causes of poverty, economics, poverty

The Causes of Poverty (79): Poverty Traps

BrickWallLounge_Blog

(source)

Many among us will experience short spans of poverty at some stages in our lives. I lose my job or my unemployment benefits, I have a catastrophic but transitory health problem, an extreme weather event destroys my crop, or an economic crisis forces me to declare bankruptcy. As a result, I have to live off my savings or my parents and friends will have to lend me money. Still, in time I find another job; my health improves as I benefit from cheap healthcare (perhaps provided or subsidized by the government); the weather returns to normal and I can resume my profitable farming activity; or I can start a new business under the protection of bankruptcy laws that don’t burden me with debt.

However, I may also be what’s called a “structurally” poor person, meaning that I’m poor for most if not the whole of my life. Perhaps I was even born into poverty. The reason may be that I find myself in a “poverty trap”, a self-reinforcing mechanism which causes poverty to persist. In other words, I’m poor because I’m poor. And because I’m poor I’ll always be poor. I’ll die without ever having had an “adequate” standard of living, all the while passing on my poverty to my descendants.

Here are some examples of poverty traps:

  • I have a job, but the wage is low. As with many low wage jobs, I have almost no control over my work schedule. That means I can’t take on a second job and I can’t send my kids to child care. I have to spend time, money, effort and other people’s good will to take care of my kids. My job is physically hard and so I tend to have some health problems. My life is relatively expensive and it’s hard to find a better job. My salary doesn’t really cover my spending needs, hence I’m poor.
  • I can’t afford to pay the security deposit for a rental apartment, so I’m stuck in an expensive motel or I have to live with my parents who can barely afford their own survival. I also don’t have a refrigerator or a microwave, so I have to buy more expensive food. I have to wash my clothes by hand because… you guessed it. This takes a lot of time, time that I can’t spend on wage labor.
  • I don’t have tap water or heating because those aren’t things that people have where I’m from. I use wood for fuel like everyone else. The result is deforestation, soil degradation, lower crop yields and yet more poverty. My children have to help me – which is why I have a lot of them – to the detriment of their education. My kids will probably inherit my poverty because of this.
  • A lot of the things I’m forced to do because I’m poor are illegal. The lights of my car broke down, and I got a fine. I should have made the financial sacrifice and get them replaced, but I gambled on not being caught. I couldn’t pay the fine and my car was repossessed. Now I have to take public transport but can’t pay for that either. So I often get a fine for that as well. I know some homeless people who get a fine just for being homeless.
  • My calorie intake is too low to give me the strength to work. The quality of work I’m able to offer is inadequate for obtaining the food I require, and the food I do get isn’t enough to allow me to deliver quality work. My productivity is low, my earnings are low, and ultimately I can’t even keep a job or work the farm. My low calorie intake levels lead to health problems. My inadequate housing makes those problems even worse. My ill health, caused by my poverty, makes my poverty worse. I’m more likely to catch a disease, and also less likely to recover from it.
  • Like many poor people I have a low credit rating, making it difficult to get credit. The credit I do get is very expensive, which sort of defeats the point. Now, I do need the credit because I don’t have any savings. People say that I exhibit a high discount rate, that I’m too present-oriented and that I’m unable to delay gratification. Instead of borrowing money at high interest rates as a means to satisfy my unrealistic consumption desires, I should moderate myself and save for the future. But I’m present-oriented because I live in an environment in which I can’t trust people. Better to consume what I have than to save it and lose it later.
  • People also say that my issues with gratification extend to my sex life. I was indeed a teenage mother, and my education suffered as a result. This in turn affected my job prospects and my income. But this wasn’t just stupidity on my part. Being a mother gave meaning to my life. Other meaningful options just didn’t seem realistic.

