Why are we so quick to scrutinise how low-income families spend their money?
digest.bps.org.uk
digest.bps.org.uk
I have no right to make a value judgement on how Joe spends his money in this example. However that is what the study asked participants to do. claiming that people scrutinized low income families based on that part of the study is incorrect. They simply tended to look differently on a spending decision to buy a luxury item based on income. Something the study required them to do.
That said if a friend asked me for on advice on how to spend $200 my answer would depend on their financial position. If they had plenty to spend it doesn't really matter how they spend it. If they have very little I might recommend they spend it on a necessity rather than a luxury. That is not a judgement. It is simply the wiser choice. I suspect this could have been why people answered the way they did.
They also did another version of the study where the thing being bought was a backup camera for a used car, and the study was 2x2: along with the income framing, there was also a framing of convenience vs safety (backup cameras are now required on all new cars since 2018 because they significantly increase safety, especially for pedestrians). Participants still rated the permissibility of a safety feature higher for a rich person than for a poor person, and rated the "convenient" camera for a rich person just as permissible as a safety camera for a poor person.
https://sci-hub.tw/downloads-ii/2020-06-09/9a/10.1073@pnas.2...
If a low income person is spending money on things that are not necessities it might feel like their are miss-using the help they get.
I think it is almost a tribal/low level human reaction to that. It might make you feel like you are being taken advantage of, and the feeling of unfairness might come out.
It that person is low income, but not receiving any support, then another feeling is just sheer jealousy or inadequacy, where this person is dressing better/and has better phone/car than you.
The way it read was that European countries have much more homogenized cultures where people are more openly shamed for having an unhealthy lifestyle; due to the fact that the healthcare costs are more visibly distributed to everyone.
In my limited experience, there is no such shaming going on in Germany. Perhaps people move around more, and drive around less? Perhaps it's related to how food is regulated?
At least in France, children are faced with healthy food since primary shool. Sodas distributors are forbidden up to and including high school. They are also given the opportuinty to do sports (my children, 14 and 16, routinely go to play football with their friends in an open field - in the subrbs of Paris)
Then there is not much tolerence for fat people. Surprisingly, this equals fatness to having a disease.
The company restaurants are very affordable and usually healthy.
One of the things which also help a lot that it is traditional to drink water at meals. This is also what you get at school (and nothing else), and at the office (some would buy something else but this is unusual.
In the U.K. median households are not net contributors, the U.K. tax base is exceedingly small the vast majority of people get much more than they put in.
The average public spending in the UK is around £10,000 most households don’t pay that in income tax and NIC. Even if you take VAT into accounts it’s not enough because the primary expenses such as housing and food and transportation are VAT exempt and other common expenses like utilities have a reduced VAT of 5%.
It seems inherent to a progressive taxation scheme?
The only way I see median households being net contributors is if the taxation and redistribution made money flow from the poorest 50% to the richest 50% (either as cash or as services).
I think a better indicator of how narrow the tax base is would be the percentage of households that are net fiscal contributors.
Perhaps each group has some level of both and we shouldn't generalize to entire strata and population groups too much. Instead maybe we shouldn't be so quick to measure outcomes and just fix the problems. Instead we're using outcomes as a (I would argue) poor measure of how well we're fixing the problems we should be agreeing are problems on their own worth fixing. That's where a lot of the argument/debate gets lost, quibbling over correlations instead of just solving bad things.
Obviously, all of the following is a generalization, but I think it's fairly accurate...
There is/was a pervasive belief in the US that the wealthy pulled themselves up by their bootstraps and that they provide more value to the world. 1980s Wall St boom, Yuppies, etc. Up until perhaps 30 years ago, this might have even been accurate. It's only recently that economic mobility in the US has started to noticeably lag behind similar western nations.
However, starting with Gen-X and perhaps accelerating with Millenials, public opinion has started to shift. Three decades of failed Neo-liberal government (and GOP and Democratic leadership both largely fall into that category) has left the average person disgruntled and seemingly unable to find any bootstraps at all.
This is a ridiculous contrived situation. $100 for a lower Maslow-level need or $200 for a higher level need? Why was giving $200 for the lower level need not an option? Maybe I'm missing the point here, but all this proves is that people are aware of Maslow's hierarchy.
