7 ms·

Why do the poor make poor decisions?

46 points by yusufp 10y ago

paulddraper 10y ago
Or, asked another way, "Why are people who make poor decisions poor?"
- cauterized 10y ago
  But there are vicious cycles involved where the mental effort of surviving day to day is too high to leave mental energy to think further ahead and make better decisions. There have been multiple studies about this - if I could remember where I'd read about them, I'd link to them.
- projectramo 10y ago
  If you read the article, it is about someone's attempt to tease apart which is the cause and which is the effect. In other words, the article is about debunking exactly this restatement.
- jbmorgado 10y ago
  Actually, that's exactly the opposite of the conclusions of the article.
projectramo 10y ago
TL;DR Duke researcher Jane Costello tries to answer the question: do poor people make poor decisions, or is it that poor decisions lead to poor people. In order to answer this question, she looks at the extra money that a casino brought in to a poor native tribe. She concludes that it was poverty that was leading to the "poor decisions": "Ten years after the casino’s arrival, Costello’s findings showed that the younger the age at which children escaped poverty, the better their teenage mental health. Among her youngest age cohort, Costello observed a “dramatic decrease” in criminal conduct. In fact, the Cherokee children in her study were now better behaved than the control group." Importantly, the parents didn't work less. They worked just as hard but the labor was redirected towards parenting.
- dpc59 10y ago
  The second part of the article is pretty interesting too. Apparently giving poor people money would save money in the long run.
  - dpc59 10y ago
    "Granted, it would take a big program to eradicate poverty in the U.S. According to economist Matt Bruenig’s calculations, it would cost $175 billion. But poverty is even more expensive. A 2013 study estimated the costs of child poverty at as much as $500 billion a year. Kids who grow up poor end up with two years’ less education, work 450 fewer hours per year, and run three times the risk of bad health than those raised in families that are well off."
    - G43nm45ji 10y ago
      It seams like a lot, but then I think about military spending and at least its less then that. Can't really compare them more than that though.. I'm not trying to start something. Just a thought.
      - noir_lord 10y ago
        I think the last figure I saw for military spending was 650bn a year. Of course if you cut that by half you'd lose a lot of workers many of those with families (in one respect you could look at the military as a jobs program, what was the last time the US had more than 10% of it's total military personal actually fighting a war).
        gertef 10y ago
        Imagine if the military was converted to be mostly Corps of Engineers, building schools and roads and cafes, instead of building stuff to blow up.
        majewsky 10y ago
executive 10y ago
TL;DR Because they are poor.
SubiculumCode 10y ago
BASIC INCOME
SubiculumCode 10y ago
Being poor is hard. There is no flexibility to be nimble around hardships or mistakes. Its easy to make money if you have money. But try to start a business with no backup funds.or credit line? The first time your vehicle breaks down can put your business in a death cycle.
- sharemywin 10y ago
  assuming you can afford a vehicle in the first place.
- yardie 10y ago
  Forget the breakdowns as an impediment to business. Most businesses have high startup costs just from taxes and fees alone. I'm trying to start a small hobby business and just getting the ball rolling I've forked over $500 in filing fees. I imagine it must be nigh on impossible if you are poor and want to start a small business. And I know people do it but they borrow heavily from friends and family.
chadlavi 10y ago
The trick is, how do you get anyone who doesn't already think UBI is a good idea to read this line of thinking and agree with it? The 'bootstrapping' mentality is crazy-strong in the US. Too many people say "I did it, so you should be able to, also, and if not, that's your problem," without understanding the underlying reasons behind how they overcame poverty and how others get trapped in it.
DavidTNcl 10y ago
Because poor decision makers become poor.
- st3v3r 10y ago
  Most executives of failing companies say hi.
elcapitan 10y ago
"Poor Economics" is a good book about that topic, based on field studies of the authors. I found the investigation of economics at those margins very interesting. Most concepts of small business etc as people who have grown up in the West don't work anymore at those margins, because people have to pay enormous interest rates, shops can't really buy stock etc. http://www.pooreconomics.com/ http://www.pooreconomics.com/ and http://www.amazon.com/Poor-Economics-Radical-Rethinking-Poverty/dp/1610390938 http://www.amazon.com/Poor-Economics-Radical-Rethinking-Pove...
jimrandomh 10y ago
This article tries to shift perception from "poor people make bad decisions because they're intrinsically dumb" to "poor people make bad decisions because poverty makes them dumb." But this is also wrong; the decisions poor people make are, for the most part, sensible decisions given the circumstances they're in. Here's a list from the article: > "The poor borrow more, save less, smoke more, exercise less, drink more, and eat less healthfully. Offer money management training and the poor are the last to sign up. When responding to job ads, the poor often write the worst applications and show up at interviews in the least professional attire." Borrow more: because you only need to borrow if you don't have money. Save less: because you can only save if you have money. Showing up at interviews in poor attire: because good attire costs money. Eat less healthfully: because healthy food costs more than unhealthy food. Exercise less: because exercising requires the energy that poor diet and the other stresses of poverty sap away. Writing poor job applications: because applications are judged based on whether they sound like something a poor person would write. The only genuinely questionable decisions in the list are smoking and drinking, but even these have sensible explanations that don't involve moralizing. I think the real answer is that things have been labelled "poor decisions" not because they are strategically bad choices for the people who actually make them, but because seeing someone make them provides others with evidence that they're poor, which is stigmatized.
- ygjb-dupe 10y ago