So, there you have it. I think a lot of these stories are very real, and the problems that poor people face are often self-reinforcing. Of course, I don’t want to deny human agency. There are people who, even in the face of the worst possible circumstances, can fight their way out of poverty traps. So “trap” may be too strong a word. Individual responsibility still plays a role. Yet, let’s not forget that a poverty trap is sometimes intergenerational, as I’ve said before. Some children are born into a trap, and you can’t insist on responsibility and agency when we’re talking about children. A child growing up in a poor family may suffer in its early development. Undernourishment for instance can have a lasting impact on learning ability and earnings as an adult. Children of the poor are perhaps even more affected than the parents because the latter need a minimum calorie intake to work. They have to eat first. If they choose not to eat first, they will only make the poverty of the household worse.

Just to be clear: I’m not talking about an entire economy or country being stuck in a poverty trap. If you were expecting a post about that, I’m sorry I’ve wasted your time. I’m not wading into the treacherous debate about the necessity of large foreign aid injections to break the cycle of poor nations that can’t save enough to finance investment necessary to growth.

This post seems to be going on forever, so I’ll limit myself to a description of the problem. The solution – how to get out of poverty traps – is a topic for another day.

More on poverty traps here and here. More posts in this series are here.

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causes of poverty, economics, poverty

The Causes of Poverty (78): High Discount Rates and Lack of Delayed Gratification

grasshopper & ants

(source)

You talk to conservatives about the reasons why poor people are poor, and chances are that the discussion turns to lack of self-control, high discount rates and inability to delay gratification. “High discount rates” means that things in the present or near future are viewed as having a higher payoff than things in the distant future. If you have a high discount rate, you focus on immediate gratification. This in turn shows up in low savings rates, high debt, obesity, teen pregnancy, drug use, high drop out rates, low school attendance and other vices supposedly common among the poor.

Some even argue that differences between people in the apparent levels of self-control, discount rates or time preferences – which is all the same thing – appear at a very early age and are therefore probably innate. The famous marshmallow test will then get a favorable citation: you give kids a marshmallow and tell them they can either eat it now or, if they wait a few minutes, have two marshmallows. Kids who wait do better later in life.

However, recent studies have suggested that the marshmallow test does not, in fact, reveal innate (in)ability. The environment in which tests such as these take place determines to a large extent the levels of self-control revealed through them. Whether or not people are capable of delayed gratification depends not on their abilities but on their assessment of the reliability of the world around them. When the world is not worthy of trust, the best course of action is often to live for today.

This attitude towards the world and the future is probably internalized from a young age onward, which makes it hard to change. What it takes is to offer young children a reliable environment allowing them to develop levels of trust which will in turn yield low discount rates and the ability to delay gratification later in life. But in order to do that we’ll need to reduce parental poverty. Claims about lack of self-control as a cause of poverty then have things completely backward. Rather than a cause we’re dealing with an effect of poverty.

More posts in this series are here.

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The Causes of Poverty (77): The Lottery of Birth and the Country You Live In

mcdonalds-vegetarian-india-2

McDonalds in India

(source)

Charles Kenny explains to what extent the country you live in affects your livelihood:

[P]overty in Africa and Asia isn’t the result of something about individual Kenyans and Pakistanis, it is instead something about Kenya and Pakistan. Individuals the world over have the same drives and capacities, but the societies and places in which they live present radically different opportunities to turn that drive into wealth, health, and well-being.

That’s clear from evidence compiled by Princeton economist Orley Ashenfelter for the National Bureau of Economic Research. He looks at the wages earned by staff working at McDonald’s franchises around the world and compares what they earn to the cost of a Big Mac in that same franchise. The Big Mac is a standard product, and the way it is made worldwide is highly standardized. The skill level involved in making it (such as it is) is the same everywhere. And yet McDonald’s employees worldwide earn dramatically different amounts in terms of Big Macs per hour.

In the United States, a McDonald’s employee earns an average of $7.22 an hour, and a Big Mac costs an average of $3.04. So the employee earns 2.4 Big Macs per hour. In India, an employee earns $.46 an hour. The average Indian Big Mac (made of chicken, which is cheaper than beef) costs only $1.29. Still, the employee earns only one-third of a Big Mac for each hour worked. Same job, same skills—and yet Indian workers at McDonald’s earn one-seventh the real hourly wage of a US employee. There’s a huge “place premium” to working in the United States rather than India.

