In 2008, a book called Blue Zones was published, pointing out the seven places around the world where people live longest and happiest.
One of those places is Okinawa, Japan. I was born on the main island in this prefecture, so naturally, I was interested to read more.
My most prominent memories of Okinawa are of clear blue waters and delicious purple sweet potatoes. It now seems there are more A&W’s and KFC’s on the islands than in most US states, and American culture has blended into the fabric of many young Okinawan’s lives. This is the Okinawa I knew as an Okinawan-American kid.
However, some elements of Okinawan culture that existed long before KFC infiltrated are highlighted as possible reasons why these islands have low rates of cancer, heart disease, and dementia, as well as the highest percentage of female centenarians in the world. Strong senses of responsibility, plant-based diets, active lifestyles, and a strong sense of community through moai groups among them.
I was eager to learn more about moai, as I had never heard of them before. Blue Zones describes moai as a “powerful social network” and “ lifelong circle of friends that supports people well into old age”.
My mother grew up on one of the smaller islands in the prefecture, so I asked her if she knew about moai. While she admitted that she didn’t know much, she mentioned that she had heard there was actually money exchanged in the groups.
Looking further into Blue Zones online, I didn’t see any mention of money changing hands. As an economics student, I was shocked to see that barely any economic research existed on these groups either, especially in English. How and why was money exchanged in these groups that are primarily described as social networks?
I decided to make moai the subject of my senior economics thesis. I received funding from my school (Middlebury College) to travel to Okinawa to gather surveys and interviews during the month of August 2019. This is what I have learned visiting moai groups and communicating with individuals in Okinawa.
Moai is not just a group of friends; it’s also a rotating savings and credit association
Moai are often described as tight groups of friends. While this is true today, membership in these groups throughout history has actually been much more nuanced.
Another way to look at how these groups served their members historically is as informal lending, saving, and borrowing institutions among trusted friends and colleagues. These types of associations are called rotating savings and credit associations.
More common in developing economies, ROSCAs act as informal financial institutions in which individuals contribute regularly to common funds from which others within their group can withdraw. These types of groups are integral to economies in which formal financial institutions are inaccessible, but with access to financial institutions of various forms today, one could wonder why Okinawans continue to partake in this form of borrowing and lending.
To better understand the answer to this, let’s take a look at how a typical moai group works.
Moai groups range in size but generally consist of about 10 people. There are various types of groups, but in a typical one, members meet once a month on a set date at an izakaya (Japanese pub) and take their time eating multiple courses often including sashimi and fries while drinking a couple (or a few) beers.
Near the end of the meeting, members will pull out their wallets and hand 10,000 yen each (approximately 100 US dollars) to a single person, the coordinator of the group, who jots down the attendees and any missing contributors in a journal.
Then a person who wants to use the 100,000 yen (1,000 dollars) pooled this month — maybe because their car licensing needs to be renewed or they have a vacation planned — will raise their hand. If more than one person is vying for the winnings, some groups choose to split it between two people or play jan, ken, pon (rock, paper, scissors) to decide a single winner. Other groups will just disperse winnings through a fixed rotation. This repeats every month.
Why not just meet as friends once a month without exchanging money, and go to a bank for your various financial needs?
According to the members I spoke with, the majority of moai participants today are not really doing it for the money, but some historic benefits of using moai still make them more convenient than relying entirely on a bank.
Moai are a forced saving mechanism
Do you have a trip you’d like to go on next year, but doubt your ability to gradually and consistently save for it?
In a way, the contributions you make to your moai are a forced saving mechanism. Friends trust and depend on you to make your monthly contribution, and if you don’t keep up your end, you risk being ousted from your closest social network.
You will ultimately withdraw the same amount you contribute, so in this way, your moai is like a savings account — but with social pressures forcing you to save a fixed amount regularly.
Moai provide interest-free lending
If a group of friends started their moai contributions at 5,000 yen (50 dollars) in 1970, their contributions are likely still 5,000 yen today. This means your winnings aren’t adjusted for inflation over time, nor are they adjusted between earlier and later winners. It also means that you aren’t paying interest on your winnings as you would if you borrowed from a bank, as you contribute the same amount to the yen that you win.
Few moai groups have complicated ways of adjusting for interest. However, inflation likely doesn’t have a large enough effect to significantly decrease the value of your 100,000 yen (1,000 dollars) between January and December of the same year, and most members don’t seem to care because the money is not the main reason they are in the groups anyway.
The importance of the lending and borrowing mechanism was greater when Okinawans had little access to formal banks or were particularly struggling to qualify for loans. Members of the groups I visited referenced the period around WWII as a time when it was particularly difficult to attain loans to start a business or build a home. With little to no credit history and few banks around, it was helpful to have trusted friends or colleagues that you could count on to help you out and that you could help in return.
What happens when the money becomes too important
Some of these groups practiced more speculative forms of ROSCAs, drawing from pools of hundreds of thousands or even billions of US dollars worth of money to fund large business bets. But these groups often fell apart, as trust was broken between members when they couldn’t pay back what they withdrew— and the trust is what ultimately keeps a group together.
While it may not be hard to come up with 10,000 yen (100 dollars) once a month, promising to contribute 1,000,000 yen (10,000 dollars) based on the expectation of good business performance doesn’t always work. There are stories of people who couldn’t pay their portion back running away and even moving off the islands to escape their debts.
