Always with us . . . .

The poor you will always have with you . . . Matthew 26:11 always_with_us

Say what you will about him, Jesus has been right on this one for 2,000 plus years. In the U.S., through The New Deal (30’s), the Great Society (60’s), and Temporary Aid for Needy Families (90s), poverty has survived. It’s also true for the world, but no other country has the additional cultural force of a rags-to-riches ideal. Here, the poor should work harder and achieve the American dream. Except that most don’t. Why?

I have recently come across two fascinating ideas about why poverty persists

  • Being poor takes up mental energy, which impairs a person’s ability to “get ahead”.
  • Even after getting a college degree, people from a poor household do not earn as much as their peers who grew up richer.

It makes sense that being poor is distracting. Kids do not do well in school if they are chronically hungry, for example. In their book, Scarcity, Mullainathan and Shafir show that the burden of being poor effectively shapes a person’s thinking and therefore the choices he makes.

Through clever lab experiments, Mullainathan and Shafir show that we all respond to scarcity in similar ways. When people are randomly assigned to being “poor”, they respond in the very same ways as a poor person does. Under pressure – which poverty naturally creates – we all take the short-term fix, the equivalent of the usurious payday loan for example. Having some cushion, the rich can not only weather life’s financial storms, but also think more long term about their choices. When you do not have this week’s groceries on your mind, you can plan for next month’s bills and activities.

But surely getting a college degree will increase a person’s earnings and lift him out of poverty. True, but more true for rich kids according to a Brookings Institute study. The lifetime “Bachelor’s bump” in earnings is closer to a molehill for college graduates who were raised in a household that subsisted on 185% of Federal Poverty level.

Possible reasons for this gap include the type of college that poorer students attend, the type of degree that a poorer student is likely to choose, and even the place where the lower income student grew up.

This all made me question the rags-to-riches mythology. Why can’t the poor just work harder and stop doing stupid things? – is the wrong question entirely. The better question is how can we ease the affect that poverty has on people’s brains? The people promoting the work-harder ideal are doing so with brains not stressed by scarcity, or at least not stressed to the degree that a person struggling to pay for groceries.

We all have a tendency to think that others should do what we (well-fed, educated, higher income people) do. What we do not fully understand is that the world looks entirely different through scarcity-colored glasses.

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