The place premium affects more than just low-end service jobs. Economist Michael Clemens, a colleague of mine at the Center for Global Development, studied a group of Indians working in an India-based international software firm who applied for a temporary work visa to the United States to do the same work in the same firm, just on the other side of the Pacific Ocean. Some of them then won the lottery by which visas were issued, while others lost. The winning workers, who were still in the same firm and still doing the same type of job on the same projects, suddenly saw dramatic differences in their pay.

The ones who moved to the United States started earning double what their colleagues back in India were earning (adjusted for purchasing power). They were earning more not because they were different from the colleagues they left behind—selection was not based on education, talent, or drive but was entirely random. And once they returned to India, they went back to earning pretty much the same as their colleagues who had never left. They briefly earned more in the United States simply because they were in the United States rather than India. (source)

Some more numbers:

place premium

(source; how much more workers in the U.S. make compared to identical workers in developing countries, e.g. Nigerians and Yemenis stand to gain upwards of 10 times as much from moving to the U.S.)

The place premium is a strong argument in favor of reducing migration restrictions: it doesn’t seem just that people’s income is determined by the good or bad luck of having been born somewhere, and the use of force to keep people in their country of birth only aggravates the injustice. However, by the same logic we can also argue for a more generous welfare state: it’s not just your country of birth that affects your income. Your parents, social class, genetic endowment, health prospects, looks etc. are also a lottery that affects your income and good fortune.

More posts in this series are here.

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The Causes of Poverty (76): Farmer vs. Hunter Thinking

caveman-hunting-illo-md

(source, illustration by Grant Coghill)

Tim Harford mentions an interesting study about the origins of different ideas about justice. Farmer cultures seem to stress desert, whereas hunter cultures believe that solidarity is the more important focus of justice. Hunters tend to share because their “incomes” are volatile: some days they catch too much, other days not enough. Luck also determines farmer incomes, but to a lesser extent. Bad weather means bad luck, but it’s also bad luck for neighboring farms. A sharing culture won’t solve that kind of bad luck in the same way as it will in the case of bad luck while hunting. Another reason why a sharing culture will be less important in farmer cultures is the fact that farm crops can be stored more easily than meat in primitive societies.

A farmer mentality will therefore stress self-sufficiency over sharing, and perhaps this will fuel desert-based theories of justice even centuries after farming or hunting has ceased to be an important social role. That may have an impact on the way a society deals with poverty. If you adopt a desert-based theory of justice then you’re normally less inclined to enact policies that reduce poverty since you believe that poverty is deserved. If people deserve their poverty then they can’t claim assistance, and if assistance were to be given anyway that would be an injustice to those whose stock of means is used as a source of assistance, because they too deserve what they have.

It’s tempting to use this farmer-hunter difference to describe the different approaches to poverty in Europe and the US. There’s more opposition to the welfare state in the US, and desert-based theories of justice are more popular there. Hard work and self-sufficiency are common topics of political talk in the US, whereas words such as solidarity and equality are more often used in Europe. Here are some data from the World Values Survey which tend to confirm these national stereotypes:

equality and incentives hard work success

And of course the US was founded as an agrarian society (Thomas Jefferson for instance was a staunch agrarian), with the South of the country remaining agrarian deep into the 19th century.

However, careful with national stereotypes. It’s not as if the whole of the US is hardhearted. It’s a matter of degree:

Beo_px5CIAA60EM

Steven Pinker has come up with a similar story, although he contrasts farmer and herder cultures.

More posts in this series are here.

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The Causes of Poverty (75): Different Types of Colonization

colonists

Some time ago, Acemoglu, Johnson and Robinson argued that areas of the globe where early colonists did not face a high mortality risk – such as North America and Australia - are now much richer countries. Many ex-colonies in Africa and the Caribbean, on the other hand, where colonists did face high mortality rates because of tropical diseases such as malaria, are now poorer.

