7 ms·

The best way to help poor people who make reasonably good decisions is to give them money. People who make bad decisions often end up poor. Giving them money w

The best way to help poor people who make reasonably good decisions is to give them money. People who make bad decisions often end up poor. Giving them money will not help them make better decisions, and may make them worse off. How you think those two effects interact, and how much you value efficiency of donation vs. enabling people with poor decision making skills to waste probably determines where you stand on this issue.

roel_v 11y ago
This is a beautifully succinct summary of the issue. It explains why micro financing can elevate people in Africa from abject poverty, but why it's extremely hard to lift the bottom 5% in the West (apart from the fact that someone needs to be in the bottom 5%...)
PythonicAlpha 11y ago
> People who make bad decisions often end up poor. Giving them money will not help them make better decisions, and may make them worse off. But there are also many people who started poor and stayed poor, because they did not have the possibilities of the rich. Or is your argument, that somebody whose parents where rich, will stay rich, because he made all the good decisions himself? There are so many rich, that make bad decisions and stay rich, because they have so much, they always will stay afloat.
- charlesdm 11y ago
  There are plenty of wealthy people (mainly inherited) who became poor after bad investments. But, obviously if you have significant amounts of capital, it's harder to lose it all.
  - PythonicAlpha 11y ago
    You can always find examples for all sides. But it is just a statistical fact, that moving up from being really poor today has become much more difficult than it was decades before, maybe with the exemption of being a computer scientists (but also there it is not so easy for a normally gifted person to finish studies and so on without help from the parents).
    - charlesdm 11y ago
      Is it? On what are you basing that assumption? I can't imagine it was ever easy.
    - Retra 11y ago
      Everything I can find on economic mobility suggests that it has been stable for quite a while... up to half a century.
  - jack-r-abbit 11y ago
    Also plenty of wealthy people that completely earned their money themselves but still ended up poor once the fat pay checks stopped coming. Athletes and musicians are probably the most obvious examples.
    - JoeAltmaier 11y ago
      But if the paychecks don't stop coming, then nobody is poor. And suffering is alleviated.
    - charlesdm 11y ago
      Then they didn't build wealth, they generated income.
taurath 11y ago
Poor decision making skills? I don't think you understand what it is to be poor. People are more rational than you think - when people experience long term problems and generally a very inconsistent world (food/money/resources come by sporadically), they make decisions that help them in the short term, because to their experience there is unlikely to be a long term. If someone below the poverty line wins $10,0000 in the lottery they'll buy a few luxuries, spend a lot of money on short term things for a little while and then go right back to being poor. If you tell them they'll get $10,000 for the next 4 years no matter what they do, I'll bet their attitudes change. What people need to make rational decisions is to be able to develop confidence that tomorrow will not be another disaster - of course, that is a much more difficult thing. As long as we continue this meme that people that are poor have poor character poverty will be allowed to continue and fester.
- pdeuchler 11y ago
  >>> "they make decisions that help them in the short term, because to their experience there is unlikely to be a long term." This is also known as "poor decision making skills". Granted, it's very understandable in many situations, but let's call a spade a spade
  - Frondo 11y ago
    What? How is acting rationally given your past life experience "poor decision making"? If you don't have money to spare, and then one month you get a windfall and do, it's absolutely rational to assume (and consequently base your decisions on) that you'll go back to the former state.
    - pdeuchler 11y ago
      Because they're not actually acting rationally? Semantically correct logic built upon false assumptions is still fundamentally incorrect. You seem to be caught in a circular argument... the poor can't help that they're poor because, well, they're poor!
tg3 11y ago
I think that this is a myth, perpetuated by people who wish to rationalize their position (which also happens to be wealth-maximizing for themselves). Empirically, giving people money helps them. This experiment with the homeless in London is a good place to start: http://www.washingtonpost.com/opinions/free-money-might-be-the-best-way-to-end-poverty/2013/12/29/679c8344-5ec8-11e3-95c2-13623eb2b0e1_story.html http://www.washingtonpost.com/opinions/free-money-might-be-t...
- jenius 11y ago
  I have spent a long time thinking about and looking for ways that people use to rationalize their own spending and not giving to those who are in need, and this is one of the most common reasons cited. While all my research and experience has led me to the same conclusion, that it's a bullshit psychological defense, when it comes down to it I lack enough hard scientific evidence that this is the case to really solidly prove it. The article you posted is great, thank you for sharing. It's clean, well-written, and backed by an experiment, which is fantastic. Do you have any more material like this? On the other hand, does anyone who disagrees have any material to the contrary?
gph 11y ago
