Women, Money and Financial Literacy

I recently read about a divorcing couple who met with a mediator, only to be told that mediation would not be the best option for them. Later, when pressed, the mediator offered several reasons why she was reluctant to take them on as clients. But the factor that seemed the most significant to me was the divorcing woman’s discomfort talking about money and her lack of basic financial literacy. Was the woman in this case a recent immigrant and unfamiliar with North American ways? Was she uneducated? Was English her second language? You might be surprised to hear that she was a highly educated (Ph.D.), middle-class, native-born American.

But then again you might not be surprised. A recent survey by the Globe and Mail of 800 of their (presumably educated and sophisticated) readers, found that only 29% of women and 53% of men said that they were “absolutely” financially literate. When the woman in the case I’ve mentioned reflected on her situation, she found that she had gradually let her husband take over the family’s money management. There was nothing sinister about this – she disliked having to think about such things, he enjoyed working with numbers, and she felt that he would do a better job. But this meant that when they decided to divorce she was a bit lost. She had to pick up money management skills at the same time as she was trying to cope with the stress of divorce and the added burden of being a single parent.

The Canadian Task Force on Financial Literacy defines “financial literacy” as having the knowledge, skills and confidence to make responsible financial decisions. While everyone should be knowledgeable about their money and able to make good decisions, the costs of financial illiteracy are particularly high for women, who still tend to earn lower salaries than men.

How can you become financially literate if you’re not? If you aren’t already familiar with your family’s financial situation, get better acquainted with it. As a minimum, you should know the amount of your monthly rent or mortgage payment, your monthly cost of living, how much money you’re setting aside for savings each month, the outstanding balance on your credit cards, and how much you’re paying in interest. You can get more familiar with your financial situation by taking on some money management tasks each month: pay the utility bills, make the mortgage payment. Get involved the next time you renew your mortgage. Sit down with the person who handles the family finances and have him or her go over the basics with you. If you’re handling finances by yourself for the first time and you feel overwhelmed, get help. (The woman whose story I’ve told in the opening paragraph ended up asking her mom for help). In Canada, the Toronto Star maintains a great website with lots of practical information. For help with your specific situation, it might be worth your while to sit down with someone where you do your banking, a certified financial planner or a certified divorce financial analyst.

Unintended Consequences, the Common Good and Cell Phones in Africa

I just read a fascinating article: “Mobile Phone Diffusion and Corruption in Africa” by Catie Snow Bailard, published in the journal Political Communication in 2009. The author looked at data from 12 countries from the period 1999 to 2006. She found that there was a relationship between the number of people in a country who had access to cell phones and the country’s level of perceived corruption: The greater the level of cell phone penetration, the lower the level of perceived corruption. In a second study, she analysed the degree of mobile phone signal coverage across 13 provinces in Namibia. Again, greater levels of cell phone coverage were associated with lower levels of perceived corruption.

(You might wonder why the author chose to examine “perceived” rather than actual levels of corruption. Corruption is a difficult concept to define, let alone to measure. For one thing, corruption is culturally variable. What is considered a bribe in one place might be seen as a necessary cost of business in another. Secondly, the often private nature of corrupt behaviour can make it difficult to detect. Counting the number of prosecutions for corruption in a given place might tell you nothing more than the quality of the prosecutors. For these reasons and others, social scientists rely on indirect means of getting information about corruption. Transparency International’s Corruptions Perceptions Index is one that is widely used.)

It is easy to understand that improved telephone coverage and greater ease of communication at a distance would improve the lives of Africans. But why would it contribute to lower levels of corruption? Bailard offers some plausible explanations. First, corruption thrives in conditions of secrecy, and opportunities for corruption increase in cases of information asymmetry – when one group of people has greater access to information than another group. Cell phones decentralize information. As more people come to own cell phones (or have access to them) information becomes more readily available. Bailard refers to another study that found that the simple act of posting a newspaper advertisement stating that aid was meant to be dispersed to certain schools significantly reduced the amount of aid lost through misappropriation. (That study, “Fighting corruption to improve schooling: Evidence from a newspaper campaign in Uganda” by R. Reinikka and J. Svensson, was published in the Journal of European Economic Association in 2005).

