11 ms·

Your Brain on Poverty: Why Poor People Seem to Make Bad Decisions (2013)

146 points by bane 11y ago

Kinnard 11y ago
This is spot on. And if you think about it neurologically, changing patterns of thinking that have grown into your brain make it even harder, like breaking a facebook habit. It's a process of learned helplessness: http://braythwayt.com/2015/01/20/learned-helplessness.html http://braythwayt.com/2015/01/20/learned-helplessness.html The cognitive portion is only half the picture though, and I think wealthy people(especially moderately wealthy people) suffer from something similar(e.g. doctor just trying to get through the day rather than save lives and cure diseases.) The other half is the social mechanisms that make poverty endemic. Going right to the root: it's the monetary system itself.
- bmh_ca 11y ago
  > Going right to the root: it's the monetary system itself. Please pardon me for being pedantic, but there is distinction worthwhile, here. The monetary system is a mechanism of liquid exchange for goods and services. It is largely good for everyone because it facilitates trade of otherwise incomparable goods, as well as possession of assets that can in the future be exchanged (i.e. savings). One cannot trade apples for oil tankers directly. There are a few places that are considered the root of inequality, though. In my opinion, these include the tax system. A "progressive" tax leads to greater equality; optimally this will not diminish individual incentives, but one does not want to apply regressive (and often hidden) taxes that create systemic perpetual and inescapable poverty. Second, the social commons. School, health care, policing, roads, etc., that give everyone opportunity to apply themselves to success. These are the things that lead to "social mobility". With poor social mobility, the poor stay poor and the rich stay rich, regardless of their competences. It is an oversimplification and arguably inaccurate to say that the monetary system makes poverty endemic. I believe the root of the problem is founded in the two points above: the fairness of how we collect taxes; and, how opportunities for advancement come about – be they smarts and hard work and social institutions that recognize and reward those, or just being born with rich parents.
  - dmichulke 11y ago
    I think he doesn't mean money itself but the monopoly of money definition and creation by a small set of people (state or central bank).
    - bmh_ca 11y ago
      > I think he doesn't mean money itself but the monopoly of money definition and creation by a small set of people (state or central bank). He's not wrong in thinking that in practice people who are close to the money supply do better than those who are not, in the USA. That is not necessarily true, elsewhere. The real questions are, IMHO: 1. should proximity to the money supply be a (the) basis for social mobility? and 2. are the requirements of getting close to the money supply fair? The supply of money is a separate issue from the fairness of distribution; central banks are not inherently unfair or a cause of inequality – they can in fact contribute to reduction of inequality by employing monetary policies that reduce the cost of borrowing (and simultaneously reducing the returns of lenders), which favours workers over savers.
      - jschwartzi 11y ago
        Wait, can't a worker also be a saver? That seems like a false dichotomy to me, and what you're really suggesting is that monetary policy should encourage the accumulation of debt(spending) rather than careful insulation from chance(saving).
        bmh_ca 11y ago
        > That seems like a false dichotomy to me, and what you're really suggesting is that monetary policy should encourage the accumulation of debt(spending) rather than careful insulation from chance(saving). I do not believe my statements suggest monetary policy should encourage anything. At least they were not meant to. Lowering interest rates is bad for those with savings, but good for those with ongoing income. I understand this is a widely accepted observable economic phenomenon. Does that clarify?
  - 11y ago
dplgk 11y ago
https://hn.algolia.com/?query=Why%20Poor.%20People%20make%20bad%20decisions&sort=byDate&dateRange=all&type=story&storyText=false&prefix=false&page=0 https://hn.algolia.com/?query=Why%20Poor.%20People%20make%20...
tosseraccount 11y ago
Poor people make bad decisions? How about "bad decisions lead to poverty"?
- edc117 11y ago
  That's a negative way to look at it, though I understand what you're saying. I think it comes back to a central point of the article: 'You have no idea how strong the pull to feel worthwhile is. It’s more basic than food.' I doubt anyone starts out their day looking to be a failure.
- backtoyoujim 11y ago
  The point is that access to good decision making requires having access to food, warm shelter, community, and all of those to be in steady supply. Without those a person in a meritocracy where the poor "deserve" to be without ... that person will spend money on things that make them think they are living better not regarding what make sense to someone comfortable. But I guess maybe you have never been homeless. Or without food or a place to shit.
  - tosseraccount 11y ago
    Doesn't being a little hungry make the brain work better? Isn't the poor in America suffering more from being obese than "not having access to food"? https://scholar.google.com/scholar?q=food+stamps+obesity&btnG=&hl=en&as_sdt=0%2C21 https://scholar.google.com/scholar?q=food+stamps+obesity&btn...
  - NoClass 11y ago
    Weird that poor people in the US are so fat - access to food clearly isn't an issue.
  - rustynails 11y ago
    It is unfair to say that a meritocracy believes the poor "deserve" to be without. I'm not sure what's started this campaign against merit (eg. Qualifications, years of experience, etc) - was it political correctness? Society can either pull back those that achieve (to level the playing field) or there will be winners and losers. However, there are still welfare programs and taxation to offset those at the lower end (at least in some parts of the world). However, the current system is imbalanced with the rich getting richer. As the rich get richer, Everyone else gets poorer. Taxation was "meant" to level that playing field, but tax havens and vested interest by politicians to give tax breaks to the wealthy have allowed the horse to bolt.
ratsmack 11y ago
People with weak character, poor morals and low IQ will probably be in poverty. I can't tell if the study takes this into consideration.
- johnpickens 11y ago
  I can't tell if this is sarcastic or not, but there are plenty of politicians in this world that are not impoverished.
- cryoshon 11y ago
  Can you define weak character and poor morals? Can you explain to us how these things will lead to poverty?
  - Tycho 11y ago
    Who wants to do business with someone with poor morals. How can you trust them to keep their word. Someone with weak character will lack the discipline necessary to get better at something or seize opportunities as they come up.