When you create such strange scenarios, expect strange results. If a person struggling financially is servicing their higher level needs before their lower level needs are met, they deserve scrutiny.
It's not how much money you earn-- it's the delta between what you have coming in and what you spend. There are countless stories of low-to-middle income savers who grow to be wealthy through the power of safe, slow investing and compound interest. There are likewise countless stories of high-income individuals who spend all they make and more, ending up broke.
The world needs more clarity. More education. These are bedrock, basic skills, but they are woefully underpresented.
- they complain
- they tend to be jealous of others and judge them. Even sometimes of people who don't even spend as much as themselves
Honestly, most low income families I know of make poor money choices (cigarettes and alcohol being the poorest). I actually believe a big part of poor people are poor because they make bad choices, even though it's a somewhat unpopular opinion.
Now we have a lot more money, so we can afford better goods. When we were less well of, a better internet package, child car seat, electronic goods were less necessary COMPARED TO OTHER FINANCIAL PRIORITIES. We had other things to use that money for, like saving up for a deposit on our first house. if you’re not saying necessary compared to what, you’re not evaluating necessity.
It's why the Tories are so focussed on people who claim benefits: if the public are angry about "scroungers" grabbing the crumbs then they won't be paying attention to the hands which are taking all of the cookies out of the jar.
It's important to be consistent here. The 1% may have a lot of the wealth financially, but they don't have anywhere near 50% of the things that matter to Americans. Homes, cars, food, healthcare, etc. is much much more evenly distributed.
'Material conditions' and wealth aren't directly correlated.
If you want a more meaningful comparison, try investigating personal consumption expenditures for each income group. I'm sure consumption is higher per-capita among the "1%" but I'd be very surprised if the total were over, say, 10% of all PCEs.
The reason this isn't possible is that their wealth doesn't represent actual resources they're claiming. When we say that someone like Jeff Bezos is worth $150 billion dollars, that doesn't mean they're personally using $150 billion dollars worth of land, materials, equipment, people's time, etc that can be redirected into houses or healthcare, whereas someone who buys a $200 TV is making use of something like that amount of actual resources that cannot be used for anything else. Houses and healthcare need land, materials, and lots of workers' time, which then cannot be used for other things, and it fundamentally has to be the people who'd have those other things who ultimately pay for this.
This phrasing of “need” does not seem accurate here, it’s more about priorities
If you don’t have enough to buy food, pay the rent or emergency savings then securing these are the top priorities, doesn’t matter if you are rich or poor
If the government gives SpaceX money with no strings attached, just a vague "expand production facilities", then the government would be right to be upset if SpaceX spent it on keggers.
> Fortunately, we don’t need to know what the money is spent on to measure whether or not the program is working.
I could not disagree more- we absolutely do not have adequate measure of how these programs are working. You are trying to solve a problem upstream of a million factors- we aren't anywhere near measuring outcomes of single decisions.
Which would we be more profitable monitoring and enforcing: who we’re paying out to, or who’s supposed to be paying us?
Generally speaking, this assistance doesn't come as a big lump sum payment, they're usually structured as ongoing payments (or other benefits with a cash value).
Because of the nature of this structure, money must be continually appropriated. The appropriation of resources by the government is something that, at least in democracies, the populace expects to have some input on.
Also, we don’t “give” money to the poor. We buy social peace by preventing them to get desperate enough. Riots and revolutions is the alternative, which is much costlier.
Also, I haven’t counted posts or anything like that, but something along the lines of “that loophole is legal so how dare you criticise them exploiting it?” is quite common.
I also don't care for the idea that bribing the indigent and poor is what I'm doing. Glad to know that people are decoupling from the idea that welfare helps upward mobility.
Helping people who are in a difficult situation is also the right thing to do from a moral point of view. But I am under no illusion that our governments act on morals alone.
I don’t think welfare necessarily helps with upward mobility. On the other hand, it definitely is useful to prevent downward mobility, for example if someone has an accident and can’t do their job anymore, or their employer goes out of business.