Why is that? AJR claim that the reason is institutional. In those poor countries, the only institutions that were created in early colonial times were extractive. If only a small elite of colonists could survive the local diseases, colonizing nations had little incentive to create durable and non-extractive institutions or provide public services like health and education to the masses of the local populations. More livable colonies could be occupied en masse by the natives of the colonizing nations. These natives required institutions and had the knowhow to create them. The societies that developed there were therefore better organized and far more equal (if you leave out the indigenous populations who were often exterminated). The early institutional built-up, the argument goes, has survived until today, and it’s commonly accepted that good institutions play a key role in development.

Make of it what you will. Perhaps it obscures more than it reveals. In the wrong hands, this argument can be used to exonerate present-day autocratic rulers. After all, it takes time to build institutions, especially in countries burdened by a long tradition of (the wrong kind of) colonialism. Path dependence can be a lousy excuse.

More posts in this series are here.

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The Causes of Poverty (74): Family Structure, Ctd.

single mother

The more traditionally minded among us often blame family structure for high poverty rates. Family structure is of course a euphemism hiding several very specific moral judgments about people’s behavior, about single motherhood, divorce, paternal negligence and incarceration. Those are the things that supposedly make people poor. “Family structure” just sounds nicer and more neutral.

At first sight, this does make some sense. It is a lot harder, financially and otherwise, to raise kids on your own, and if you find yourself in this situation it’s often your own fault or the other parent’s fault. Having a kid or not is a choice given the availability of contraception and abortion. Divorce is a choice. Finding yourself in prison as a parent is a choice. And even if you’re not a parent, marriage or cohabitation is just plainly cheaper than living on your own because you can share costs. You’ll have to buy just as much food as a single person, but the cost of rent, heating, internet access, the use of a car etc. can be split. A lot of consumption goods are non-rival, and marriage and cohabitation are wonderful places for non-rival goods (the park as well, but you can be lonely there).

Given the high rate of children living with single parents it’s not a priori crazy to assume that there’s a link with poverty rates. It does seem to be the case that poverty rates among single parents are higher than average:

brady-lis-single-mother-poverty1

(source)

However, we have to be careful when assuming causation. While it can be the case that your income is lower than it would have been had you (remained) married or chosen not to be a single parent, it might just as well be true that your preexisting poverty causes you to be single.

Suppose you are a single person making $9,000 a year and therefore live in poverty. Now suppose you meet someone else making $9,000 and you are considering marrying them. If you marry, the family income goes to $18,000 and is therefore above the poverty line. On a very superficial take, this seems like it would be a real improvement. But that is only if you assume your potential spouse will necessarily remain employed. If they lose their job, you will go from supporting one person with $9,000/yr to supporting two people with $9,000/yr. On the low-end of the labor market, precarity is very common and so this is a very real risk. (source)

There’s also some literature about how teenage pregnancy results from poverty: poor teenagers often see parenthood as one of the few meaningful options that are available (work, education etc. may not be realistic options).

Another point: traditionalists who make the argument that we should promote marriage in order to reduce poverty can perhaps be somewhat dishonest about their motivations. It may be that what they really want is more marriage for its own sake and just dress it up as an anti-poverty measure because arguing outright for more marriage for its own sake is just not that convincing anymore. It’s telling that cohabitation doesn’t figure as an equivalent alternative in their arguments, even though in theory marriage and cohabitation have the same effect on poverty.

And there may be another hidden motivation. Traditionalist proponents of marriage are often situated at the right of the political spectrum, and being right-wing often also implies being opposed to the welfare state. Arguing that poverty should be solved by way of increased marriage rates is perhaps just a roundabout way of downsizing the welfare state: why should we have a welfare state if marriage can solve poverty? Some make this argument explicitly, saying that welfare destroys marriage because it allows people to survive without getting married (I can’t find a citation just now).

What I dislike about the focus on family structure is not really these possible motivations, but rather the inherent simplifications and victim blaming. There are a lot of causes of poverty, and behavior is probably not the most important one. Many single parents are doing a fine job, both financially and otherwise. Low marriage rates are common in many countries, including those where poverty rates are low (see the graph above). And those single parents who struggle probably do so for other reasons than family structure. It’s also true that many working married parents are poor, whereas most celebrity divorcees don’t have a trouble in the world.