  > Eat less healthfully: because healthy food costs more than unhealthy food. I hate this myth. It glosses over some of the most difficult choices that people in poverty have to make on a regular basis. "Quantity has a quality all it's own." - various sources This is anecdotal, and entirely based on my own experiences as I grew up in poverty (by Canadian standards, which is substantially better than most of the world). YMMV when evaluating this if you come from a part of the world that has more extreme cases of poverty. Eating healthy foods is not inherently more expensive than eating unhealthy foods, but it is a risk management decision. When you have a small budget and you have to make choices about where you will spend your money, you tend to make choices that insulate against risk. If you have a tight budget then you buy foods that provide the best economic value, not the best nutritional value. That means buying bulk, low cost food so that you can ensure that you have some food left at the end of the week, which might help reduce the amount you have to spend on food next week. This exacerbates the "healthy eating" myth because if you are buying foods that you hope last, you are disinclined to purchase foods that expire, so rather than buying fresh meat, produce, etc, you will instead purchase canned or frozen foods. Everyone that I grew up with that has elevated themselves above their roots has a similar perspective - it's not that we could buy better food, it just didn't make sense to do so back then.
deleted 10y ago
[deleted]
joesmo 10y ago
"Granted, it would take a big program to eradicate poverty in the U.S. According to economist Matt Bruenig’s calculations, it would cost $175 billion." Is that a correct figure? It's hardly that large and there's no excuse for us not spending it to end poverty if it is.
- AnimalMuppet 10y ago
  Agreed, except that it would have to be spent by Congress. That makes me... let's say somewhat less optimistic about it being doable. Could Congress allocate $175 billion? Sure. Could they sell it to the public that it was worth it? Maybe. Could they do it in a way that actually eradicated poverty, rather than throwing big chunks of it down the sewer? I'm not optimistic. If they could actually do it instead of larding it down with pork, though, I'm all for it.
pnut 10y ago
I know more than a few poor people, and the one thing they all have in common, is that they either consciously or by virtue of their personalities or aptitude, do not treat maximizing financial impact as the primary criterion in their decision making. And I would venture that in general, this group of people thinks running around, chasing money 'cause the man says it's important, is a sad way to live your life.
lhnz 10y ago
The stress-caused-by-poverty narrative feels plausible to me but I'd like to see more evidence. Scott Alexander recently posted this study [0] that seems to show that stress is not linked to poverty: > socioeconomic status has no relationship to hair cortisol level > which complicates theories about how many body systems are > affected by “the stress of poverty” since we might expect hair cortisol > level to be an indicator of biological stress levels. On the other hand, a couple of years ago I lost access to my bank accounts for 2 months, and I will say it was a fairly stressful experience, and did force me into situations where I made what I would generally consider bad economic choices. [0] http://biorxiv.org/content/early/2016/05/24/055244 http://biorxiv.org/content/early/2016/05/24/055244
peterwwillis 10y ago
In my city, the poor school children in 8th grade are at a 3rd grade reading level. They also frequently go without food, have parents addicted to drugs, and are in or have friends who are in gangs. There are also no jobs in their neighborhoods and no transportation to areas that have jobs, that they can't get anyway, because they're in 8th grade at a 3rd grade reading level. And miraculously passing their exams every year. Poor people do dumb things because they live in shitty situations and are trying to survive, not thrive. You don't mainline heroin because it's a great idea. You do it because your drug addiction has progressed to the point where this is the only thing you can do. You are addicted to drugs because it's the only thing you can do to escape endless depression from how shitty your life is. And you were born into this life, so "pulling yourself up by your bootstraps" seems less likely than winning the lottery (hence why poor people play the lottery).
noonespecial 10y ago
"The poor are poor because all of their choices in life suck." There are 2 ways to interpret that. Which one you choose has radical implications for the methods you might use to remedy poverty.
PoorBloke123 10y ago
A better question might be, why do poor US born Americans make poor decisions while poor legal immigrants (regardless of race or color) arrive with nothing and make wiser decisions. These first generation immigrant often escapes poverty within 15-20 years (albeit with very hard work). Their children are more successful then they were and far more successful financially than the US born American's children. Knowing some of these people immigrant and US born poor the answer is quite obvious to me. No study needs to be conducted, only casual observation. Here are the key differences. The influence of the US culture is obvious in the US born American. He expects more for less effort (entitlement), he is more easily discouraged when facing adversity, he expects someone to care for him and hand him all the tools and opportunity, his expectations are polar opposite of the immigrant (who expects nothing but what he has earned with his bare hands). He is disillusioned easily and when discouraged, drinks or abuses drugs to forget his problems. He supports liberal or socialist ideals because he feels that they will put cash into his pocket and bring down the wealthy people who "oppress" him. The US born minority (non white) thinks the cards are stacked against him, the minority immigrant sees other minority immigrants who have created wealth and aspires to replicate their success despite it's challenges. The culture of the US born poor person comes from the media (not just news - all media) they consume and the media saturated people surrounding them. Plain and simple that is the most corrosive thing. Secondarily, the idea that these people must be helped out, they don't have to fight through adversity to succeed. This is the worst thing you can do to a man. A man must be a man and have a fighting will to survive and flourish. If you make him a dependent, you are extinguishing this flame... perhaps forever. Some of the immigrants I know come from socialist countries and they are coming partly to escape from them. They respect the opportunity to work hard and succeed whereas the US born man does not. Americans have been given too much, they watch too many TV shows and other media which slants their view of reality and what life really is like. They have been over medicated and indoctrinated with views that are unproven and those which claim they are proven "cannot be replicated" (psychological studies). America needs to look back to see what has worked for us when we were great, take some good things we have now that have worked and put some other things back to the way they once were. The most revealing thing when looking at immigrants is how by the third generation, they hardly stick out from the lazy culture that their grandparents were so different from. TLDR: America is too liberal, has too much cheap crap from China (materialism) and watches too much Garbage TV and other media and is too medicated. We are lazy. An immigrant of any color comes over here and works his ass off, escaping poverty.