I would say the majority of people that are poor didn't end up that way, they were born or thrust into it. The amount of people who become poor purely through their own actions is not reflective of the overall population. Most people, myself included, will make both good and bad decisions throughout their lives. Those with money/education/stability can weather the bad and thrive under the good. I've had difficult periods in my life that probably would have left me in a terrible position if I didn't have a middle class support system. Maybe at some point after we give poor people a bunch of money those who become poor again we can say are clearly making poor decisions. I believe most poor people are generally good people. We shouldn't leave a majority of people in the position they are in simply because some of them will waste it on bad decisions (drugs, etc.). This doesn't have to be a permanent thing, but the best charity at this point is probably to give people money.
- sologoub 11y ago
  Equating bad decisions (from our or even general societal points of view) with someone being a "bad person" isn't really the right way to look at the concern. The fact that bad decisions (again from a given point of view) are made has to do with the duration of the view. From my experience, people that spend their last money on drugs are looking for a relief, even if it lasts from a few minutes to a couple of hours of that high. This is the time that they don't have to face their situation. From that point of view, the decision is sound to them. Addiction is a very powerful thing, but it need not be chemical, it could very well be emotional. The motivation is an extremely important item to consider. Proponents of the food stamps and other specific-use assistance programs point to the fact that they deter bad use. However, one can still buy fast-food with it and end-up more unhealthy and worse of. Personally, I am of a very strong belief that as a society, we need to work to address root causes that together combine to contribute to the poverty rates. Some relatively straightforward ones - real universal healthcare (and mental health) and universal education to at least bachelors level. If we really want to eliminate the notion of poverty, we need to figure out universal income question, but the economic consequences of this still need to be worked out. Universal healthcare and education are economic no-brainers when not completely bastardized by corporate interests... (in my own view at least.)
dllthomas 11y ago
Giving poor people who make bad decisions money may help them make better decisions. Recent studies have shown that the stress of persistent poverty diminishes cognitive capacity. To the degree that is the case, giving people money (and especially reliable money) may not only give them more options and better options, but help them pick better amongst their options.
- ianferrel 11y ago
  That is a really good point.
thomasluce 11y ago
The problem with that line of reasoning is that it has an inherent assumption of rightness through selective observation. You believe that if a person in the abstract, "makes good decisions" then they will do well with more money. However, you believe this because you (presumably) are yourself not poor, and a person is disinclined to think of themselves as a bad decision maker. If you do think of yourself as a poor decision maker, then we would have no reason to take your argument with any degree of seriousness; you yourself would reject the premise on the axiom that you don't think rightly. How well a person manages money is only partly determined by their ability to observe, reason through abstractions about their observations and make rational decisions. It is mostly determined by circumstance outside of their control which oftentimes has a negative feedback loop (living paycheck to paycheck, get sick, have hospital bills, can't buy good food, get sick again, etc. etc.) Given that, from the outside we can't say weather or not a person is poor because of choice or chance, and can't make a value judgement about their... well, judgement. Certainly even if you could in the individual, you couldn't institutionalize such judgements. So the only way to know if they will do well is to give them money and see how they do with it, or to give them nothing and see if they rise above circumstance (which if they are a candidate for free money, the answer is likely already answered.) The efficiency of donation is almost irrelevant. They will either do well with the money and uplift themselves, or they will do poorly with it and the money will return to the economy through normal means. A better way to think of this kind of reasoning is that some non-zero percentage of recipients of the money will have a better life for it. With a better life for them, comes a better set of circumstances for their local (and diffusely, the rest of) society through more able members. Given that, giving money to the poor is more correctly thought of as an investment in quality of life and societal health. From that perspective, we can avoid ad-hominum value judgements of individuals and look at the social impact as a whole and see that the statement, "the best way to help the poor is to give them money" is, in fact, correct.
juliangregorian 11y ago
It's almost like you didn't read the article at all.
ianferrel 11y ago
Many responders seem to think that I'm saying that most poor people are poor because they make bad decisions. I'm not (that's the logical converse of the statement I made), and I don't think that's true. My post was an attempt to summarize and contrast the two major conflicting issues that relate to how aid to the poor is made, not to argue in favor of either.

roel_v 11y ago

This is a beautifully succinct summary of the issue. It explains why micro financing can elevate people in Africa from abject poverty, but why it's extremely hard to lift the bottom 5% in the West (apart from the fact that someone needs to be in the bottom 5%...)

