“gambling”

Does anyone know an anthropologist/sociologist/economist who is looking into modern exchange networks in remote Aboriginal communities? Someone seriously needs to look at gambling as wealth redistribution and how it forms part of the local economy. I say this because of comments like the one from federal Indigenous Affairs minister Mal Brough recently (the context is the apparent failure of Indigenous land use agreements and the distribution of mining funds):

“There was one particular gentleman being paid $250,000 in royalties [and] the whole lot was gone within a week, with a number of vehicles bought and the rest spent on gambling and other activities.

“Because the alternative of perhaps buying a home for your family – where there is a housing shortage in this particular locality – isn’t an option because no one owns the land individually.

“So I think that the choices that you and I would have, or anyone else would have, to invest and make that money work for you is seen as less an opportunity in many Indigenous communities.

As far as I can see, the expenditure by said gentleman is completely rational in a remote community. “Gambling” here doesn’t mean that the person is going to the RSL or the casino and playing the pokies. Gambling doesn’t involve the loss of money from the community. Gambling is sitting in the shade with your mates and doing a bit of wealth redistribution. It’s a closed system. Vehicles are always in short supply and access to one increases quality of life (through access to better resources further away from the community, status, possibility to ‘hire’ it out, etc). We aren’t told what the vehicles will be used for. One community I know uses their royalties for things like patrol boats (and upkeep) to protect turtle breeding grounds. Perhaps the vehicles were a similar start-up. Perhaps they were to be used for taking tourists around. But back to gambling. Gambling in remote communities seems to function a bit like a safety net against the effects of income shocks, and to be an added layer on traditional distribution networks based on kinship.

Why am I posting about this when it’s not linguistic and I’m three weeks or so behind with “language of the week”? Because it’s an excellent illustration of why local knowledge is necessary in policy formation, and of the cultural relativity of specific economic and social judgements. One would have hoped that the minister with the portfolio of Indigenous affairs would have had an inkling of this.

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One response to ““gambling”

  1. You have three main points here: i) the Minister for Indigenous Affairs in a Howard government made some ill-informed comments; ii) he seems to feel that buying vehicles is necessarily a poor investment; and iii) gambling and ‘other activities’ are not a good use of cash. i) is probably unfortunately true. ii) and iii) are not really falsifiable with the information available – if they were sports cars, then Brough is probably right, whereas if they were investments, you might be. We don’t know. iii) Implicit insurance contracting is well studied, both theoretically and in developing countries in Asia and Africa (following work by Townsend at Chicago). I do not know of work that tries to characterise gambling in this light, but there is no obvious reason why it wouldn’t work (it’s essentially like giving stochastic transfers rather than deterministic transfers, assuming the game is zero-sum). That is, it would be hard to argue for it instead of just reallocating the resources in a deterministic way, but this welfare cost isn’t huge, I wouldn’t think.

    Brough’s point about gambling is more the idea that gambling is something to be held in moral opprobrium, combined with the idea that whatever it is, it isn’t an investment. And you are right that there are situations in which it might be.

    And incidedentally, you have the economist jargon correct here: ‘income shock’ is exactly right.

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