Another reason why cell phone use may decrease corruption is that they make it easier for ordinary citizens to fight corruption. It becomes relatively easy to contact reformers, government officials, or the news media. It is plausible that individuals contemplating corrupt behaviour will weigh their potential gain against the likelihood of getting caught and being punished. In a climate where exposure and punishment is likely, people who may have been tempted to increase their wealth through corrupt means will think twice. (I made a similar point about insider trading in an earlier post.)

The connections between cell phones and reduced corruption in Africa strikes me as a wonderful example of an unintended consequence. No one involved in the business of providing mobile phones to Africa did so with the aim of reducing corruption. Rather, they saw a good business opportunity and hoped to make a profit. The reduced levels of corruption were a good consequence, but one that nobody intended or even foresaw. When I have taught ethics in the past, many students are very readily convinced by the view that good acts are those that have the best consequences. Indeed, many find this view obviously true. The problem, though, is that the line from an act to its consequences is not always straight or apparent. There are countless examples of good-willed individuals who thought that their actions would produce beneficial results only to be dismayed by the actual outcome. This is the problem of unintended consequences, and it is a powerful reason to act with caution, especially when our actions will effect others. It is good to be reminded that unintended consequences can be positive as well as negative, and that neutral acts can bring about beneficial results.

Another point – we often assume that when people act in their own interest, the benefits they reap will be strictly individual as well. But happily this isn’t always the case. Here, many individuals acquired cell phones for their own purposes and improved their lives. Yet out of their individual actions emerged the collective good of reduced corruption.

Gary Noesner’s Stalling for Time: Lessons for Mediators

It isn’t often that I’m so absorbed in a book that I miss my subway stop. But that happened to me when I was reading Gary Noesner’s Stalling for Time: My Life as an FBI Hostage Negotiator. The book is fascinating reading, whether or not you’re the sort of person (as I am) who can be transfixed by movie scenes of high stakes negotiations. Aside from being an absorbing read, Noesner’s memoir contains some important lessons for mediators, even for mediators who hope never to negotiate with armed criminals.

The Importance of Coaching: FBI negotiators usually work in teams. While one officer negotiates, another listens and may offer suggestions via a passed note. The “coach” will often sense an opening or possibility that the active negotiator, listening and working in the moment, has not noticed. For example, FBI negotiators tried for weeks to persuade followers of David Koresh to leave their compound at Waco. Some did leave, including many of the children, but negotiations were slow and difficult because Koresh had a strong psychological hold on his followers. One woman got the courage to leave after the negotiator told her that her son, who had been released earlier, “needs a hug from his mom.” The primary negotiator told her this only because Noesner, acting as a coach, had been monitoring the ongoing conversation and sensed that this remark would be effective in getting her to think of her son’s emotional well-being and thereby weaken Koresh’s influence. Any mediators involved in complex, multi-party negotiations might benefit from working with a co-mediator.

Trust and Credibility: Noesner sometimes had to work hard to establish trust with his negotiating partners. His work brought him into contact with violent prison inmates, men who were angry and abusive towards women, religious fanatics, right-wing extremists, and mainstream political activists. Often, these were people from very different backgrounds with whom he had little in common. In every case, he treated those on the other side with respect and strove to make them feel like he cared about their well-being. Noesner tried at all times to project the view that he genuinely wanted to help them get out of their predicament with security and dignity.

De-briefing and Support: When negotiations have gone well – and especially when they haven’t – negotiators meet to discuss which techniques worked and which were less successful. FBI negotiators often work long hours in extremely stressful conditions, sometimes far from their families and the comforts of home. When a job is over, staying in touch with co-negotiators and talking things over is an important part of maintaining good mental health.

Safety: Although they are tough and confident around firearms, FBI negotiators place a high priority on their personal safety and do not put themselves at unnecessary risk.

Mediation Works: Noesner tells us about some pretty challenging cases, and not every story has a happy ending. Still, it was truly inspiring to read about his successes. A trained negotiator has important skills and the power to do good, to avert violence and to help resolve even those situations that might seem hopeless. This is important to keep in mind, even if the only high-stakes negotiations we are ever exposed to are in the movies.

Grandparents, Children and Divorce

Among the current proposed changes to family law in England and Wales is a plan to grant access rights to grandparents in the case of family breakdown. (Here is an article about the proposed changes.) In Ontario, a private member’s bill (no. 33) with a similar aim is currently being reviewed by the standing committee on social policy.