PythonicAlpha 11y ago

> People who make bad decisions often end up poor. Giving them money will not help them make better decisions, and may make them worse off. But there are also many people who started poor and stayed poor, because they did not have the possibilities of the rich. Or is your argument, that somebody whose parents where rich, will stay rich, because he made all the good decisions himself? There are so many rich, that make bad decisions and stay rich, because they have so much, they always will stay afloat.

charlesdm 11y ago
There are plenty of wealthy people (mainly inherited) who became poor after bad investments. But, obviously if you have significant amounts of capital, it's harder to lose it all.
- PythonicAlpha 11y ago
  You can always find examples for all sides. But it is just a statistical fact, that moving up from being really poor today has become much more difficult than it was decades before, maybe with the exemption of being a computer scientists (but also there it is not so easy for a normally gifted person to finish studies and so on without help from the parents).
  - charlesdm 11y ago
    Is it? On what are you basing that assumption? I can't imagine it was ever easy.
  - Retra 11y ago
    Everything I can find on economic mobility suggests that it has been stable for quite a while... up to half a century.
- jack-r-abbit 11y ago
  Also plenty of wealthy people that completely earned their money themselves but still ended up poor once the fat pay checks stopped coming. Athletes and musicians are probably the most obvious examples.
  - JoeAltmaier 11y ago
    But if the paychecks don't stop coming, then nobody is poor. And suffering is alleviated.
  - charlesdm 11y ago
    Then they didn't build wealth, they generated income.

taurath 11y ago

Poor decision making skills? I don't think you understand what it is to be poor. People are more rational than you think - when people experience long term problems and generally a very inconsistent world (food/money/resources come by sporadically), they make decisions that help them in the short term, because to their experience there is unlikely to be a long term. If someone below the poverty line wins $10,0000 in the lottery they'll buy a few luxuries, spend a lot of money on short term things for a little while and then go right back to being poor. If you tell them they'll get $10,000 for the next 4 years no matter what they do, I'll bet their attitudes change. What people need to make rational decisions is to be able to develop confidence that tomorrow will not be another disaster - of course, that is a much more difficult thing. As long as we continue this meme that people that are poor have poor character poverty will be allowed to continue and fester.

pdeuchler 11y ago
>>> "they make decisions that help them in the short term, because to their experience there is unlikely to be a long term." This is also known as "poor decision making skills". Granted, it's very understandable in many situations, but let's call a spade a spade
- Frondo 11y ago
  What? How is acting rationally given your past life experience "poor decision making"? If you don't have money to spare, and then one month you get a windfall and do, it's absolutely rational to assume (and consequently base your decisions on) that you'll go back to the former state.
  - pdeuchler 11y ago
    Because they're not actually acting rationally? Semantically correct logic built upon false assumptions is still fundamentally incorrect. You seem to be caught in a circular argument... the poor can't help that they're poor because, well, they're poor!

tg3 11y ago

I think that this is a myth, perpetuated by people who wish to rationalize their position (which also happens to be wealth-maximizing for themselves). Empirically, giving people money helps them. This experiment with the homeless in London is a good place to start: http://www.washingtonpost.com/opinions/free-money-might-be-the-best-way-to-end-poverty/2013/12/29/679c8344-5ec8-11e3-95c2-13623eb2b0e1_story.html http://www.washingtonpost.com/opinions/free-money-might-be-t...

jenius 11y ago
I have spent a long time thinking about and looking for ways that people use to rationalize their own spending and not giving to those who are in need, and this is one of the most common reasons cited. While all my research and experience has led me to the same conclusion, that it's a bullshit psychological defense, when it comes down to it I lack enough hard scientific evidence that this is the case to really solidly prove it. The article you posted is great, thank you for sharing. It's clean, well-written, and backed by an experiment, which is fantastic. Do you have any more material like this? On the other hand, does anyone who disagrees have any material to the contrary?