A final remark: even if higher marriage rates would be an effective anti-poverty measure, how on earth do we get more people to marry? Tax cuts? A government sponsored dating service? Flower shop vouchers? It all seems so impractical, especially given the ease of other anti-poverty measures (for example…). And not just impractical but also paternalistic and lacking in respect for people’s choices.

More here, here and here.

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The Causes of Poverty (73): Low IQ?

The brain, "the most complex human organ", and yet we think that 1 number based on a 100 or so short questions is a good measure of its ability

The brain, “the most complex human organ”, and yet we think that 1 number based on a 100 or so short questions is a good measure of its ability

This kind of reasoning is all too common: the poor are stupid and they are poor because they make stupid decisions. Unsurprisingly, it’s mostly the rich who indulge in this kind of pop-psychology, because if true it would also mean that they are wealthy because they are smart. They imagine a correlation somewhat like this:

income iq correlation

Had they cared to look up the actual data, they would have found that the rich don’t necessarily have higher IQ. There’s no correlation at all between wealth and IQ, not even a weak one:

iq and wealth correlation

(source)

And that’s not really surprising: a lot of high paying activities do not require high IQ (I’m looking at you, Sarah Palin). Conversely, it’s not uncommon for smart people to be poor.

So, if the wealthy aren’t making a living that is proportionate to their intelligence, then their wages are determined by other factors: specific skills if we want to be kind; networking, nepotism, degrees paid for by their parents if we want to be nasty. And the wages of the poor aren’t caused by their IQ either.

However, let’s just assume for a minute that the poor do indeed have lower IQ than average. Maybe all this would tell us is that the pressure and stress of poverty reduces our cognitive abilities. So, if there’s is an effect, the causation goes the other way: the poor aren’t poor because they are stupid; they are stupid – if they are indeed stupid – because they are poor.

dstupid2A more fundamental objection to the “poverty is caused by low IQ” narrative: IQ itself is a highly dubious notion. Children’s IQ scores are all over the places, changing almost overnight (up and down). Over longer periods of time, average IQ among populations rises (which is known as the Flynn effect). There is also no agreement on the heritability of IQ – the fluid nature of IQ results seems to argue against heritability. So intelligence is neither fixed nor obviously innate. Environmental factors – including education – change people’s IQ. Much has been made of the fact that African Americans score lower than European Americans on IQ test. However, when black or mixed-race children are raised in white rather than black homes, their test scores rise dramatically. And then I don’t even mention the cultural, gender or race biases inherent in a lot of the IQ test questions (for example, it’s clear that IQ tests are designed for very specific roles in a post-industrial advanced society).

Even more fundamentally: there is no one single and fixed quality or ability called “intelligence” that IQ tests could measure. What these tests do measure is one very particular type of intelligence. They don’t measure planning abilities, long term memory, creativity, emotional intelligence or any practical intelligence such as street smarts, and yet most of us would consider those abilities as essential parts of intelligence.

But again, let’s assume that the “poor = low IQ” claim is true, that the causation goes from low IQ to poverty and not vice versa, that IQ is a good measure of intelligence, that we have a good and objective definition of intelligence, and that the scientifically ascertained lack of innate intelligence among the poor is impervious to any social intervention such as education and redistribution. What would that imply? Inherited disadvantage is unfair and unjust. People should not suffer from inherited disadvantage. Even if the wealth of the rich and the poverty of the poor are the result of innate IQ, that would not lead to a conclusion favorable to the “poor = low IQ” crowd, because the conclusion would be that the poor need to be compensated.

More on poverty and IQ here. More posts in this series are here.

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The Causes of Poverty (72): How Unemployment and the Incentive Theory Aggravate Poverty

unemployment

Not all poor people are unemployed. Even in developed countries some of the poor are “working poor“, i.e. people who have an income that is below the poverty line. Hence, if some who work for a living can’t make ends meet, it’s obvious that the unemployed are even more at risk of being poor. At best, the latter only have a temporary replacement income in the form of unemployment benefits. This income is often lower than even the lowest wage income, and in most countries it’s also limited in time. Hence, poverty is the likely result of unemployment, even in wealthy countries.