Grandparents often play important roles in the lives of their grandchildren. They help out with childcare, provide a sympathetic ear, and share their life experience. There is good evidence that children benefit from having a close relationship with their grandparents. When a child’s parents have separated, the grandparents’ role is all the more crucial. A grandparent’s home can be a place of peace and stability. This is especially true if the parents are angry or upset with one another, or there is a lot of upheaval in a child’s life.

Sadly, many grandparents have reported that they have found it difficult to remain part of their grandchildren’s lives after the children’s parents split up. Paternal grandparents are especially likely to report feeling shut out. While there is support in both England and Ontario for improved legal rights for grandparents to see their grandchildren, it is easy to see that changing the current laws cannot be the whole solution. For one thing, many seniors are on restricted incomes and may not have the means to hire lawyers and have their day in court.

Why would a parent make a decision to restrict the time that their children can spend with their grandparents? A mother might feel that her former in-laws never accepted her or never liked her. She might feel that they contributed to the breakdown of her marriage. A father might fear that his ex-wife’s parents are going to put him down in front of their children. If one of the parents does not share the same religious or cultural background as his or her in-laws, that parent might be concerned that the grandparents will not respect these different cultural traditions, and this in turn might be confusing for the children.

I predict that many conflicts between parents and grandparents over the right to spend time with their grandchildren will end up in mediation. A mediator can talk to all of the parties involved and work to keep everyone focused on the best interests of the children. Children do benefit from having their grandparents in their lives, but it is also important that grandparents are respectful of both of the children’s parents. One of the greatest gifts that grandparents can give to their grandchildren is a stable and peaceful setting where they can get away from their parents’ conflicts and problems. It might not always be easy for grandparents to set aside bad feelings about one or other of their grandchildren’s parents. But refusing to do so can only make a bad situation worse.

Mediation and “Bad Faith” Bargaining

I remember, during my mediation training, asking for a clear definition of “bargaining in bad faith” and being disappointed not to receive one. Having now myself done a little research I can understand why the concept is so hard to define, despite many people’s claim to “know it when they see it.”

Most of the legal discussions of bad faith bargaining that I have seen come from the area of labour relations. For example, the Alberta Labour Relations Board advises that, “parties must make every reasonable effort” to reach an agreement. They also list some examples of bad faith bargaining techniques, including refusing to meet the other party, refusing to respect the other party’s representatives, reactivating proposals that have already been settled, adding new areas of discussion late in the dispute, and “surface bargaining.” I would guess that “surface bargaining” is what most people have in mind when they think of bad faith bargaining. It is basically a form of stalling. In surface bargaining one of the parties “goes through the motions” of bargaining, but has no intention of ever coming to an agreement. The BC Labour Relations Board defines bad faith bargaining somewhat more strictly, saying that it is the “deliberate strategy by either party to prevent reaching an agreement.”

Bargaining in bad faith is not the same as “hard” bargaining, but the two can be very difficult to tell apart in practice. Imagine a dispute in which party “A” has made what they consider a reasonable offer to settle. Party “B” refuses to accept it and has not moved very far from their opening position. Did party B never intend to settle, or are they simply convinced that party A’s offer isn’t yet good enough? How would a mediator (or anyone else) be able to tell, short of a private confession by party B? Or imagine a dispute in which party A spends a lot of time going over relatively trivial yet highly detailed matters. Is party A deliberately stalling, or taking reasonable care to protect their interests? And who is to say what counts as a “trivial” issue?

Yet despite the difficulties in characterizing bad faith bargaining, it represents a real problem for mediators and for the mediation process. It is a particularly troubling possibility when one of the parties has greater resources (time, money) than the other. The more powerful party can stall, drawing out the process and using up the other party’s time and money. When the mediation process is declared a failure, the stronger party is in an even more favourable position. The weaker party, having depleted their resources, may agree to an unreasonable offer because they no longer have the money to defend their rights in court.

What should you do as a mediator if you suspect that one of the parties is bargaining in bad faith? I don’t think that there is any way to be sure that parties intend or do not intend to come to an agreement, and it is important not to jump to conclusions. If one of the parties won’t move from what looks like an unreasonable position, try to find out why. Their view of the dispute may be such that their own position is reasonable. How does it differ from your view, and from the other party’s view? But there may come a point in a mediation when the mediator begins to suspect that the process is not serving either party and that prolonging it would not be a good use of their time or money. In this event, the best thing for the mediator to do may be to explain their concerns and then exercise their right to end the mediation.