  - im2w1l 11y ago
    Spending your money on drugs and/or alcohol that you are addicted to. Buying nice things you can't afford on expensive credit.
donatj 11y ago
I grew up very poor, this did not make me stupid and implying such is offensive. There are poor people who can work it out and there are those who simply are incapable. Knowing people that are still poor, including much of my own family, it is very obvious that they're unwilling to apply themselves. They give in to the easy quick fix, even when actively told not to and shown a better path. They are largely beyond help. The people I know will make just as bad of decisions if given money. They are poor because they don't think about the future, they don't not think about the future because they're poor.
- indlebe 11y ago
  Dr. Mike Gazzaniga has done some excellent research on free will (or the lack thereof). It's impossible to break from the path on which you are headed, however you are responsible. Something happened to you that set you on a better path than that of the poor folks with the lack of forward thinking abilities that you mention.
- wpietri 11y ago
  That is a common view, but I don't think it's correct, and I don't think it's supported by the science. I also grew up poor, but having been in tech for decades, being well off is a shit-ton easier. When thing go wrong, I have a cushion that I didn't before. That gives me time to think, time to recover from trauma, time and patience to consider and plan. I would love to attribute my new circumstances to my enormous virtue. But honestly, I think it's more about having lucked into a career that happens to be a great match and also be highly rewarded. For those interested in the science how scarcity shapes cognition, this is a good book: http://scholar.harvard.edu/sendhil/scarcity http://scholar.harvard.edu/sendhil/scarcity For those unfamiliar with the experience of poverty, John Scalzi's piece "Being Poor" is evocative: http://whatever.scalzi.com/2005/09/03/being-poor/ http://whatever.scalzi.com/2005/09/03/being-poor/ And unlike most sites, that one definitely benefits from reading the comments.
  - fencepost 11y ago
    "Being poor is knowing exactly how much everything costs." There was a time when I could say exactly how much breakfast ingredients were per serving: oatmeal serving $0.xx; 2 eggs $0.20 (obviously not this year), 2 sausages $0.20 (frozen, buy when on sale for $1/box). I wasn't really constrained by those prices, but I was certainly sensitive enough with irregular customer payments to be well aware of them.
youngButEager 11y ago
It's a Leftist recruitment article to get people feeling sorry for the poor who, SUPPOSEDLY, according to this article -- unlike most other humans, the poor are incapable of making good decisions, only bad ones. I was living on the street as a teenager after making bad decisions and having my parents abandon me. How did I start making good decisions (finally) ? I quickly grew to HATE being poor. That hatred of poverty helped me ask "okay, how do I get out of this, living on the street and having no prospects?" I had independent means within 20 years (in my 30s) after that hatred of my poverty forced me to put more effort into what I did every day. I was still making some bad decisions for a few years but over time I became very practiced at knowing what to choose (go to college? go in the military? get away from all my current acquaintances?) Within a year of my peak of hating poverty I stumbled on the idea of having goals. I read "Your Erroneous Zones" by Wayne Dyer. 20 years later I had independent means (no boss, good income). HATRED OF POVERTY. People who stay poor lack that. THEIR RESPONSIBILITY. No one else's. That article is a recruitment tool for Leftists, as in "we should feel sorry for the poor, it's not their fault." Life will hold you individually responsible for YOUR DECISIONS. So will the criminal justice system. Articles like this one try to convince us that some people should NOT be held responsible for their behavior. WRONG. WRONG. WRONG.
- indlebe 11y ago
  What was your IQ before you were out o the streets? Average grades? Were you exposed to hallucinogens such as DMT or LSD? The outcome in your life largely depends on the opportunities available to you, whether it is perceived as you creating those or not.
- wpietri 11y ago
  Hating the experience of poverty is surely a fine thing. Hating other people for being poor, though, is sad. And rejecting empathy for those suffering because you might have to change your political views borders on obscene.
  - mikerichards 11y ago
    He didn't say that he hated other people for being poor. He said he "hated being poor'.
astral303 11y ago
Wow first few top responses here reflect the upper-middle-class nerd myopia. You don't understand what middle class is. Middle class is not a specific dollar figure. It's not owning a large TV. Middle class is when you don't have the set of anxieties that cloud your judgement and depress your day. Middle class means you don't care if your paycheck gets delayed from Friday to Monday. Middle class is when you don't have to count how many times a week you go to the laundromat. Sadly, middle class, as evidenced by these responses, also means that you don't see why other people would care if their paycheck gets delayed by a business day or two. It's no big deal, you are convinced. Yet, there's a woman that just started working, waiting for her first paycheck, which already had to be delayed due to starting date not aligning with payment schedules. And she has been planning to pay rent with this money, on the promised date. And yet, because some upper-middle-class manager with middle-class myopia forgot to submit everyone's timecards on time (as required by the similarly-myopic corporate policy), everyone's paychecks get delayed by a few days, including this woman's. Now she has to deal with missing paying rent. True story, in modern liberal bastion of Massachusetts. All you have to do is understand why it's considerably more difficult for someone to improve their life, when starting from a much lower point, constantly being banged around by the ankles of the society.
- WalterBright 11y ago
  I've seen many middle class employees run to their cars at lunchtime on payday, to get to the bank and deposit it before their checks bounced. It happened every payday.
  - Riseed 11y ago
    I've seen employees run to the bank at lunchtime on payday, to deposit their paycheck before the paycheck bounced. Those in a better financial situation could avoid the stress by jumping ship when trouble first arose (i.e. it wouldn't be jumping out of the pot and into the fire).
- force_reboot 11y ago