To some extent, this result is intentional: governments want to “incentivize” people and “nudge” them into the labor market. High unemployment benefits that aren’t limited in time – combined with the fact that many jobs don’t pay enough to avoid poverty – may trap some people in unemployment. Low and limited unemployment benefits, on the other hand, invoke the horror of poverty which in turn may force people to look for work.

It’s obvious why many unemployed people are poor – their incomes are just too low, and intentionally so. But why are poor people unemployed? The incentive theory tells us that poor people shouldn’t be unemployed. The horror of poverty should drive them out of unemployment. While some people are probably “incentivized” in this way, this is not something that will work for all the unemployed poor. It will only work for all the unemployed poor if jobs are abundant, and indeed that’s what the incentive theory assumes. Of course, this assumption is wrong. There’s something called the natural rate of unemployment. Even in the best of economic circumstances, there’s always some level of involuntary unemployment, and during recessions, this level is higher than normal. From the graph below you can see that during a recession (starting from 2008 in this case) more poor people than normal indicate that their unemployment is due to their “inability to find a job”.

why the poor don't work

(source, data for the US)

So, there are no conceivable incentives that will push all unemployed poor into the workforce, not even at the best of times.

Notice how the same graph shows that the inability to find a job is just one reason among many, and definitely not the most important reason why poor people don’t work. Choice (“home or family reasons”) is another reason. And that’s one which can sometimes be influenced by incentives. However, the reason that’s cited most frequently, namely “sickness or disability” cannot. The horror of poverty will not force you into employment if you can’t work for health reasons. Hence, even if we assume, unrealistically, that there is an abundance of jobs and no natural rate of unemployment, it’s unrealistic to assume that all poor unemployed people will one day join the workforce.

This has implications for the incentive theory. If you put too much emphasis on incentives, you’re likely to put unemployment benefits at a very low level with a strict time limit. After all, the closer the horizon of poverty, the more likely that people will act and look for a job. However, if there are not enough jobs or if people have other reasons why they won’t work, then they won’t work. And if unemployment benefits are stingy, then these people will become poor. Incentives don’t always work as intended. Sometimes they may even cause poverty.

Now, I do agree that work is important (I’ve written a entire book on the importance of work) and that we should therefore try to get as many people in jobs as we can (and, by the way, improve the quality of those jobs; that’s also in the book). Not only because working people normally – although not always – are less at risk of being poor, but also because work is important in human flourishing. I also agree that incentives can play a role in getting people to find work, and that the specter of poverty can be used as an incentive. However, we should be careful with this particular incentive. It may work sometimes, but often it doesn’t.

More on how unemployment benefits protect people from poverty is here. More posts in this series are here.

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The Causes of Poverty (71): Poverty of Willpower and of Self-Control, Revisited

marshmallow test

(source)

Almost as old as the problem of poverty itself is the story that poverty is caused by insufficient self-control and willpower. Never mind that things may just as well be the other way around: poverty drains the will. And never mind that the most famous study cited by proponents of the willpower story is apparently misleading:

For the past four decades, the “marshmallow test” has served as a classic experimental measure of children’s self-control: will a preschooler eat one of the fluffy white confections now or hold out for two later? … The research … began at Stanford University in the late 1960s. Walter Mischel and other researchers famously showed that individual differences in the ability to delay gratification on this simple task correlated strongly with success in later life. Longer wait times as a child were linked years later to higher SAT scores, less substance abuse, and parental reports of better social skills.

Because of the surprising correlation, the landmark marshmallow studies have been cited as evidence that qualities like self-control or emotional intelligence in general may be more important to navigating life successfully than more traditional measures of intelligence, such as IQ.

