What's more we don't always react to people as they are but as we expect them to be. So our various prejudices and preferences both malignant and benign affect how we treat others. Whether it's preconceptions about race, gender disability or whatever or whether it's subtle quirky issues such as smell or patterns of speech.

But what we often forget is that most of us have a whole other set of rules again for how we treat ourselves. Not that I'm saying we're all hypocrites. Just that a lot of us have a code of 'normal' behaviour to which we hold others and then we have a slightly different code of behaviour to which we hold ourselves.

This has disturbing implications. For example it's a common problem that people beat themselves up about small slip-ups that they would tell a friend to forget immediately. Okay most people are aware of that possibility. There's another level to it though as well. What about the areas where you let yourself off the hook but you would expect another to be better than you.

For example, I have a deep hatred of housework and really have to steel myself to do any at all. I expect other people's houses to be clean and tidy but I let myself make excuses. Or do I? It occurred to me earlier this year that perhaps I didn't let myself get away with it at all. That secretly I was still quite disgusted by last week's dust and yesterdays washing up. Perhaps this wasn't actually balancing out the times when I was strict with myself. Perhaps I was just masking the self-judgement when acting on it seemed too unpleasant.

So the solution came to me that I needed to balance out these external and internal standards. To do the bloody dishes and not be so hard on myself about trivial slips of the tongue.

Good for me but what about financial capability? Well, it seems to me that people who end up in debt who haven't been through a serious income shock often do so in part because they hold themselves to a higher standard of material generosity than they hold others. I'm not knocking generosity. The world would be a sadder place if we all kept a constant tally of who showed which kindness to whom.

Still, I helped a loan sharking victim to write his budget a few years ago. He was on a middling income and it was hard to see how he'd ended up in so much trouble. Until he looked at what he had left after he'd paid for the essentials and exclaimed "Now I understand why all my friends are so tight!"

It turns out he'd been buying extra rounds, bigger presents and so on than the rest of his social circle and judging them for not putting in as much as him. He even tried to shame them into spending more with his conspicuous giving. His view of friendship was that it involved spending on your friends and he had never realised that he was holding himself to a higher standard of friendship than he held his mates. (He didn't actually drop them for not giving him enough back.) That was until he was confronted with the reality that they were only spending their own money and he was spending other people's.

This story makes the poor fella look a bit stupid. Of course he wasn't stupid, he just never made the connection between his actions in the moment and his financial status as a whole. At each small spending point his beliefs about correct social behaviour overrode his need for financial wellbeing. A lot of the value of financial capability interventions is giving people the time and space to evaluate their financial decisions from a more objective, holistic point of view. It is valuable to ask whether they are behaving in ways that they would not expect from others, including sacrificing their peace of mind and physical security on the altar of debt in order to show their friends and family a good time.

Credit Action's November debt statistics are out now and can be found here. For those who don't have time to click through (and I recommend you do) here are some headliners:

• The CAB is dealing with 9,000 new debt problems daily.
• Average personal debt now stands at 127% of average earnings.
• Every 3.78 minutes someone is declared bankrupt or insolvent.
• Every 14 minutes a property is repossessed.
• 1,000 people seek some form of formal debt rescheduling every working day 
• 1,567 people are being made redundant daily

So we have a growing number of people who will be unable to meet their commitments and a high level of personal indebtedness and what does the government do? Remove legal aid for debt advice.

I want to get this out quickly so I won't search around for the number of debt advice services that will fold, the clients that they currently serve etc but if anyone knows and wants to tell us in the comments that would be superb.

I know that debt advice is unglamorous and doesn't pull that heartstrings like parents being denied access to their children. Here's the truth, people kill themselves over their debts. They begin misusing alcohol and other drugs to cope with the stress, they are tempted to crime*, they fight with or even break up with their partners, and sometimes they kill themselves. The average citizen of this country doesn't have a clue about how to negotiate their debts and is frightened by threats of court action and the stigma of bankruptcy. They leave things to get out of control before they ask for help. When that help is then stretched to breaking point and we already have 6-8 week waiting times so you could say we're already there, accidents will happen.

People in debt, most of whom have not managed their budgeting badly but have had a change of circumstances for which they were not prepared, are vulnerable to harrassment by bailiffs and debt collectors. Most are not aware that under Section 2 of The Protection from Harassment Act 1997 this is a criminal offence, but debt advisors are and can put a stop to it.

The amount of misinformation about debt and debt solutions is huge. There is a growing marketplace of private sharks selling inappropriate and overpriced individual voluntary agreements and expensive (instead of free) debt management plans. These will only increase and with them the number of avoidable bankruptcies and drains of cash from the already poor and vulnerable to the financial institutions and ambulance chasers. Oh and the divorces and deaths. Let's not forget them.

I know I sound like I'm being melodramatic. In amongst the other injustices that the withdrawal of legal aid will herald this is only one way in which life will get harder. Still let me give you an example of why this matters. Running up debts and stealing money is a common way in which controlling and abusive men punish their partners for trying to leave. That and the ever popular threats of murder and suicide. But apparently that's a "private matter" and if he never hit her, or she can't bring herself to press charges over the physical violence, she'll get no help with either the theft of her money and trashing of her credit record or with sorting out the debts.

