The Economics of the funeral industry: Boom or bust?

In my piece titled ?Of funerals and video-recording:?? (see www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=102716&comment=1949605#com ), I asked the following question: Why do we find it necessary to video-record funerals of the dead? The best answer I got (e.g., from kaffaman, ATL) is that it is meant for ?dear relatives in the diaspora who are are unable to be there in person.? This makes sense, especially since the funeral brings all the relatives together. In short, you get to see most (if not all) of your relatives in one event captured on tape. But I also received several other (negative) comments that got me thinking some more about the funeral industry in general. For example, most people thought it is our culture to have a ?good? funeral to honor the dead (and so I shouldn?t be bucking tradition). Others thought it sustains several businesses in Ghana. In other words, it drives the economy.

As an economist, I began to think of the implications of our funeral industry. As I thought through these, I received an email from a Ghanaian doctor (reproduced below) which prompted me to write again on this topic. As always, I am keeping this short.

Why this should not become a leading industry

How is the funeral industry driving the economy? A earlier comment by C.K. Danso (on Ghanaweb), puts it most succinctly: ?If funerals are outlawed in Ghana, hundreds of businesses may collapse; including seamstresses and tailors, clothing and the kente and adinkra industries, cobblers, caterers, marquee hirers, funeral chair hirers, soft drinks distributors and producers, bands and traditional drummers, singers and dancers and many, many more.? I agree with C.K. Danso on this. There is no doubt that the funeral industry is growing; and the livelihoods of many depends on it. But this poses a grave concern, and here is why. The size (i.e., revenue) of the funeral industry each year, equals the number of people that die each year, times the size of the average funeral. The growth in the funeral industry therefore requires an increasing death rate and/or a growth in the size (expenditure) of the average funeral. That means funerals must become larger and larger each year. In other words, the funeral industry has to keep innovating so it can offer more funeral-related products: e.g., video-recording, thicker and more colorful program booklet, nicer wreaths, coffins shaped into a fish or a mercedes benz car, etc. So herein lies the first problem: our innovations will be driven by services for the dead. There is something troubling about an economy whose growth depends in part on innovation in services geared towards the dead (i.e., the past), as opposed to kids (i.e., the present and future).

More importantly, if the funeral industry keeps drawing businesses into it, then it must rely on an increasing death rate to be sustainable, and such high death rate has to be matched by an even higher birth rate. But people are opting for smaller family sizes these days. So we face a stark trade-off; the growth in the funeral industry (which requires more deaths), will mean less than proportionate resources devoted to those alive now, or to provide future generations with a chance at a better life. Put differently, if someone is on the verge of dying, we are better off ?pushing them over the cliff? so we can add value to one of our funeral industry (i.e., more funeral-related business), because many live off it. Again, very troubling.

As I ponder over the consequences of this misplaced priorities, I received this email from a Ghanaian doctor that confirmed my conjectures:

Quote:?After qualifying in Germany as a medical practitioner, I returned to Ghana to practice in a university hospital. I was trained to cherish human life above all. The frustrations I went through were beyond description. From our leaders to the ordinary man on the street I got the message that the dead were more important than the living! Cash and Carry. Of course the majority could not afford it so they visited the hospital when it was almost too late to be helped. On several occasions, relatives asked me how much a prescription I had written for their sick relative was going to cost. When I estimated that it might cost such an amount, I would be told angrily that they were not prepared to waste that amount of money on the sick because they would rather make huge profit if he died! Funerals are now everything. It is not a place for solemn mourning and grieving anymore as you might have thought. It is a merry-making, girlfriend/boyfriend finding, husband/wife-snatching, good food/drinks available, money-making serious business affair. Who would want to save the sick to ruin such an industry. At least those in the health sector who could no longer continue to sign death certificates for big-time "Abusuapanin" (who never visited the sick or refused to contribute towards his/her recovery) would continue to quit. Brand such colleagues not as unpatriotic but rather conscientious.? End quote.

In short, when you are close to dying, we are better if you are dead. The ideal funeral industry.

So what to do? We need an ideal and stable funeral industry that is not sucking away resources from the living. That means a handful of businesses, each providing a one-stop shopping for bereaved families. You can play a role here. If you don?t see any problems with the trend in the funeral industry, that?s fine. If the trend bothers you, then you can use your money/remittances to shift the priorities of our moms and dads, brothers and sisters. I recognize that there can be ?social costs? associated with unilaterally deviating from a social norm (or, a fad). But there is a critical mass out there who are saying ?enough with the dead robbing the living.? We can find solutions in living wills. These have not been a part of our culture (and I wonder why, but that?s a topic for another article). We can encourage our folks to write their wills, expressing their wishes to every minute detail, so no one has to run around cleaning up the mess, and managing the in-fighting that ensues after they are dead.

We can influence our folks to return to basics (by burying the dead in a way that makes sense, financially). We then free up resources that can be invested in kids, in their health, and in their education. There are larger payoffs here, and it goes all the way to the top. An educated critical mass promotes good governance. That is a fact.

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