Alam Srinivas is a business journalist with nearly three decades behind him, working for The Times of India, India Today, Outlook, Financial Express and Business Today. He is the author of “Cricket Czars: Two Men who Changed the Gentleman’s Game”
Money makes the world go around. While this may be a general observation, it has differing impacts on different cultures, societies, nations, and communities. Over the past seven decades, Indians’ attitudes and thinking towards, and connect with money underwent dramatic changes. In terms of sociology, philosophy, and economics, the influences differed remarkably. Even within specific communities, castes, and classes, the reactions, assimilations, and transformations were diverse.
You don’t need to step out of your house to realise this. Compare how your grandparents, parents, and you think about money, and deal with it. The fascinations, passions, and pains associated with it are not the same in the three generations. The attitudes towards saving, spending, and squandering of money have changed. Even the touch, feel, and look have transformed.
For some, it’s only paper, for others mere plastic, and for many it’s technology. You pay for your cab through PayTM, your father bought his flight ticket through a card, and your grandfather always carried lots of cash in his inside pocket. You rarely carry a wallet (your wallet is on your mobile), your mother carries quite a fancy one, and your grandmother never felt the need for it because she could carry anything in a knot in her sari.
This is just one of the ways in which we have changed our beliefs about money. In fact, one of the strangest things that happened to money, and the way we relate to it, is in its language. In his book, How To Speak Money, John Lancaster deconstructed this in a post-modernistic manner, and for the millenials. In a dictionary format, and in a jargon-free way, he described what the terminologies associated with money mean.
Over the past several decades, social classes (castes and communities) were reduced to socio-economic ones. Be it in terms of consumerism, incomes, even Mandal Commission, the accent is on the socio-economic categories.
Economically, as also socially and politically, the shift is traumatic and revolutionary. Your social hierarchy is partially decided by your economic status. Your economic class defines your social status.
According to Boston Consulting Group (BCG), Indians can be largely divided into five categories. People are either elite, affluent, aspirers, the next billion, or strugglers. The distinctions are self-explanatory, although people may be slightly confused about who fits into which ones. Compared to someone, who earns more, you may consider yourself as an aspirer. But when someone who earns less looks at you, she sees you as part of the affluent.
In the next few years, the compositions of these groupings will change. The combined size of the elite and affluent will double from eight per cent to 16 per cent of the population in 2025, and that of the strugglers will dip from 31 per cent to 18 per cent. More importantly, the former will account for 40 per cent of the national consumption, up from 27 per cent in 2016. “Wealthy urbanites,” says the BCG report, “will be responsible for one-third of total consumption.”
However, urban India is not a homogenous subset. It has various components, which see money in various hues, contours, and colours. The ones in the big cities, especially metropolitan centres, seem to be leaning towards the extravagant. Those in emerging cities “have a strong value-for-money orientation, significant local cultural affinity, and a more conservative... outlook,” says the BCG report. Even the emerging cities with “similar sizes and growth rates” differ from each other in this respect.
Within urban India, and this is partially true for rural India, joint families gave way to nuclear ones. In the former, money was meant to serve cumulative and consolidated needs, and sections saved for the ‘rainy days’, which were often as some sub-family or the other would be in need of additional money. Hence, money was shared, or at least ostensibly served that purpose. Money was the means to achieve several joint family ends.
Nuclear families have larger disposable incomes, especially with two earning individuals, because there’s little sharing involved, except possibly with the immediate family (parents and kids). More importantly, given the lesser number of members, there’s a propensity to give the best to the family members. So, the children should go to the best schools, and the parents should access the best assets. A vehicle is a given, so is a home.
Decision-making undergoes a change as the family becomes smaller. In joint families, the elders have a say, but the decisions are taken in a more collective manner because all the sub-families are equally important. The role of money is, therefore, consensual, at least sociologically. In nuclear families, the decisions are quite influenced by the children, and empowered female members. Hence, the way the money is treated is vastly dissimilar.
The disintegration of communities (think migration) and families (think nuclear) has transformed money from a social tool to a largely economic one. Earlier, money was social capital to be used for a larger set of people, even if it was restricted to joint families. Today, it is to satiate the needs of a few individuals, sometimes a single one with the increasing expanse of people who live alone, far away from their families and relatives.