That'll teach her for attacking The Traditional Family, eh?

*You can't be a security guard if you have a poor credit record.

Image by johngard on www.sxc.hu

After two days of stimulating discussion my main take-away was the need to rethink our handling of the informal economy. This borderline world of cash in hand work and unregulated saving is worth around £12bn a year according to Community Links and yet it is largely ignored, or dismissed by policy makers as evidence of inherent criminality amongst people in poverty.

Mistrust of authority and institutions came up as a sticking point in addressing financial inclusion and irresponsible lending issues time and again. Whether it's unregulated savings schemes within BME communities or the low take up of support from Trading Standards by victims of loan sharks or the way in which pay day loan and rent-to-own companies use 'no credit checking' as a selling point meaning 'no official records', the swathes of people on low incomes who have good reason to stay under the radar and are willing to pay over the odds to do so is a serious issue.

The timing with the announcement of the Comprehensive Spending Review is impeccable. I haven't yet had a chance to analyse much of the new benefits provisions, although I'm pretty scared by what I have seen, but ultimately the key thing that needs to be done urgently is a means by which people on low incomes can accept small pieces of irregular work without losing their benefits. I doubt if, for all Iain Duncan Smith's noise, the DWP has achieved this. Until this is possible then desperate benefits recipients will continue to commit low level 'fraud'* to make ends meet and will refuse to engage with other services including regulated financial services for fear of being caught.

Tax reform that redresses the marginal tax rates of low income workers is also a major factor in the informal economy. I would love to hope that the coalition was smoothing out those bumps and making taxes fairer, simpler and more progressive but since they wrote of Vodafone's £6bn tax bill while simultaneously taking a hatchet to public services I think there's scant chance of that. An unfair tax system will be evaded more than a fair one. When low income workers, particularly the self-employed see that Vodafone getting away with £6bn it's no wonder they transfer a little of their own work into the record-free zone.

The informal economy costs everyone. It costs the country in lost taxes by supporting a cycle of tax evasion whereby the less well off justify their own avoidance/evasion by looking at behaviour of the rich, and then having evaded themselves feel they do not retain sufficient moral high ground to challenge large scale, systematic corporate evasion. It costs the DWP in expensive 'fraud' investigations and unnecessary trials. It costs the criminal justice system as it facilitates the operations of loan sharks providing them with borrowers and makes gathering evidence against them harder. It costs the employees in poor conditions, low wages and exploitation about which, as they should not be there, they have no recourse. It condemns the poor to a world of shadows and recriminations where their neighbour may phone the fraud hotline over a slight and yet the only place to save or borrow is with a trusted friend. But who can they trust?

Community Links have done some great work on the informal economy here, check it out.

*Actually the hardworking and entrepreneurial spirit that government and many media sources berate the poor for lacking.

There's a write up here but I'll summarise. The scientists hooked volunteers up to an fMRI scanner and presented them with a set of imaginary scenaria in which they and others are given money. The volunteers showed a response in the reward centres in their brains, the bits that light up to show we are pleased with receiving good things such as, for example, food. The interesting thing about the research is that people's responses vary depending on how much money they are told they and the others already have before the transfer are made.

The volunteers were told that before the transfers were made they either had some money or they did not. Those who had no money at the start showed a strong response to getting money themselves and no significant reaction to money going to others. The fascinating bit is that those who started out with money felt a stronger reaction to others getting money than they did to getting money themselves.

So it appears that we like things to be equal. If so, whence inequality? Well, I am going throw out some initial thoughts and I'd love to hear other people's ideas. I believe that in the initial experiment no details were given about who the other person was. If this is true then it would make sense that the participants would assume that the other person is either someone very much like themselves or else some sort of everyperson. In that case it is understandable that they wish to be fair. We feel like being fair to people who are like us because, after all, we deserve it. And we feel like being fair to the everyperson who likewise deserves it, after all they have no distinguishing bad features that make us feel it's ok to be unfair to them.

My thoughts though centre around who, in most people's minds, the everyperson actually is. See if you can picture yours. Put a face to them. I bet they are a straight, white, middle class man in his thirties. TVs idea of an everyperson. He's actually a person who's pretty different from most of us but his status as the norm, reinforced by his sympathetic central role in drama after drama and film after film and advert after advert, affords him this special place in people's not-quite-consciousness. What about people whose stories are less frequently told? Do they count as everypeople? Will they get the same kind of fairness? What about the people about whom biased or unfair stories are told? People who are members of a group which is consistently portayed as sneaking a better deal out of the system than the are entitled to? I suspect that they are punished for the perceived sins of that group with an unfair deal in real life.

We may have an instinct for fairness but I think this instinct applies to people we empathise with and perceive to be fair themselves and the more we empathise the more inclined we are to be fair. I reckon that if the researchers repeated this experiment with pictures or names of the other person receiving the money they would get quite different results. Prejudices attached to people's names and faces would distort turn our desire for equality into something unfair.