"Give a man a fish and he'll live for a day. Teach a man to fish and he'll live for the life."

The Financial Secretary (Mr. Henry Tang) chaired the newly established Commission on Poverty. The commission aims at identifying the needs of the poor and solving poverty through encouraging and supporting self-reliance.

I remember when I was young my family was so poor that the only possible solution was self-help and self-strengthen rather than any outside assistance. In economics, we have the Lorenz curve and Gini Coefficient (*) that indicate the degree of seriousness of the problem of uneven distribution of wealth. However, I think it is hardly to draw a specific line to define who is above or below the poverty margin. The top priority of the working schedule is to prevent the so-called "inter-generational poverty". It is the right direction.

I totally agree with the existing policies and measures in alleviating poverty such as providing social security, medical services to the needy, educational services to students, training and retraining programmes as well as employment information services. The rest of the work is how to co-ordinate various government departments in a better way to fight the problem.

The most cost effective way to alleviate the pain of poor in any economy is not just giving them "the fish to eat" but to teach them "how to fish" for the rest of their lives.

Even with monetary or material assistance it only meets the temporary needs. The poor recipients would have to develop their abilities to live independently in the long run. They should stand on their own feet; otherwise the prolonged material assistance will just increase the burden to the society as a whole as a chinese proverb says “長貧難顧”.

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(* economic jargons)
The Lorenz curve is used in economics to describe inequality in income.
The Lorenz curve is a function of the cumulative frequency of ordered individuals mapped onto the corresponding cumulative frequency of their income.
The Lorenz curve compares the uneven distribution of income with the uniform distribution (represented by a 45 degree diagonal straight line that represents equality).
Gini coefficient is based on the Lorenz curve. The greater the deviation of the Lorenz curve from the equality diagonal line, the greater the inequality.
I.e. The further the Lorenz curve lies below the line of equality, the more unequal is the distribution of income.
To compute the Gini Coefficient, we first measure the area between the Lorenz Curve and the 45 degree equality line. This area is divided by the entire area below the 45 degree equality line(which is always exactly one half). The quotient is the Gini coefficient, a measure of inequality.
In extreme equality (i.e. for a perfectly equal distribution), there would be no area between the 45 degree line and the Lorenz curve -- a Gini coefficient of zero. And, in extreme inequality, Gini coeficient is 1.

The Law of D.M.R. is an empirical law in economics

Many students often don't bear in their minds of the importance of the following law:
the Law of Diminishing Marginal Returns ----
A principle stating that as more and more of a variable input is combined with a fixed input in short-run production, the marginal product of the variable input eventually declines.
It is a very important economic principle underlying the analysis of short-run production for a firm. It offers an explanation for the upward-sloping market supply curve.

How does the law of diminishing marginal returns help us understand supply? The law of supply and the upward-sloping supply curve indicate that a firm needs to receive higher prices to produce and sell larger amount quantities of the good or service concerned. Why do they need higher prices?

The paradox of "compulsive shopping addiction" vs "rational behaviour"

The following confession was clipped from a recent newspaper about the "shopaholic". It is a real fact and it just happens around us.
"I just can't control my shopping habits, and as each week goes by I find I am buying more and more things I don't really need or can't afford. When I get home I hide things and feel guilty for a while (and even sometimes quite sick with fear) about what I might do, but it doesn't stop me going out again the next day. How can I stop spending money?"

People use what is called retail therapy as a way of enjoying themselves. They normally buy things for which they have a need or have developed a desire for. Compulsive or addictive shopping is not like that. It is a problematic behaviour.

A medical term called "shopaholic" or "compulsive shopping addiction" emerges recently. Shopaholics are people who suffer from what has become termed 'Compulsive Shopping Addiction'. Compulsive shoppers buy more than what they need and spend money more than that they can afford, in an effort to make themselves feel better. They will be suffered afterwards emontional depression with a sense of guilty. Some are even encountering financial trouble. "Shopping addiction" actually causes much pain rather than pleasure for them as a result .

It seems contradictory to our basic assumption that in all economic models we assume individuals to behave rationally. The process of consumption should bring people such good feeling of happiness and pleasure rather than bad feeling.
Should the economic laws be discarded for such existence of paradoxical phenomenon?

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