46 points by yusufp 10y ago

paulddraper 10y ago

Or, asked another way, "Why are people who make poor decisions poor?"

cauterized 10y ago
But there are vicious cycles involved where the mental effort of surviving day to day is too high to leave mental energy to think further ahead and make better decisions. There have been multiple studies about this - if I could remember where I'd read about them, I'd link to them.
projectramo 10y ago
If you read the article, it is about someone's attempt to tease apart which is the cause and which is the effect. In other words, the article is about debunking exactly this restatement.
jbmorgado 10y ago
Actually, that's exactly the opposite of the conclusions of the article.

projectramo 10y ago

TL;DR Duke researcher Jane Costello tries to answer the question: do poor people make poor decisions, or is it that poor decisions lead to poor people. In order to answer this question, she looks at the extra money that a casino brought in to a poor native tribe. She concludes that it was poverty that was leading to the "poor decisions": "Ten years after the casino’s arrival, Costello’s findings showed that the younger the age at which children escaped poverty, the better their teenage mental health. Among her youngest age cohort, Costello observed a “dramatic decrease” in criminal conduct. In fact, the Cherokee children in her study were now better behaved than the control group." Importantly, the parents didn't work less. They worked just as hard but the labor was redirected towards parenting.

dpc59 10y ago
The second part of the article is pretty interesting too. Apparently giving poor people money would save money in the long run.
- dpc59 10y ago
  "Granted, it would take a big program to eradicate poverty in the U.S. According to economist Matt Bruenig’s calculations, it would cost $175 billion. But poverty is even more expensive. A 2013 study estimated the costs of child poverty at as much as $500 billion a year. Kids who grow up poor end up with two years’ less education, work 450 fewer hours per year, and run three times the risk of bad health than those raised in families that are well off."
  - G43nm45ji 10y ago
    It seams like a lot, but then I think about military spending and at least its less then that. Can't really compare them more than that though.. I'm not trying to start something. Just a thought.
    - noir_lord 10y ago
      I think the last figure I saw for military spending was 650bn a year. Of course if you cut that by half you'd lose a lot of workers many of those with families (in one respect you could look at the military as a jobs program, what was the last time the US had more than 10% of it's total military personal actually fighting a war).
      - gertef 10y ago
        Imagine if the military was converted to be mostly Corps of Engineers, building schools and roads and cafes, instead of building stuff to blow up.
        majewsky 10y ago

executive 10y ago

TL;DR Because they are poor.