  So called "nerd myopia" is self perpetuating. Middle class nerds are bullied in school by working class kids (happened to me and many people I know). They shift to the right politically. The left sees this, realizes nerds are a lost cause, and therefore uses them as a soft target. This is ironic given that most nerd stereotypes are also inherently homophobic (nerds are weak, unmanly, scared of real work etc.). This perpetuates the cycle of bullying.
Camillo 11y ago
Here is the article itself: http://www2.warwick.ac.uk/fac/soc/economics/staff/amani/mani_science_976.full.pdf http://www2.warwick.ac.uk/fac/soc/economics/staff/amani/mani... Note that the effects of financial concerns measured in this paper are large and instantaneous. There is nothing here about persistent, long-term effects. A couple of observations: - The proposed mechanism is that thinking about financial concerns ties up mental resources that would otherwise be available to solve tests. But it seems to follow that the poor do have their full mental resources available when dealing with those financial concerns themselves, so it does not seem to work as an explanation for poor decisions concerning finances. - The sugar-cane farmers end up poor towards the end of the harvest cycle because they spend too much of their money soon after they have been paid (as the paper says, they "find it hard to smooth their consumption"). In other words, their eventual poverty is caused by poor decisions made when they are rich, not when they are poor.
Mikeb85 11y ago
It's simple maths. Wherever you live, there's a baseline amount of money that it costs to survive. Food costs the same whether you're rich or poor. Housing varies, but there is generally a baseline. If the baseline cost of living is $2000/month, and you make $2000 a month, you have $0 disposable income. If you make $4000 a month, you have $2000 in disposable income. If you make $8000 a month, you have $6000 per month disposable income, or 3 times that of the second scenario. Since the cost of certain things is constant, as you make more money, your disposable income rises dramatically (until a certain point where gains are seemingly only incremental, at which point you're no longer middle class). The rich have more opportunity to save, thus they learn about saving. They have capital, thus learn how to use it. If you never save and never accrue capital, you'll never understand it. So any time you do end up with a windfall, you will inevitably squander it, since you've never had the experience of what to do with it. Plus, money problems lead to stress. My wife grew up poor, and even though we're not doing badly today, it causes an immense amount of stress and is 'mental overhead' for her. She never wants to invest, is apprehensive about going to school herself, or basically doing anything that would deplete any amount of savings. This inevitably prevents her from attaining a 'higher' equilibrium, but I do understand the feeling (and for the record, based on where she came from, she's actually doing fantastic and has experience doing things that none of her relatives even contemplate doing). I grew up working class for this country (so probably the bottom end of 'middle class'), but I'm stubborn with a bit of a gambling streak. So I'm going to university, investing money, occasionally hustling for extra here and there (gambling, side jobs, etc...), and it's mostly going OK. Plenty of relationships end over money. And when your world is falling all around you, it's all too easy to turn to 'escapes' such as drugs and alcohol. This is a tech forum, so a little analogy. A poor person is like a phone whose specs are just barely enough to run Android. The experience is poor, laggy, and you can't play too many games, or do any 'productive' tasks. Middle class is like an iPad pro or a decent laptop, you can do what you want for the most part, it's a pleasant experience, but there are certain limitations. Being rich is like having a super-computer - the potential is seemingly limitless, you can solve problems that are out of reach of the first two. Right now I'm in University, and being working-class, it's hard to compete with rich kids who live on their parents dollar. Every day I work is less time to study. Every time I have to cook dinner is less time to study. And if I need to study a 'minimum' amount to pass my courses, then I need to either sacrifice sleep or time with my wife. And neither leads to a particularly great outcome. So mostly I just suck it up and lose sleep, live off coffee, and am a solid 'B' student rather than actually competing with the more privileged kids. In the job market I'll probably have to use my life experience and hustling streak, since I won't compete on GPA or extra-curriculars. Anyhow, just a few thoughts on the matter. And these sorts of problems with income inequality are why more and more economists support the idea of a basic income. It'll allow the 'poor' to have the ability to have disposable income with which they can get an education, or invest in themselves rather than work like dogs to barely survive. While this may not seem fair for those who have already attained middle class or higher (who always claim they 'earned' it, never mind the societal advantages they used), it's better for society. Unless you think having a serf class is a societal advantage (and there are people who think this)...
glup 11y ago
There was a great study published in the journal Cognition a few years ago revisiting the famous kids & marshmallows self-control study, but where the researchers additionally manipulated the children's beliefs in the environmental variability. They offered the kids some desirable thing and then either gave it to them or not, then checked how much self-control they exercised on the marshmallow task. The idea here is that if the payoff is highly unreliable, the rational thing to do is to go ahead and eat the first marshmallow because 1) there's a pretty good chance there aren't more coming and 2) even the first marshmallow might disappear. I think there's a pretty clear socioeconomic analog of this— if you have few resources and an unreliable environment, it's rational to act on a much shorter timeline.
RodericDay 11y ago
