Should I Over Pay for Things when I Visit Poorer Countries?

Whenever I visit a country, if I'm not familiar with the local pricing I typically google for the answers. I hadn't been to Cambodia for many years so I had forgotten what the local prices were like, so when I arrived, I googled what I should pay for cab fares. I like to have that information handy at the airport because I know what is going to happen after I land.

Unlike most people, I like to haggle. I really do enjoy it. I expect I got it from my dickering-loving father. So when I get off the plane and go outside to look for transportation to my hotel, I am ready for the hoard of cab drivers that are ready to swarm. But I need that information of what a fair price would be when I land.

On my recent trip to Cambodia the first cab driver approached me and asked if I needed a taxi. I answered in the affirmative and asked the price. I already knew that the price should be in the $10 range. They accept the US dollar as readily as they do their own currency in Cambodia and they often quote you prices in US dollar. Well, this man came out with a ridiculous price of US$30. I didn't even reply, I just shook my head and kept walking. But he followed me and did what they always do at that point, he kept asking me "how much you want to pay?" Well the answer to that is nothing but I don't normally say that.

When they quote something that far out of whack, I do not give them any further consideration. I just keep walking and let them continue their price dropping. I didn't even respond to him, but the more I walked the more the price dropped. He eventually got down as low as eight dollars. I think that was his bottom line.. But now I was being approached by a tuk-tuk driver. Although a tuk-tuk is not as comfortable as a cab, I actually enjoy them more because of the maneuverability and their ability to make it through traffic easier.

I asked the driver how much and he replied nine dollars. I said to him, "let's go." Now the other driver was upset. He asked why I accepted a higher fare than he was offering. I replied, "because this is an honest man."

There is actually more to this story of this tuk-tuk ride to my hotel, but it is rather lengthy and I'll save it for tomorrow. But suffice it to say that I actually paid the tuk-tuk driver US$15 for this ride, much more than he was asking.

But what I really wanted to get to in this post was how much should you overpay when you visit a poorer country? When I googled how much I should pay for the taxi ride from the airport, I began to read a discussion forum about a person who refused to overpay above the local pricing. In the discussion forum he was being massacred for being a cheapskate by most of the people. But I am one who actually takes his side on the matter. Now I don't mean to be a total cheapskate and Penny pinch every cent out of a negotiation. But I think that it is realistic to pay market prices wherever you are.

I actually travel to these places because these are the places that I can afford to do my travel since I had retired early and haven't drawn a paycheck in 10 years now. I have to take advantage of local pricing to continue to do this travel. They wouldn't have my US dollars in that country if their prices were inflated. So I do serve to stimulate their economy with whatever US dollars I introduced to them.

I've also written on this on another post. If you begin to overpay grossly for things in other areas of the world, you mess up their local economy. Because the expectation will be there for everybody to pay that higher price and place a burden on the locals. I've already seen this many times, locals are being ignored by taxi drivers in tourist areas because they know that the tourist will overpay them. How fair is that to the locals?

I want to mention also that in many places there is already a two tier structure. On my recent post about the blind massage incident in Cambodia, the driver told me that the price of the foot massage was only $6USD. But when I entered the place, they quoted me a price of $8. The driver actually entered the place with me to help with the translation if I needed it. When he asked why it was eight dollars they informed him that that was the price for foreigners. Only locals got the $6 price. That's a 33% increase! My point being, that often times there is already an inflation factor built in for foreigners. You're already overpaying in many areas. If you continue to pay the markup prices, it will only serve to drive the prices higher. For their cost of living area, they charge market pricing.

Now, I'm not saying to not be generous when you travel to these places. I know the expectation is there for foreigners to tip well. I certainly do pay higher prices than the locals pay. But what I'm saying is let's not get crazy here and pay US prices in a foreign land. it really does mess with the local economy and can cause hard feelings towards those who don't do it.

I adhere to the philosophy of a controlled generosity. And if you do want to spend the extra US dollars in their economy, do it in places that will make a difference to the people who need it most. Give to the poor on the streets, but don't grossly overpay above market pricing.