People today generally err on the side of caution, accepting only members they would trust to contribute consistently for a lifetime into their groups and limiting the contributions to an easily manageable amount.
Although contributions large enough to finance large business ventures are now uncommon, the money circulating through moai still allow for forced saving, interest-free borrowing, and trust-based lending that you can count on for a lifetime. Today, members might purchase a special gift for their wife, take their family or friends on a vacation, or pay off smaller business and household expenses with the money they take home from their moai. Some groups just keep their contributions as group savings rather than dispersing to different members each meeting so that they can attend a trip together every couple of years.
It’s not really about the money.
The moai groups I met with knew I was studying economics, so they made clear to me that they didn’t join their groups for the money. The financial function is just a perk of spending time with your friends in a moai; they are held accountable to show up and you get to save or take home some money as a bonus.
The reasons members say they participate have more to do with strengthening their relationships with each other. They used terms synonymous with Okinawan culture and tradition to explain their feelings about their group: yuimaru (the spirit of cooperation) — the idea that you check in on neighbors and offer them assistance and community, and nichigusui (healer of life), meaning that their moai activities contribute to living long, healthy, and happy lives just like exercise and healthy eating.
…but it wouldn’t be moai without money.
Thinking about all of the changes in the financial space — increasing cashless transactions and borrowing sources, for example — I had a burning question: if moai are not really about the money, why do they still exchange it in cash or at all?
Before I can answer, I’d like you to ask your self a question: how often do you see your high school friends?
If you’re like me, you probably moved away and usually don’t see all of your old friends at once. Someone’s always working, has other plans with friends, family, or significant others, or is otherwise unaccounted for. There’s no set date every month that we have to meet and there’s no consequence for skipping out because I’m just not feeling it or already doing something else.
But if my friends were counting on me — trusting me — to contribute to their savings because it’s another friend’s turn to take home the pool, I have to go. There’s no excuse; I’d lose all of my friends if I made excuses not to show up. I probably would lose trust and communication with a friend if they didn’t show up for the rest of us and give as much as they took as well.
The primary function of money in moai today is to hold people accountable. It forces you to show up and be there for your friends, keeping you from losing touch. It ensures you’re always giving to your friends, and you receive from them as well. Because of your trust in your group and their trust in you, you are able to invest not only financially but also in strengthening your relationships when people prove their reliability by showing up and contributing at every meeting.
Can you create your own moai?
Moais sound great, but as I interviewed various people in the groups, I wondered if it would ever be possible to recreate such a thing in the US.
After seeing different kinds of groups, it seems that what’s needed for a moai to form is people who are relatively settled geographically, trust, cash, and meeting places.
Aside from some exceptions, moai generally only work when people stay in one place for most of their lives. The Okinawan prefecture is small enough that one may be able to travel to a central meeting location from any corner within a day, but it is more likely that people live near where they grew up and originally met each of their other group members, making the first requirement easy to fulfill.
As transactions are almost always in cash, and the social experience is the main purpose of moai, being close enough geographically is important to making a moai work.
My friends and I dispersed to different states within the US — I even moved to the opposite coast, which makes this kind of regular meeting pretty much impossible. Would you describe your group of friends similarly?
There are some moai groups that solve the issue of distance by meeting less frequently, say twice a year. Could this work for you?
The second requirement is that you have a group of friends you can trust. Many moai groups are formed by people who have been friends since junior high or high school, but some are formed among colleagues that become friends or college classmates. No matter how long you’ve known these people, you have to trust them to hold up their end of the bargain and like them enough to want to meet with them and contribute indefinitely.
The third requirement: do you have cash?
Thinking about how my own friends Venmo each other when covering a dinner bill and how we rarely ever carry cash anyway, I realize that it’s often inconvenient to deal with cash at all. But it is doable, and perhaps there is a future where moai members deal only on an app or other electronic forms of peer-to-peer money transfers. This would just mean members need to strong enough motivation to show up and not just Venmo their contribution in remotely. Otherwise, that would sort of defeat the purpose of moai.
The fourth condition is easy if you live close enough to your friends. I can think of plenty of places I like to go with my friends already. In fact, if you already meet your friends regularly anyway, moai groups are not ostensibly that different from meeting with friends at a bar or restaurant.
The key differences, however, are what set moai apart as a tradition that contributes to lifelong community and trusted networks.
While some of these requirements seem trickier in a place like the US, there are things about Okinawa that make it the perfect place for moai to form and thrive.
People generally live close to where they grew up and have friendships from childhood because of it, daily transactions are often completed in cash, and there are plenty of places in the community where people already meet. The formation of a moai helps them keep lifelong friends that they can count on, and the money is just a way of strengthening their trust in each other.
According to a survey done by the regional newspaper, Ryukyu Shimpo, nearly half of all Okinawan people are in at least one moai group. One cannot understand Okinawan culture without knowing the central role of moai in many lives.
What do you think would happen if you proposed contributing to a pool of money, moai-style, with your friends?
I’m not sure my friends would be on board, but maybe there’s something to be learned from a culture in which it’s normal to trust each other with their money.
Maybe the spirit of moai can exist in your life, even if takes a different form. After all, it’s not about the money. In Okinawa, the money is invested in not for financial return, but in order to strengthen trust and sense of community — something that is considered central to living a long, healthy, happy life. How do you invest in strengthening trust in your community?