Asymmetrical Information - Megan McArdle


What's Better: Cell Phones or Indoor Toilets?

Can we tell by looking at what rural farmers buy first?

A recent paper from Robert Gordon posed the following dilemma:  


Gordon assumes the answer is obvious: toilets, stupid! But Kevin Kelly pushes back:


A number of people I read have enthusiastically linked this as an example of the limits of introspection: revealed preference beats theory! Take that, just-so stories!

But not so fast. Notice what these farmers are not choosing between: regular telephones and indoor toilets. That’s because for a regular telephone, you need a connection to a public grid. Which doesn’t exist, a fact which Kelly acknowledges but sort of slights:

Take a look at these farm houses which I saw under construction in remote areas of Yunnan province China. They were not unusual; farmsteads this size were everywhere in rural China. Note the scale of these massive buildings. Each support post is cut from a single huge tree. The massive earth walls are three stories high and taper toward the top. They are homes for a single extended family built in the traditional Tibetan farmhouse style. They are larger than most middle-class American homes. The extensive wood carvings inside and outside will be painted in garish colors, like this family room shown in a finished home. This area of Yunnan is consider one of the poorer areas in China, and the standard of living of the inhabitants here would be classified as “poor.”

Part of the reason is that these homes have no running water, no grid electricity, and no toilets. They don’t even have outhouses.

But the farmers and their children who live in these homes all have cell phones, and they have accounts on the Chinese versions of Twitter and Facebook, and recharge via solar panels.

Indoor plumbing also requires a connection to a grid, like a regular telephone, and unlike a cell phone. Kelly sort of glosses over this by saying “they don’t even have outhouses”. But the difference between a shack over a pit in the ground, and going to the bathroom in the fields (where it fertilizes your crops, at some cost of disease), is much smaller than the difference between an outhouse, and real live indoor plumbing that keeps you warm and dry and odor-free. And yes, I’ve used all three fairly extensively.

I’m frankly puzzled by the way he conflates outhouses with true indoor plumbing. Anyone who has ever used a primitive outhouse will have no difficulty explaining why they are almost never attached to houses, but for the benefit of those of you who haven’t: your outhouse smells really disgusting. And the pit types need to be moved periodically when the pit you've dug fills up. With stuff you really don’t want washing around the foundation of your house.

Personally, I prefer the woods.

Saying that people are choosing the a cell phone over an outhouse is not the same as saying they’re choosing a cell phone over an indoor toilet. Maybe that’s the choice they’d make, if they had it—I don’t know! But as Kelly’s own account acknowledges, they don’t actually have that choice, and certainly not at anything like the same cost.

Indoor plumbing requires either electricity to pump the water, and a nearby well to pump it from, or a connection to a public system with enough pressure to force the water high enough to flush your toilet. That’s a lot of power, not a trickle charge off of a small solar cell; I believe my great grandparents used a gasoline generator when they installed indoor plumbing in the mid-thirties. Gasoline generators are fairly expensive, as is the gasoline to run them, and I gather that they were only able to do it because their newly married son (my grandfather) saved up to help pay the installation cost, and then paid them rent that covered the cost of the fuel. Most farmers, I am told, waited until rural electrification brought them grid power.

Indoor plumbing also requires somewhere for the flushed waste to go. If you’re using a septic tank, you’ll need someone who comes and pumps that septic tank out regularly, something I doubt is available in rural China. If you’re using something more primitive, then some of the big benefits of indoor plumbing—odor and disease control—go away.

So I’m not sure how revealing it is that people in rural China and Africa have chosen something that is relatively inexpensive and available, over something that is fairly expensive, and isn’t. Saying “Well, they didn’t install this totally inadequate substitute” doesn’t really persuade me.

As an aside, I’d also note that we haven’t talked much about Gordon’s other stipuation: hauling all your water. Indoor toilets are great for everyone, but water-hauling is largely women’s work. If men are the ones controlling the design of the houses, then you may get a very different set of priorities than you would if everyone got a vote. If I had to choose between hauling my water a mile, and having a cell phone, there is absolutely no question about what I, personally, would choose, unless I could use the cell phone to make money to install the indoor plumbing faster.

It’s not that I’m trying to downplay the amazing role that cellphones are playing in rural communities. It’s amazing! But indoor plumbing is also amazing, and I don’t think you can look at dispersion rates to tell which one people find more awesome. One requires fairly extensive infrastructure developments, and the other doesn’t, so while the latter is mostly a function of demand, the former is largely a function of public developments that haven’t happened in the areas where most of the global poor still live.