Thinking Economics

Thinking Economics

Most human behaviour can be viewed through an economic lens to identify trends, patterns, biases and misconceptions. This column assesses Nigerian behaviour by applying Economics to behaviour and behaviour to Economics.

***

No Such Thing As A Free Lunch

Chuba Ezekwesili

Chuba Ezekwesili

Chuba is an economist, a data analyst, and the co-founder of Akanka - a global design studio.

A TOMS Story

Blake Mycoskie was travelling in Argentina when he noticed children walking without shoes. Like every hero that goes on to form a company, he felt driven to solve this problem. So, he came up with a genius idea and started a shoe company called TOMS.

For every pair of shoes purchased, TOMS would donate a pair to a child in a developing country. The scheme hit the right spot of consumerism, hipsterism and philanthropy, and predictably, caught the fancy of the Western world. You buy a shoe that signals you’re socially conscious and some poor kid in a slum gets some fancy new shoes. Everyone wins. What could go wrong?

It turns out free shoes can negatively affect those who aren't donors or recipients. In the words of Michael Miller, Director of PovertyCure, a group promoting entrepreneurial solutions to poverty, “the one-for-one model can undermine local producers”. When free shoes are made available, local producers lose customers and sales slump. When free shoes are given away, shoe businesses in those villages or town lose customers and sales diminishes. After all, why would you buy shoes when you can get swanky new ones from ‘the abroad’ for free? 

...
Read More