SubiculumCode 10y ago

BASIC INCOME

SubiculumCode 10y ago

Being poor is hard. There is no flexibility to be nimble around hardships or mistakes. Its easy to make money if you have money. But try to start a business with no backup funds.or credit line? The first time your vehicle breaks down can put your business in a death cycle.

sharemywin 10y ago
assuming you can afford a vehicle in the first place.
yardie 10y ago
Forget the breakdowns as an impediment to business. Most businesses have high startup costs just from taxes and fees alone. I'm trying to start a small hobby business and just getting the ball rolling I've forked over $500 in filing fees. I imagine it must be nigh on impossible if you are poor and want to start a small business. And I know people do it but they borrow heavily from friends and family.

chadlavi 10y ago

The trick is, how do you get anyone who doesn't already think UBI is a good idea to read this line of thinking and agree with it? The 'bootstrapping' mentality is crazy-strong in the US. Too many people say "I did it, so you should be able to, also, and if not, that's your problem," without understanding the underlying reasons behind how they overcame poverty and how others get trapped in it.

DavidTNcl 10y ago

Because poor decision makers become poor.

st3v3r 10y ago
Most executives of failing companies say hi.

elcapitan 10y ago

"Poor Economics" is a good book about that topic, based on field studies of the authors. I found the investigation of economics at those margins very interesting. Most concepts of small business etc as people who have grown up in the West don't work anymore at those margins, because people have to pay enormous interest rates, shops can't really buy stock etc. http://www.pooreconomics.com/ http://www.pooreconomics.com/ and http://www.amazon.com/Poor-Economics-Radical-Rethinking-Poverty/dp/1610390938 http://www.amazon.com/Poor-Economics-Radical-Rethinking-Pove...

jimrandomh 10y ago

This article tries to shift perception from "poor people make bad decisions because they're intrinsically dumb" to "poor people make bad decisions because poverty makes them dumb." But this is also wrong; the decisions poor people make are, for the most part, sensible decisions given the circumstances they're in. Here's a list from the article: > "The poor borrow more, save less, smoke more, exercise less, drink more, and eat less healthfully. Offer money management training and the poor are the last to sign up. When responding to job ads, the poor often write the worst applications and show up at interviews in the least professional attire." Borrow more: because you only need to borrow if you don't have money. Save less: because you can only save if you have money. Showing up at interviews in poor attire: because good attire costs money. Eat less healthfully: because healthy food costs more than unhealthy food. Exercise less: because exercising requires the energy that poor diet and the other stresses of poverty sap away. Writing poor job applications: because applications are judged based on whether they sound like something a poor person would write. The only genuinely questionable decisions in the list are smoking and drinking, but even these have sensible explanations that don't involve moralizing. I think the real answer is that things have been labelled "poor decisions" not because they are strategically bad choices for the people who actually make them, but because seeing someone make them provides others with evidence that they're poor, which is stigmatized.

ygjb-dupe 10y ago
> Eat less healthfully: because healthy food costs more than unhealthy food. I hate this myth. It glosses over some of the most difficult choices that people in poverty have to make on a regular basis. "Quantity has a quality all it's own." - various sources This is anecdotal, and entirely based on my own experiences as I grew up in poverty (by Canadian standards, which is substantially better than most of the world). YMMV when evaluating this if you come from a part of the world that has more extreme cases of poverty. Eating healthy foods is not inherently more expensive than eating unhealthy foods, but it is a risk management decision. When you have a small budget and you have to make choices about where you will spend your money, you tend to make choices that insulate against risk. If you have a tight budget then you buy foods that provide the best economic value, not the best nutritional value. That means buying bulk, low cost food so that you can ensure that you have some food left at the end of the week, which might help reduce the amount you have to spend on food next week. This exacerbates the "healthy eating" myth because if you are buying foods that you hope last, you are disinclined to purchase foods that expire, so rather than buying fresh meat, produce, etc, you will instead purchase canned or frozen foods. Everyone that I grew up with that has elevated themselves above their roots has a similar perspective - it's not that we could buy better food, it just didn't make sense to do so back then.

deleted 10y ago

[deleted]

joesmo 10y ago

"Granted, it would take a big program to eradicate poverty in the U.S. According to economist Matt Bruenig’s calculations, it would cost $175 billion." Is that a correct figure? It's hardly that large and there's no excuse for us not spending it to end poverty if it is.