Nowhere is this evident than in the chasm between economics and humanities. Authors Gary Saul Morson and Morton Schapiro compare this to an ancient Greek fragment: “The fox knows many things, but the hedgehog one big thing.” Economists are like hedgehogs, “forever on the search for a single, unifying explanation of complex phenomena.” This has three systemic biases – it ignores the role of culture, peoples’ stories, and ethics.
Hence, when people begin to look at money in purely economic terms, as is the case now in several households, they acquire a hedgehog mentality. Consumption, including its corollary, like saving and retirement planning, become overpowering. In their bid to look for a single solution, through money, for complicated social and emotional problems, they ignore the concepts of values, morals, and ethics. In essence, culture.
Materialism and asset-based notions grip the society. Today, at least in certain socio-economic sections, but spread across social categories, there is an innate desire to get-rich-quickly. This goes hand-in-hand with the aim to “work hard and get rich”. The operative part remains the same – get rich, by hook, crook, or work. As an HBR study said, “Indians are more motivated than ever by personal ambition and a desire for materialistic success.”
Once these are achieved, the attitudes change radically. A lot of youngsters, say, in the IT sector, have the intense acquisitive tendency. They change their mobiles every few months, buy a new car every few years, own at least two properties, and love to get hold of the latest gadgets. It’s the “I can, so I will”, or the “I live for the moment” thought process. They do save, and invest, but consumption is an integral part of their lifestyles.
Hence, consumption patterns get intrinsically linked to incomes, but it follows a kind of an ‘S’ curve. Up to a certain income level, households grapple with the basic necessities. And then “consumption increases linearly with income”, but only up to a certain stage. Thereafter, in terms of percentages of incomes, consumption reduces, and then plateaus. Finally, it decreases “after a certain level of income is reached.” This isn’t counterintuitive, or even observable. But it’s true, especially for the middle class families.
Look at your life, especially if you are in your 40s and 50s. You spent a larger share of your income on consumption in the first 20 years of your career. Today, you think more in terms of savings, intelligent investing, to prepare for your retirement, medical expenses for your family, and children’s higher education and marriages. Once you near retirement, the proportion of your earning spent on immediate consumption will reduce.
Here’s a test to gauge what you think about money, and how they treat it subconsciously. But you need to be absolutely transparent and truthful. Are you a ‘Richie Rustie’, “who do not follow any set patterns”? Should you be called ‘Vivacious Vivant’, “who want to spend money to enjoy life without feeling any guilt”? May be you are the ‘Political Prowlers’, who “want to acquire anything new with the money they have”. You are ‘Affluent Ascetic’, who “want(s) value for money”. Sorry, you are the ‘Flashy Flaunter’, whose only goal is social status. To tell you the truth, you are actually ‘Classy Connoisseur’, who seek “intrinsic satisfaction” and for whom consumption is a part of daily life. This categorization by a researcher will flummox any reader. The fact is that we are different people in different situations. Money, like with the world, also makes us go around.
Many of us seek “immediate gratification” in some situations. At the spur of the moment, we decide to spend a few thousand of rupees on an evening in an expensive pub, or decide to go to the hills or beach over a weekend. But we spend money on a wide array of goods and services. Yet, when a new iPhone is launched, we need to acquire it, come what may, and immediately. However, even when it comes to expensive purchases, we look for the best deals, the maximum discounts. Of course, we are classy in our tastes.
In philosophical terms, whether we agree or not, money has become the convenient grease to smoothen the topsy-turvy, roller-coaster rides of our lives, which change constantly on a second-by-second basis. Technology has enhanced this process, as well as its impacts. As we hop, skip, and jump from one situation to another, thanks to mobile and social media, we need something to reduce the frictions. Money does this.
For many, it helps in crisis situations. We feel guilty that we don’t spend time with our parents, so we throw money to take care of their medical needs. We feel distraught that we don’t spend time with our children, so we buy them the latest mobile. We feel agitated that we haven’t met a friend for years, so we buy her an expensive gift. We want to spend value-time with our partners, so we take them to expensive pubs, restaurants, and holidays.
When money becomes a philosophical strain in its own right, it encourages people and societies in bizarre ways. There is an overriding urge to view “successes are deserved and their failures as bad luck”. This world view – and it happens more to those employed in financial services – “fuels ego and ambition in an unusually powerful way”. It leads to king-size egos across the society. Values and ethics, often, go for a six. In effect, what we achieve is the growth of an affluent, but extremely corrupt, society. This is the bitter truth, whether we like it or not.