The Logic of Stupid Poor People http://tressiemc.com/2013/10/29/the-logic-of-stupid-poor-people/ http://tressiemc.com/2013/10/29/the-logic-of-stupid-poor-peo... > I sat in on an interview for a new administrative assistant once. My regional vice president was doing the hiring. A long line of mostly black and brown women applied because we were a cosmetology school. Trade schools at the margins of skilled labor in a gendered field are necessarily classed and raced. I found one candidate particularly charming. She was trying to get out of a salon because 10 hours on her feet cutting hair would average out to an hourly rate below minimum wage. A desk job with 40 set hours and medical benefits represented mobility for her. When she left my VP turned to me and said, “did you see that tank top she had on under her blouse?! OMG, you wear a silk shell, not a tank top!” Both of the women were black. > The VP had constructed her job as senior management. She drove a brand new BMW because she, “should treat herself” and liked to tell us that ours was an image business. A girl wearing a cotton tank top as a shell was incompatible with BMW-driving VPs in the image business. Gatekeeping is a complex job of managing boundaries that do not just define others but that also define ourselves. Status symbols — silk shells, designer shoes, luxury handbags — become keys to unlock these gates. If I need a job that will save my lower back and move my baby from medicaid to an HMO, how much should I spend signaling to people like my former VP that I will not compromise her status by opening the door to me? That candidate maybe could not afford a proper shell. I will never know. But I do know that had she gone hungry for two days to pay for it or missed wages for a trip to the store to buy it, she may have been rewarded a job that could have lifted her above minimum wage. Shells aren’t designer handbags, perhaps. But a cosmetology school in a strip mall isn’t a job at Bank of America, either. > At the heart of these incredulous statements about the poor decisions poor people make is a belief that we would never be like them.
douche 11y ago
Being poor means you have no cushion. Particularly if you are poor in an urban/suburban area. You are one unfortunate event away from being wiped out. Company downsizes or has a round of layoffs, and you lose your job? The rent, the car payment, the grocery bill, the utilities, etc, don't go away. Some of that you can scrape by on by shifting the bills onto credit, but most landlords don't take VISA. Get in an accident, and get seriously injured? Now you can't work, and you've got either huge medical bills, or a deductible that you have to pay before the insurance covers the rest. Maybe you heal up and your job isn't there any more. If you are poor in a rural area, you actually have more options than if you are living in a city. My grandparents were poor as church mice, but if things really hit the fan, at least they still had a roof over their heads (even if it's a dirt-floor shack), they had a plot of land they could grow a garden in, wood that could be chopped down to feed the wood stove, and deer that could be poached to put meat on the table. They had resources and skills that could help them subsist and ride out rough patches where money was tight or non-existent.
- stretchwithme 11y ago
  Spending everything as you get it, not being a saver, using all the credit lenders will allow - that means you have no cushion. In the US, money is taken from you for Social Security and you can't get it back until you're 60. Or, rather, you get paid when later generations pay in. In Singapore, there is forced savings. You still own everything you save. There's more freedom with how you invest it. And it's not dependent on future generations paying in. You are correct about the rural area. There is less pressure, more ability to save. Its also more boring with fewer activities and people of interest, but you can save your pennies, invest in your ability to earn and perhaps move to where you can profit from those skills.
- lsc 11y ago
  > Being poor means you have no cushion. Particularly if you are poor in an urban/suburban area. You are one unfortunate event away from being wiped out. I think there is a more important distinction; really, one that is more valuable than any reasonable amount of saved money is. Family with the resources to support a person. I mean, most of the time, if you come from a middle-class family, you can't remain dependent forever, but you do have a place to stay while you get back on your feet, and you have a network of people who know people who can get you interviews for decent jobs. I think this is a bigger advantage than it would seem at first glance; bankruptcy is dramatically less frightening if you know that worst-case, you can sleep at your parent's place, eat their food, and that they'll be calling all their contacts trying to get you an interview.
jqm 11y ago
We like to think hard work and correct attitudes towards education, savings and investment results in being well off. And to a certain extent it does. But, many people who are well off, in fact likely some of the most well off, have an entirely different attitude that doesn't have anything to do with the above traits of the middle class. And that is the burning desire to fuck other people over and to take unfair advantage of others at every opportunity regardless of the effects it may have on the victims. Poverty sometimes isn't all about short term thinking and bad choices. Sometimes it's just being fucked over at different scales again and again and not being able to defend oneself against it. Education and going to work everyday doesn't necessarily help in this regard.
thedevil 11y ago
The idea of handing out cash has become popular lately but I'm skeptical. Does anyone have an argument why handing them cash would be better than paying for needs? It seems to me (less restrictive) housing subsidies, food stamps for everyone and child healthcare would help the poor a lot more than cash. My argument is that paying basic needs will reduce stress level and help them deal with the problems. Not only does it make more intuitive sense, but when I've helped troubled family members, this has worked much better in practice than giving cash. The article, which seems to support giving out cash, admits they don't make good decisions. A more generous assumption is that they spend it on their needs but spend all their will power doing so, leaving less willpower to address other problems. Note: I'm in favor of helping the poor and I'm not bashing them. I think the stress of poverty partly causes them to make bad decisions and I think people have value even if they make bad decisions. Also note: Please don't just downvote me if my argument isn't consistent with your ideology. That's lame (100% chance I get downvotes anyway). Rather, provide an argument if you disagree.
- datashovel 11y ago
  From what I understand the primary reason people seem to think giving money instead of services is better is due to overhead. If you need to monitor how the money is distributed and how the money is spent, then that requires entire branches of government to make this possible. Instead if you're just giving money you are giving those in need more, which more than likely will help them considerably more than if you're paying a ton of overhead in salaries and buildings and bureaucracy just so you can distribute money to those in need.
  - sheensleeves 11y ago
    I think the appeal of basic income to HN crowd is that is a solution that an engineer would like. Very neat. Some people can't manage their money though, however complicated that is.
    - thedevil 11y ago
      Yeah, I would guess that the huge overhead is still more efficient given how poorly some would use the money, but that's just a hunch. I have nothing to back that up (and would love any argument on either side of that)
scotty79 11y ago
http://playspent.org/ http://playspent.org/