gph 11y ago

I would say the majority of people that are poor didn't end up that way, they were born or thrust into it. The amount of people who become poor purely through their own actions is not reflective of the overall population. Most people, myself included, will make both good and bad decisions throughout their lives. Those with money/education/stability can weather the bad and thrive under the good. I've had difficult periods in my life that probably would have left me in a terrible position if I didn't have a middle class support system. Maybe at some point after we give poor people a bunch of money those who become poor again we can say are clearly making poor decisions. I believe most poor people are generally good people. We shouldn't leave a majority of people in the position they are in simply because some of them will waste it on bad decisions (drugs, etc.). This doesn't have to be a permanent thing, but the best charity at this point is probably to give people money.

sologoub 11y ago
Equating bad decisions (from our or even general societal points of view) with someone being a "bad person" isn't really the right way to look at the concern. The fact that bad decisions (again from a given point of view) are made has to do with the duration of the view. From my experience, people that spend their last money on drugs are looking for a relief, even if it lasts from a few minutes to a couple of hours of that high. This is the time that they don't have to face their situation. From that point of view, the decision is sound to them. Addiction is a very powerful thing, but it need not be chemical, it could very well be emotional. The motivation is an extremely important item to consider. Proponents of the food stamps and other specific-use assistance programs point to the fact that they deter bad use. However, one can still buy fast-food with it and end-up more unhealthy and worse of. Personally, I am of a very strong belief that as a society, we need to work to address root causes that together combine to contribute to the poverty rates. Some relatively straightforward ones - real universal healthcare (and mental health) and universal education to at least bachelors level. If we really want to eliminate the notion of poverty, we need to figure out universal income question, but the economic consequences of this still need to be worked out. Universal healthcare and education are economic no-brainers when not completely bastardized by corporate interests... (in my own view at least.)

dllthomas 11y ago

Giving poor people who make bad decisions money may help them make better decisions. Recent studies have shown that the stress of persistent poverty diminishes cognitive capacity. To the degree that is the case, giving people money (and especially reliable money) may not only give them more options and better options, but help them pick better amongst their options.

ianferrel 11y ago
That is a really good point.

thomasluce 11y ago

The problem with that line of reasoning is that it has an inherent assumption of rightness through selective observation. You believe that if a person in the abstract, "makes good decisions" then they will do well with more money. However, you believe this because you (presumably) are yourself not poor, and a person is disinclined to think of themselves as a bad decision maker. If you do think of yourself as a poor decision maker, then we would have no reason to take your argument with any degree of seriousness; you yourself would reject the premise on the axiom that you don't think rightly. How well a person manages money is only partly determined by their ability to observe, reason through abstractions about their observations and make rational decisions. It is mostly determined by circumstance outside of their control which oftentimes has a negative feedback loop (living paycheck to paycheck, get sick, have hospital bills, can't buy good food, get sick again, etc. etc.) Given that, from the outside we can't say weather or not a person is poor because of choice or chance, and can't make a value judgement about their... well, judgement. Certainly even if you could in the individual, you couldn't institutionalize such judgements. So the only way to know if they will do well is to give them money and see how they do with it, or to give them nothing and see if they rise above circumstance (which if they are a candidate for free money, the answer is likely already answered.) The efficiency of donation is almost irrelevant. They will either do well with the money and uplift themselves, or they will do poorly with it and the money will return to the economy through normal means. A better way to think of this kind of reasoning is that some non-zero percentage of recipients of the money will have a better life for it. With a better life for them, comes a better set of circumstances for their local (and diffusely, the rest of) society through more able members. Given that, giving money to the poor is more correctly thought of as an investment in quality of life and societal health. From that perspective, we can avoid ad-hominum value judgements of individuals and look at the social impact as a whole and see that the statement, "the best way to help the poor is to give them money" is, in fact, correct.

juliangregorian 11y ago

It's almost like you didn't read the article at all.

ianferrel 11y ago

Many responders seem to think that I'm saying that most poor people are poor because they make bad decisions. I'm not (that's the logical converse of the statement I made), and I don't think that's true. My post was an attempt to summarize and contrast the two major conflicting issues that relate to how aid to the poor is made, not to argue in favor of either.