), that it struck me what kind of difference does control over timing mean for money.
That is, there is a complex value processing underneath each of the decisions on allocating available cash money, particularly in rural areas where cashless transactions can tend to be more common.
When one can control the timing of one’s payments – such as the advance purchase of airtime minutes to use a mobile phone – one’s income could be called dynamic. Within any particular set of calender based time eg a week or a month or a quarter; a vast majority of the lower income bracket cannot predict their total cash income nor feel confident enough to claim it. It can be affected by seasonality prevalent in their region, or it can be purely random volatility, one’s workshop burns down in an accidental fire. Uncertainty in the daily environmental conditions in which the majority of the informal economy operates is manifest in individual’s unwillingness to take risks.
Innovation is a risk. I trust my wealth in the form of a tangible cow that moos than some electronic numbers on a screen.
Though this is changing, its an interesting side note to see how its due to the establishment of the mobile phone and the prepaid business model’s enabling even those on irregular income streams without paychecks and the paraphernalia of formal structure that has lowered barriers to trusting mobile money systems.
Static income is that which is stuck, such as a fixed salary paid every calender period, regular in frequency, amount and periodicity. While its a boon for security, it does not allow for the “jackpots” of chance to make that big enough difference to overcome the moment of inertia and leap for one’s aspirations.
For one of the most powerful commonalities among the lower income segments across the world is the power of their aspirations for the future. What may be an incremental change in the quality of life of someone in the developed OECD world – a better model car or a more exotic holiday – can be a windfall of opportunity applied towards some income generating activity. Even the peon who scrimps and saves to send his children to English medium schools, or whatever passes for them in small town India, sees this as an investment in the future. A better job. More perks. His wife begins to sew or embroider, ready to start the dynamic income flow. Its unreliable for daily life but will provide the necessary extras when required.