146 points by bane 11y ago

This is spot on. And if you think about it neurologically, changing patterns of thinking that have grown into your brain make it even harder, like breaking a facebook habit. It's a process of learned helplessness: http://braythwayt.com/2015/01/20/learned-helplessness.html http://braythwayt.com/2015/01/20/learned-helplessness.html The cognitive portion is only half the picture though, and I think wealthy people(especially moderately wealthy people) suffer from something similar(e.g. doctor just trying to get through the day rather than save lives and cure diseases.) The other half is the social mechanisms that make poverty endemic. Going right to the root: it's the monetary system itself.

bmh_ca 11y ago
> Going right to the root: it's the monetary system itself. Please pardon me for being pedantic, but there is distinction worthwhile, here. The monetary system is a mechanism of liquid exchange for goods and services. It is largely good for everyone because it facilitates trade of otherwise incomparable goods, as well as possession of assets that can in the future be exchanged (i.e. savings). One cannot trade apples for oil tankers directly. There are a few places that are considered the root of inequality, though. In my opinion, these include the tax system. A "progressive" tax leads to greater equality; optimally this will not diminish individual incentives, but one does not want to apply regressive (and often hidden) taxes that create systemic perpetual and inescapable poverty. Second, the social commons. School, health care, policing, roads, etc., that give everyone opportunity to apply themselves to success. These are the things that lead to "social mobility". With poor social mobility, the poor stay poor and the rich stay rich, regardless of their competences. It is an oversimplification and arguably inaccurate to say that the monetary system makes poverty endemic. I believe the root of the problem is founded in the two points above: the fairness of how we collect taxes; and, how opportunities for advancement come about – be they smarts and hard work and social institutions that recognize and reward those, or just being born with rich parents.
- dmichulke 11y ago
  I think he doesn't mean money itself but the monopoly of money definition and creation by a small set of people (state or central bank).
  - bmh_ca 11y ago
    > I think he doesn't mean money itself but the monopoly of money definition and creation by a small set of people (state or central bank). He's not wrong in thinking that in practice people who are close to the money supply do better than those who are not, in the USA. That is not necessarily true, elsewhere. The real questions are, IMHO: 1. should proximity to the money supply be a (the) basis for social mobility? and 2. are the requirements of getting close to the money supply fair? The supply of money is a separate issue from the fairness of distribution; central banks are not inherently unfair or a cause of inequality – they can in fact contribute to reduction of inequality by employing monetary policies that reduce the cost of borrowing (and simultaneously reducing the returns of lenders), which favours workers over savers.
    - jschwartzi 11y ago
      Wait, can't a worker also be a saver? That seems like a false dichotomy to me, and what you're really suggesting is that monetary policy should encourage the accumulation of debt(spending) rather than careful insulation from chance(saving).
      - bmh_ca 11y ago
        > That seems like a false dichotomy to me, and what you're really suggesting is that monetary policy should encourage the accumulation of debt(spending) rather than careful insulation from chance(saving). I do not believe my statements suggest monetary policy should encourage anything. At least they were not meant to. Lowering interest rates is bad for those with savings, but good for those with ongoing income. I understand this is a widely accepted observable economic phenomenon. Does that clarify?
- 11y ago

dplgk 11y ago

https://hn.algolia.com/?query=Why%20Poor.%20People%20make%20bad%20decisions&sort=byDate&dateRange=all&type=story&storyText=false&prefix=false&page=0 https://hn.algolia.com/?query=Why%20Poor.%20People%20make%20...

tosseraccount 11y ago

Poor people make bad decisions? How about "bad decisions lead to poverty"?

edc117 11y ago
That's a negative way to look at it, though I understand what you're saying. I think it comes back to a central point of the article: 'You have no idea how strong the pull to feel worthwhile is. It’s more basic than food.' I doubt anyone starts out their day looking to be a failure.
backtoyoujim 11y ago
The point is that access to good decision making requires having access to food, warm shelter, community, and all of those to be in steady supply. Without those a person in a meritocracy where the poor "deserve" to be without ... that person will spend money on things that make them think they are living better not regarding what make sense to someone comfortable. But I guess maybe you have never been homeless. Or without food or a place to shit.
- tosseraccount 11y ago
  Doesn't being a little hungry make the brain work better? Isn't the poor in America suffering more from being obese than "not having access to food"? https://scholar.google.com/scholar?q=food+stamps+obesity&btnG=&hl=en&as_sdt=0%2C21 https://scholar.google.com/scholar?q=food+stamps+obesity&btn...
- NoClass 11y ago
  Weird that poor people in the US are so fat - access to food clearly isn't an issue.
- rustynails 11y ago
  It is unfair to say that a meritocracy believes the poor "deserve" to be without. I'm not sure what's started this campaign against merit (eg. Qualifications, years of experience, etc) - was it political correctness? Society can either pull back those that achieve (to level the playing field) or there will be winners and losers. However, there are still welfare programs and taxation to offset those at the lower end (at least in some parts of the world). However, the current system is imbalanced with the rich getting richer. As the rich get richer, Everyone else gets poorer. Taxation was "meant" to level that playing field, but tax havens and vested interest by politicians to give tax breaks to the wealthy have allowed the horse to bolt.

ratsmack 11y ago

People with weak character, poor morals and low IQ will probably be in poverty. I can't tell if the study takes this into consideration.