The Rochester team wanted to explore more closely why some preschoolers are able to resist the marshmallow while others succumb to licking, nibbling, and eventually swallowing the sugary treat. The researchers assigned 28 three- to five-year-olds to two contrasting environments: unreliable and reliable. The study results were so strong that a larger sample group was not required…

Children who experienced unreliable interactions with an experimenter waited for a mean time of three minutes and two seconds on the subsequent marshmallow task, while youngsters who experienced reliable interactions held out for 12 minutes and two seconds. Only one of the 14 children in the unreliable group waited the full 15 minutes, compared to nine children in the reliable condition.

“I was astounded that the effect was so large,” says Aslin. ” … You don’t see effects like this very often.” …

The findings, says Kidd, are reassuring. She recalls reading about the predictive power of these earlier experiments years ago and finding it “depressing.” At the time she was volunteering at a homeless shelter for families in Santa Ana, California. “There were lots of kids staying there with their families. Everyone shared one big area, so keeping personal possessions safe was difficult,” she says. “When one child got a toy or treat, there was a real risk of a bigger, faster kid taking it away. I read about these studies and I thought, ‘All of these kids would eat the marshmallow right away.’ “

But as she observed the children week after week, she began to question the task as a marker of innate ability alone. “If you are used to getting things taken away from you, not waiting is the rational choice. Then it occurred to me that the marshmallow task might be correlated with something else that the child already knows—like having a stable environment.” (source, source)

More posts in this series are here.

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The Causes of Poverty (70): Rich People Not Giving Enough Money to Poor People, Ctd.

poor kids

a couple of kids, apparently poor, location unknown

(source)

In a previous post I looked at some of the reasons why rich people don’t give more money to poor people, and I assumed that the stories people tell themselves have a lot to do with it. Here’s a bit more about this.

The distant poor are the first to be removed from our stories. Archaic and morally dubious notions such as the “national family”, national solidarity etc. are advanced to justify this move. These notions may be linked to certain pragmatic arguments justifying the focus on the poor within our borders: poverty alleviation requires redistribution, redistribution requires a welfare state – adequate taxation and a strong government able to enforce redistributive programs – and there’s no such state on the global level. The merits of this argument are dubious: there are many ways to combat poverty beyond the national welfare state – international development aid, charity, an open borders policy etc.

Another pragmatic argument in favor of focussing on the poor in our own countries goes like this: it’s better for people to help others who are close by, because closeness comes with knowledge about the needs of those who should be helped and about the best ways of helping them. There are also problems with this argument: our poor compatriots are probably as distant to us as the poor in Africa; those who are close to the distant poor are probably poor as well and therefore unable to help - or at least will find it much harder to help compared to people in the rich parts of the world whose marginal utility of the next dollar of income is only a tiny fraction of the utility that the same dollar would provide to the distant poor.

Whatever the merits of these arguments, they help to explain why the distant poor are often removed from sight. The next step is to remove some of the non-distant poor as well. We don’t want to encourage begging, and that’s what we do when we give money to beggars. We want to make work more attractive than begging, and hence we shouldn’t give to beggars. We should even criminalize begging so as to encourage beggars to go find a job. That’s good for the beggars – at least in the long run – and for the rest of us as well because beggars may be a nuisance. Giving doesn’t just encourage begging and unemployment; it robs people of their agency, their self-reliance and their sense of responsibility. It traps them in dependence, and most of the time it encourages bad habits. How many beggars use their earnings to fuel their alcohol addiction? Never mind that alcohol may be the only thing that gives them some pleasure in life and that allows them to forget their misery, if only temporarily. And never mind that the same kind of paternalism is generally viewed as offensive when targeted at the non-poor.

But what about selection biases? Aren’t we more likely to give to some beggars and not to others? The old Mother Theresa like woman with the baby in her lap? The cripple showing off his amputated limbs? The clever beggar who has monopolized the busy intersection and who threatens competitors with violence? All in all, we’ll probably give to those who already get the most, and hence we don’t help the most needy. However, giving can take different forms, and handouts to beggars are just one option. If you’re worried about people abusing cash handouts, why not give them access to healthcare or food? If you’re worried about selection effects, why not make sure that everyone gets an equal share? And if you’re worried about dependency, why not give conditional aid: people only get cash or services when they prove that they are looking for a job, when their children attend school etc.

More posts in this series are here.

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