> As an example, in Medieval Europe, religion was used as an ideology to support the structure of society. Serfs were told that the people in charge were put there by God and that the way the world worked was the only divinely ordained way it could work. No wonder people who were essentially slaves didn't rise up; they were told God wanted them at the bottom.
> According to Marx, other ideologies like capitalism or liberalism work the same way. They are created, work to help sustain a particular social structure, and ultimately fall out of favor when a new idea comes to force. When this happens, the whole structure of society can change in a hurry as a new ideology fills the void.
Source: https://bigthink.com/culture-religion/slavoj-zizek-ideology
1. Whoever pays the bill calls the tune. Meaning if someone wants charity, the giver is going to want to know that the recipient is going to spend it wisely, otherwise would be disinclined to give.
2. People in financial difficulty often consult with a planner to see how they can adjust their spending habits so they are more effective.
And I would have thought this goes without saying but a person generally cannot financial-plan their way out of poverty. Poverty isn’t from lacking financial discipline it’s from lacking financial resources and opportunities. It’s impossible to fund a savings account when your income is just barely enough to keep a roof over your head and food on the table.
¿Por qué no los dos?
"These last findings have worrying implications when it comes to thinking about charitable donations or how resources are distributed to the less fortunate, write the authors."
> Poverty isn’t from lacking financial discipline it’s from lacking financial resources and opportunities.
My father (Air Force) once told me that the AF had difficulties with the privates living on the base, in that half of them couldn't pay their bills. He was ordered to investigate and fix it. He said the problems were due to how they spent money - they'd spend their paycheck as soon as they got it on steak and booze, then would have to beg, borrow, etc., towards the end if the pay period.
The guy who taught the accounting class I took used to be a used car salesman. He said poorer people invariably took the worst (most expensive) financing option. He'd explain to them over and over why it was bad, and they'd just accuse him of trying to cheat them.
Frontline (I think it was Frontline) ran an episode a few years ago about a company that offered a 401K plan to all its employees, from the janitor to the CEO. They found that the investment percentage returns for the employees varied by their salary - the higher income people got better results from the company plan. This is despite everyone got the same plan, some were better at investment choices.
A colleague of mine at work years ago complained bitterly that the company had him over a barrel, salary-wise, because he could not afford to change jobs because of his bills. He was wearing expensive clothes, had a new car, a new house, etc. His chains were of his own making.
And lastly, the primary buyers of lottery tickets are poor people. Lottery tickets are probably the worst investment out there. (They'd do much better buying fractional shares from a discount broker.)
It's a tragedy that the public school system teaches nothing about accounting, budgeting, how to run a simple business, etc.
> It's a tragedy that the public school system teaches nothing about accounting, budgeting, how to run a simple business, etc.
At least some do. The curriculum at my public high school included an economics course which covered (personal) accounting and budgeting in some detail—both theory and practice. IIRC we also did some simulated investing and spent some time on the basics of running a business.
The lottery is indeed pretty terrible as an investment, but I expect most people who participate see it more as a form of entertainment. It's not my thing, but a certain amount of money budgeted for entertainment and/or hobbies is perfectly reasonable and I'm not going to criticize how that money is spent so long as it makes the spender happy and all the critical expenses are paid.
It’s comforting for those of us who are financially secure to think that we’d be able to use our superior knowledge and business acumen to get out of poverty but I can assure you that comforting thought isn’t based in reality.
And in the exceedingly unlikely event that you are as skilled financially as you believe yourself to be then you should be sharing your knowledge far and wide with those in need.
My father would work with the insolvent privates making a budget for them to get them on a sound basis. They rejected his help 100%.
My accounting teacher would explain how compound interest worked to the car buyers, and they accused him of trying to cheat them.
The Frontline episode shows they were making poor investment decisions.
And lastly, buying lottery tickets doesn't auger financial judgement.
> in the exceedingly unlikely event that you are as skilled financially as you believe yourself to be
At least I've never bought a lottery ticket, only lost pocket change in Vegas, and only buy cars I can pay cash for, so there's that :-)
> you should be sharing your knowledge far and wide with those in need
There are plenty of excellent books on the topic, nothing I can add to that. "The Millionaire Next Door" is a good one if you're interested.