johnpickens 11y ago
I can't tell if this is sarcastic or not, but there are plenty of politicians in this world that are not impoverished.
cryoshon 11y ago
Can you define weak character and poor morals? Can you explain to us how these things will lead to poverty?
- Tycho 11y ago
  Who wants to do business with someone with poor morals. How can you trust them to keep their word. Someone with weak character will lack the discipline necessary to get better at something or seize opportunities as they come up.
- im2w1l 11y ago
  Spending your money on drugs and/or alcohol that you are addicted to. Buying nice things you can't afford on expensive credit.

donatj 11y ago

I grew up very poor, this did not make me stupid and implying such is offensive. There are poor people who can work it out and there are those who simply are incapable. Knowing people that are still poor, including much of my own family, it is very obvious that they're unwilling to apply themselves. They give in to the easy quick fix, even when actively told not to and shown a better path. They are largely beyond help. The people I know will make just as bad of decisions if given money. They are poor because they don't think about the future, they don't not think about the future because they're poor.

indlebe 11y ago
Dr. Mike Gazzaniga has done some excellent research on free will (or the lack thereof). It's impossible to break from the path on which you are headed, however you are responsible. Something happened to you that set you on a better path than that of the poor folks with the lack of forward thinking abilities that you mention.
wpietri 11y ago
That is a common view, but I don't think it's correct, and I don't think it's supported by the science. I also grew up poor, but having been in tech for decades, being well off is a shit-ton easier. When thing go wrong, I have a cushion that I didn't before. That gives me time to think, time to recover from trauma, time and patience to consider and plan. I would love to attribute my new circumstances to my enormous virtue. But honestly, I think it's more about having lucked into a career that happens to be a great match and also be highly rewarded. For those interested in the science how scarcity shapes cognition, this is a good book: http://scholar.harvard.edu/sendhil/scarcity http://scholar.harvard.edu/sendhil/scarcity For those unfamiliar with the experience of poverty, John Scalzi's piece "Being Poor" is evocative: http://whatever.scalzi.com/2005/09/03/being-poor/ http://whatever.scalzi.com/2005/09/03/being-poor/ And unlike most sites, that one definitely benefits from reading the comments.
- fencepost 11y ago
  "Being poor is knowing exactly how much everything costs." There was a time when I could say exactly how much breakfast ingredients were per serving: oatmeal serving $0.xx; 2 eggs $0.20 (obviously not this year), 2 sausages $0.20 (frozen, buy when on sale for $1/box). I wasn't really constrained by those prices, but I was certainly sensitive enough with irregular customer payments to be well aware of them.

youngButEager 11y ago

It's a Leftist recruitment article to get people feeling sorry for the poor who, SUPPOSEDLY, according to this article -- unlike most other humans, the poor are incapable of making good decisions, only bad ones. I was living on the street as a teenager after making bad decisions and having my parents abandon me. How did I start making good decisions (finally) ? I quickly grew to HATE being poor. That hatred of poverty helped me ask "okay, how do I get out of this, living on the street and having no prospects?" I had independent means within 20 years (in my 30s) after that hatred of my poverty forced me to put more effort into what I did every day. I was still making some bad decisions for a few years but over time I became very practiced at knowing what to choose (go to college? go in the military? get away from all my current acquaintances?) Within a year of my peak of hating poverty I stumbled on the idea of having goals. I read "Your Erroneous Zones" by Wayne Dyer. 20 years later I had independent means (no boss, good income). HATRED OF POVERTY. People who stay poor lack that. THEIR RESPONSIBILITY. No one else's. That article is a recruitment tool for Leftists, as in "we should feel sorry for the poor, it's not their fault." Life will hold you individually responsible for YOUR DECISIONS. So will the criminal justice system. Articles like this one try to convince us that some people should NOT be held responsible for their behavior. WRONG. WRONG. WRONG.

indlebe 11y ago
What was your IQ before you were out o the streets? Average grades? Were you exposed to hallucinogens such as DMT or LSD? The outcome in your life largely depends on the opportunities available to you, whether it is perceived as you creating those or not.
wpietri 11y ago
Hating the experience of poverty is surely a fine thing. Hating other people for being poor, though, is sad. And rejecting empathy for those suffering because you might have to change your political views borders on obscene.
- mikerichards 11y ago
  He didn't say that he hated other people for being poor. He said he "hated being poor'.

astral303 11y ago

Wow first few top responses here reflect the upper-middle-class nerd myopia. You don't understand what middle class is. Middle class is not a specific dollar figure. It's not owning a large TV. Middle class is when you don't have the set of anxieties that cloud your judgement and depress your day. Middle class means you don't care if your paycheck gets delayed from Friday to Monday. Middle class is when you don't have to count how many times a week you go to the laundromat. Sadly, middle class, as evidenced by these responses, also means that you don't see why other people would care if their paycheck gets delayed by a business day or two. It's no big deal, you are convinced. Yet, there's a woman that just started working, waiting for her first paycheck, which already had to be delayed due to starting date not aligning with payment schedules. And she has been planning to pay rent with this money, on the promised date. And yet, because some upper-middle-class manager with middle-class myopia forgot to submit everyone's timecards on time (as required by the similarly-myopic corporate policy), everyone's paychecks get delayed by a few days, including this woman's. Now she has to deal with missing paying rent. True story, in modern liberal bastion of Massachusetts. All you have to do is understand why it's considerably more difficult for someone to improve their life, when starting from a much lower point, constantly being banged around by the ankles of the society.