AnimalMuppet 10y ago
Agreed, except that it would have to be spent by Congress. That makes me... let's say somewhat less optimistic about it being doable. Could Congress allocate $175 billion? Sure. Could they sell it to the public that it was worth it? Maybe. Could they do it in a way that actually eradicated poverty, rather than throwing big chunks of it down the sewer? I'm not optimistic. If they could actually do it instead of larding it down with pork, though, I'm all for it.

pnut 10y ago

I know more than a few poor people, and the one thing they all have in common, is that they either consciously or by virtue of their personalities or aptitude, do not treat maximizing financial impact as the primary criterion in their decision making. And I would venture that in general, this group of people thinks running around, chasing money 'cause the man says it's important, is a sad way to live your life.

lhnz 10y ago

The stress-caused-by-poverty narrative feels plausible to me but I'd like to see more evidence. Scott Alexander recently posted this study [0] that seems to show that stress is not linked to poverty: > socioeconomic status has no relationship to hair cortisol level > which complicates theories about how many body systems are > affected by “the stress of poverty” since we might expect hair cortisol > level to be an indicator of biological stress levels. On the other hand, a couple of years ago I lost access to my bank accounts for 2 months, and I will say it was a fairly stressful experience, and did force me into situations where I made what I would generally consider bad economic choices. [0] http://biorxiv.org/content/early/2016/05/24/055244 http://biorxiv.org/content/early/2016/05/24/055244

peterwwillis 10y ago

In my city, the poor school children in 8th grade are at a 3rd grade reading level. They also frequently go without food, have parents addicted to drugs, and are in or have friends who are in gangs. There are also no jobs in their neighborhoods and no transportation to areas that have jobs, that they can't get anyway, because they're in 8th grade at a 3rd grade reading level. And miraculously passing their exams every year. Poor people do dumb things because they live in shitty situations and are trying to survive, not thrive. You don't mainline heroin because it's a great idea. You do it because your drug addiction has progressed to the point where this is the only thing you can do. You are addicted to drugs because it's the only thing you can do to escape endless depression from how shitty your life is. And you were born into this life, so "pulling yourself up by your bootstraps" seems less likely than winning the lottery (hence why poor people play the lottery).

noonespecial 10y ago

"The poor are poor because all of their choices in life suck." There are 2 ways to interpret that. Which one you choose has radical implications for the methods you might use to remedy poverty.

PoorBloke123 10y ago

A better question might be, why do poor US born Americans make poor decisions while poor legal immigrants (regardless of race or color) arrive with nothing and make wiser decisions. These first generation immigrant often escapes poverty within 15-20 years (albeit with very hard work). Their children are more successful then they were and far more successful financially than the US born American's children. Knowing some of these people immigrant and US born poor the answer is quite obvious to me. No study needs to be conducted, only casual observation. Here are the key differences. The influence of the US culture is obvious in the US born American. He expects more for less effort (entitlement), he is more easily discouraged when facing adversity, he expects someone to care for him and hand him all the tools and opportunity, his expectations are polar opposite of the immigrant (who expects nothing but what he has earned with his bare hands). He is disillusioned easily and when discouraged, drinks or abuses drugs to forget his problems. He supports liberal or socialist ideals because he feels that they will put cash into his pocket and bring down the wealthy people who "oppress" him. The US born minority (non white) thinks the cards are stacked against him, the minority immigrant sees other minority immigrants who have created wealth and aspires to replicate their success despite it's challenges. The culture of the US born poor person comes from the media (not just news - all media) they consume and the media saturated people surrounding them. Plain and simple that is the most corrosive thing. Secondarily, the idea that these people must be helped out, they don't have to fight through adversity to succeed. This is the worst thing you can do to a man. A man must be a man and have a fighting will to survive and flourish. If you make him a dependent, you are extinguishing this flame... perhaps forever. Some of the immigrants I know come from socialist countries and they are coming partly to escape from them. They respect the opportunity to work hard and succeed whereas the US born man does not. Americans have been given too much, they watch too many TV shows and other media which slants their view of reality and what life really is like. They have been over medicated and indoctrinated with views that are unproven and those which claim they are proven "cannot be replicated" (psychological studies). America needs to look back to see what has worked for us when we were great, take some good things we have now that have worked and put some other things back to the way they once were. The most revealing thing when looking at immigrants is how by the third generation, they hardly stick out from the lazy culture that their grandparents were so different from. TLDR: America is too liberal, has too much cheap crap from China (materialism) and watches too much Garbage TV and other media and is too medicated. We are lazy. An immigrant of any color comes over here and works his ass off, escaping poverty.