WalterBright 11y ago
I've seen many middle class employees run to their cars at lunchtime on payday, to get to the bank and deposit it before their checks bounced. It happened every payday.
- Riseed 11y ago
  I've seen employees run to the bank at lunchtime on payday, to deposit their paycheck before the paycheck bounced. Those in a better financial situation could avoid the stress by jumping ship when trouble first arose (i.e. it wouldn't be jumping out of the pot and into the fire).
force_reboot 11y ago
So called "nerd myopia" is self perpetuating. Middle class nerds are bullied in school by working class kids (happened to me and many people I know). They shift to the right politically. The left sees this, realizes nerds are a lost cause, and therefore uses them as a soft target. This is ironic given that most nerd stereotypes are also inherently homophobic (nerds are weak, unmanly, scared of real work etc.). This perpetuates the cycle of bullying.

Camillo 11y ago

Here is the article itself: http://www2.warwick.ac.uk/fac/soc/economics/staff/amani/mani_science_976.full.pdf http://www2.warwick.ac.uk/fac/soc/economics/staff/amani/mani... Note that the effects of financial concerns measured in this paper are large and instantaneous. There is nothing here about persistent, long-term effects. A couple of observations: - The proposed mechanism is that thinking about financial concerns ties up mental resources that would otherwise be available to solve tests. But it seems to follow that the poor do have their full mental resources available when dealing with those financial concerns themselves, so it does not seem to work as an explanation for poor decisions concerning finances. - The sugar-cane farmers end up poor towards the end of the harvest cycle because they spend too much of their money soon after they have been paid (as the paper says, they "find it hard to smooth their consumption"). In other words, their eventual poverty is caused by poor decisions made when they are rich, not when they are poor.

Mikeb85 11y ago

It's simple maths. Wherever you live, there's a baseline amount of money that it costs to survive. Food costs the same whether you're rich or poor. Housing varies, but there is generally a baseline. If the baseline cost of living is $2000/month, and you make $2000 a month, you have $0 disposable income. If you make $4000 a month, you have $2000 in disposable income. If you make $8000 a month, you have $6000 per month disposable income, or 3 times that of the second scenario. Since the cost of certain things is constant, as you make more money, your disposable income rises dramatically (until a certain point where gains are seemingly only incremental, at which point you're no longer middle class). The rich have more opportunity to save, thus they learn about saving. They have capital, thus learn how to use it. If you never save and never accrue capital, you'll never understand it. So any time you do end up with a windfall, you will inevitably squander it, since you've never had the experience of what to do with it. Plus, money problems lead to stress. My wife grew up poor, and even though we're not doing badly today, it causes an immense amount of stress and is 'mental overhead' for her. She never wants to invest, is apprehensive about going to school herself, or basically doing anything that would deplete any amount of savings. This inevitably prevents her from attaining a 'higher' equilibrium, but I do understand the feeling (and for the record, based on where she came from, she's actually doing fantastic and has experience doing things that none of her relatives even contemplate doing). I grew up working class for this country (so probably the bottom end of 'middle class'), but I'm stubborn with a bit of a gambling streak. So I'm going to university, investing money, occasionally hustling for extra here and there (gambling, side jobs, etc...), and it's mostly going OK. Plenty of relationships end over money. And when your world is falling all around you, it's all too easy to turn to 'escapes' such as drugs and alcohol. This is a tech forum, so a little analogy. A poor person is like a phone whose specs are just barely enough to run Android. The experience is poor, laggy, and you can't play too many games, or do any 'productive' tasks. Middle class is like an iPad pro or a decent laptop, you can do what you want for the most part, it's a pleasant experience, but there are certain limitations. Being rich is like having a super-computer - the potential is seemingly limitless, you can solve problems that are out of reach of the first two. Right now I'm in University, and being working-class, it's hard to compete with rich kids who live on their parents dollar. Every day I work is less time to study. Every time I have to cook dinner is less time to study. And if I need to study a 'minimum' amount to pass my courses, then I need to either sacrifice sleep or time with my wife. And neither leads to a particularly great outcome. So mostly I just suck it up and lose sleep, live off coffee, and am a solid 'B' student rather than actually competing with the more privileged kids. In the job market I'll probably have to use my life experience and hustling streak, since I won't compete on GPA or extra-curriculars. Anyhow, just a few thoughts on the matter. And these sorts of problems with income inequality are why more and more economists support the idea of a basic income. It'll allow the 'poor' to have the ability to have disposable income with which they can get an education, or invest in themselves rather than work like dogs to barely survive. While this may not seem fair for those who have already attained middle class or higher (who always claim they 'earned' it, never mind the societal advantages they used), it's better for society. Unless you think having a serf class is a societal advantage (and there are people who think this)...

glup 11y ago

There was a great study published in the journal Cognition a few years ago revisiting the famous kids & marshmallows self-control study, but where the researchers additionally manipulated the children's beliefs in the environmental variability. They offered the kids some desirable thing and then either gave it to them or not, then checked how much self-control they exercised on the marshmallow task. The idea here is that if the payoff is highly unreliable, the rational thing to do is to go ahead and eat the first marshmallow because 1) there's a pretty good chance there aren't more coming and 2) even the first marshmallow might disappear. I think there's a pretty clear socioeconomic analog of this— if you have few resources and an unreliable environment, it's rational to act on a much shorter timeline.

RodericDay 11y ago

The Logic of Stupid Poor People http://tressiemc.com/2013/10/29/the-logic-of-stupid-poor-people/ http://tressiemc.com/2013/10/29/the-logic-of-stupid-poor-peo... > I sat in on an interview for a new administrative assistant once. My regional vice president was doing the hiring. A long line of mostly black and brown women applied because we were a cosmetology school. Trade schools at the margins of skilled labor in a gendered field are necessarily classed and raced. I found one candidate particularly charming. She was trying to get out of a salon because 10 hours on her feet cutting hair would average out to an hourly rate below minimum wage. A desk job with 40 set hours and medical benefits represented mobility for her. When she left my VP turned to me and said, “did you see that tank top she had on under her blouse?! OMG, you wear a silk shell, not a tank top!” Both of the women were black. > The VP had constructed her job as senior management. She drove a brand new BMW because she, “should treat herself” and liked to tell us that ours was an image business. A girl wearing a cotton tank top as a shell was incompatible with BMW-driving VPs in the image business. Gatekeeping is a complex job of managing boundaries that do not just define others but that also define ourselves. Status symbols — silk shells, designer shoes, luxury handbags — become keys to unlock these gates. If I need a job that will save my lower back and move my baby from medicaid to an HMO, how much should I spend signaling to people like my former VP that I will not compromise her status by opening the door to me? That candidate maybe could not afford a proper shell. I will never know. But I do know that had she gone hungry for two days to pay for it or missed wages for a trip to the store to buy it, she may have been rewarded a job that could have lifted her above minimum wage. Shells aren’t designer handbags, perhaps. But a cosmetology school in a strip mall isn’t a job at Bank of America, either. > At the heart of these incredulous statements about the poor decisions poor people make is a belief that we would never be like them.

douche 11y ago

Being poor means you have no cushion. Particularly if you are poor in an urban/suburban area. You are one unfortunate event away from being wiped out. Company downsizes or has a round of layoffs, and you lose your job? The rent, the car payment, the grocery bill, the utilities, etc, don't go away. Some of that you can scrape by on by shifting the bills onto credit, but most landlords don't take VISA. Get in an accident, and get seriously injured? Now you can't work, and you've got either huge medical bills, or a deductible that you have to pay before the insurance covers the rest. Maybe you heal up and your job isn't there any more. If you are poor in a rural area, you actually have more options than if you are living in a city. My grandparents were poor as church mice, but if things really hit the fan, at least they still had a roof over their heads (even if it's a dirt-floor shack), they had a plot of land they could grow a garden in, wood that could be chopped down to feed the wood stove, and deer that could be poached to put meat on the table. They had resources and skills that could help them subsist and ride out rough patches where money was tight or non-existent.

stretchwithme 11y ago
Spending everything as you get it, not being a saver, using all the credit lenders will allow - that means you have no cushion. In the US, money is taken from you for Social Security and you can't get it back until you're 60. Or, rather, you get paid when later generations pay in. In Singapore, there is forced savings. You still own everything you save. There's more freedom with how you invest it. And it's not dependent on future generations paying in. You are correct about the rural area. There is less pressure, more ability to save. Its also more boring with fewer activities and people of interest, but you can save your pennies, invest in your ability to earn and perhaps move to where you can profit from those skills.
lsc 11y ago
> Being poor means you have no cushion. Particularly if you are poor in an urban/suburban area. You are one unfortunate event away from being wiped out. I think there is a more important distinction; really, one that is more valuable than any reasonable amount of saved money is. Family with the resources to support a person. I mean, most of the time, if you come from a middle-class family, you can't remain dependent forever, but you do have a place to stay while you get back on your feet, and you have a network of people who know people who can get you interviews for decent jobs. I think this is a bigger advantage than it would seem at first glance; bankruptcy is dramatically less frightening if you know that worst-case, you can sleep at your parent's place, eat their food, and that they'll be calling all their contacts trying to get you an interview.

jqm 11y ago

We like to think hard work and correct attitudes towards education, savings and investment results in being well off. And to a certain extent it does. But, many people who are well off, in fact likely some of the most well off, have an entirely different attitude that doesn't have anything to do with the above traits of the middle class. And that is the burning desire to fuck other people over and to take unfair advantage of others at every opportunity regardless of the effects it may have on the victims. Poverty sometimes isn't all about short term thinking and bad choices. Sometimes it's just being fucked over at different scales again and again and not being able to defend oneself against it. Education and going to work everyday doesn't necessarily help in this regard.

thedevil 11y ago

The idea of handing out cash has become popular lately but I'm skeptical. Does anyone have an argument why handing them cash would be better than paying for needs? It seems to me (less restrictive) housing subsidies, food stamps for everyone and child healthcare would help the poor a lot more than cash. My argument is that paying basic needs will reduce stress level and help them deal with the problems. Not only does it make more intuitive sense, but when I've helped troubled family members, this has worked much better in practice than giving cash. The article, which seems to support giving out cash, admits they don't make good decisions. A more generous assumption is that they spend it on their needs but spend all their will power doing so, leaving less willpower to address other problems. Note: I'm in favor of helping the poor and I'm not bashing them. I think the stress of poverty partly causes them to make bad decisions and I think people have value even if they make bad decisions. Also note: Please don't just downvote me if my argument isn't consistent with your ideology. That's lame (100% chance I get downvotes anyway). Rather, provide an argument if you disagree.

datashovel 11y ago
From what I understand the primary reason people seem to think giving money instead of services is better is due to overhead. If you need to monitor how the money is distributed and how the money is spent, then that requires entire branches of government to make this possible. Instead if you're just giving money you are giving those in need more, which more than likely will help them considerably more than if you're paying a ton of overhead in salaries and buildings and bureaucracy just so you can distribute money to those in need.
- sheensleeves 11y ago
  I think the appeal of basic income to HN crowd is that is a solution that an engineer would like. Very neat. Some people can't manage their money though, however complicated that is.
  - thedevil 11y ago
    Yeah, I would guess that the huge overhead is still more efficient given how poorly some would use the money, but that's just a hunch. I have nothing to back that up (and would love any argument on either side of that)

scotty79 11y ago

http://playspent.org/ http://playspent.org/