What really drives the poor | Hacker News Reader

What really drives the poor

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I barely made it half-way through the article, it sounded like an United Colors of Benetton add adapted into a Nobel-winning Economics paper.

Just a couple of gems that made me skip it:

""" they may well be more driven by ideas, simply because they have less information about the world outside """

So, supposedly, us, the rich people, live in the "real" world, why them , the poors, live in a world from which they cannot see "outside". Ok, I got it.

""" She would also read to us books on Mother Teresa, on African children, etc """

Mother Teresa and African children in the same sentence, what's this, "feel-good bingo for well-off people"? Also notice the "etc" after "African children", that's a first.

And I could go on and on. In case anyone's curious (and before you start downvotting me), I'm furious about the condescending tone of this article because some time ago, when I was 15-16, my family went from middle-class status to poverty (meaning less per US$ 1 per day per person) in a very short time. I can still remember my mum, an engineer by training, going to the market place early in the morning to sell home-grown parsley. She gave me most of that money in order to pay for private math-lessons given by my high-school math teacher (that was the only way to get into CS school). I still try to help my parents as much as I can, but 10 years later they still rely mostly on subsistence agriculture. But, nevertheless, they're happy with it, that's their life, they have their small piece of land, they garden it, they live under the sun in fresh air and not in a God-forsaken cubicle with artificial lights, and my dad would look very strangely at these "rich", paper-writing people who think he's living in a "different", lesser world.

...the rich people, live in the "real" world, why them , the poors, live in a world from which they cannot see "outside"...lesser world

The value judgments ("real world", "lesser world") are your own invention. They do not exist in the article.

Information deprivation is a real issue for the poor in many places. For example, before mobile phones, farmers were unable to deliver their crops to the location with the highest prices.

I don't understand what you feel is condescending - Banerjee and Duflo are applying standard economics to the poor, mapping their utility functions and designing interventions with desirable policy outcomes. Economists do the same thing to CEOs, smokers/fat people, politicians, home purchasers and many others. Why is economics condescending when applied to the poor?

This is all the more puzzling because their work contributed to significant and practical solutions against poverty (http://www.ted.com/talks/esther_duflo_social_experiments_to_...). There is nothing condescendant in their approach (randomized experiments). On the contrary, it goes against the usual "big plan, big project" idea so common in aid policies.

There are arguments against the approach (Chris Blattman sometimes write on his blog about them). But in any case, they advanced the debate.

I share your disgust. Personally, I have a real problem with academics or journalists who go on a junket to a third world country and act like the people around them are animals in some zoo.

Look at any western family for a similar period of time and no doubt you will spot all sorts of bizarre dysfunctions or irrational behavior, regardless of wealth.

People are people.

Here's an instructive contrast to the poverty safari: http://www.getrichslowly.org/blog/2011/03/01/from-the-rich-t...

And GRS comments are worth reading.

I disagree. These people are academics who want to help the poor. They go in and try to figure out what could help them and then write about it to help policy makers. It would be nice if policy makers could just figure out what works and do it, but that isn't working, so someone needs to run experiments. What would you prefer they did instead?

I do not understand your point. Yes, there's fucked up situations in every economic status, but if we follow your argument to its roots, that each level of economic welfare has the same level of utility to its members, you're arguing that healthcare, decent food, and basic shelter are without value.

You've said your parents are perfectly fine, and ergo, no-one else is worse off.

"that was the only way to get into CS school"

Couldn't you just have gone into a community college and move on from there. It is a lot cheaper and lot of the professors are actually pretty good. If your grades are good you should be able to transfer into a decent 4 year college.

If his family is living on USD$1 per day, most likely he's not from a country that provides such services.

Mike Konczal:

Here’s the normal story. Picture you are in a room with 10 people. Each of them has a slice of cake. How much you are willing to pay for a slice of the cake is the ‘marginal utility’ of having it, and the more cake you have the less any more cake is worth to you. You’d be willing to pay a $1 for the first slice of cake, but you’d only be will to pay 90 cents for the second slice. You’d only be willing to pay 10 cents for the 9th slice, and a penny for the 10th slice. Eating the 10th slice of cake in that room would probably make you sick, hence you want it a lot less than the first slice, which is delicious. That’s declining marginal utility.

Now picture you are in a room with 10 people screaming. You hate it when people scream, and you can pay a person to get them to stop screaming. Would you pay in a similar way to the cake example? Would you pay a $1 to get the first person to stop screaming, and a penny for the 10th person to stop screaming?

No. Getting one person to stop screaming would make very little difference in how much you dislike being in the room. Modern psychology tells us you might not even notice it. You’d probably only pay a penny to get that first guy to stop screaming. However getting the second guy to stop screaming might be worth 10 cents. And the last guy, the difference between some screaming and no screaming, might be worth the full dollar to you. The more quiet it got, the more a marginal difference in how quiet it is would be worth to you. There’s increasing returns to this good; the 10th guy not screaming is worth more than the first guy not screaming, which is the exact opposite dynamic of the 10th cake being less delicious than the first.

-- http://rortybomb.wordpress.com/2009/12/03/persistence-of-pov...

It is a commonly used argument that the lives of poor people are very hard and unpleasant and that dealing with the hardships sucks out all their energy and brings down their spirits so they can't take advantage of all the opportunities that middle-class people have to improve their situation.

The problem I see with this reasoning is that if you consider the entire range of standards of living which people had throughout history and geography, with maybe middle-age European peasants on one end and say Larry Ellison on the other, then on this scale, the standard of living of contemporary American poor is very close to the standard of living of the reasonably well off. From the point of view say anyone in communist Poland, as well as at least a billion people living today, what you call poverty would seem like mind-blowing opulence. On the other hand, I rather suspect that for anyone featured in The Real Housewives of New York, the lot of doctors and software engineers and struggling janitors alike must seem like horrifying wage slavery.

So, to claim that there exists a standard of living threshold, and that below this threshold life is objectively hard, whereas above this threshold it's easy, and that it so happens that the line lies between the poor and the middle class in contemporary America, you have to believe that we're looking at a very unique time and place. Of all the possible values that the threshold could potentially have, what are the odds that it would actually fall within this narrow range you're looking at? A hundred or maybe even fifty years ago in the US (and much more recently in many countries around the world), almost everyone's standard of living was way below that of contemporary poor. Do you think all these people were equally as incapacitated by the harshness of their lives, unable to make rational decisions and work to improve their lives? If the civilization does not collapse for one reason or another, chances are in fifty years time even the poor will have the standard of living as good as wealthy people have now. Do you think the poor of the future will not suffer from this ten-people-in-a-room-screaming effect?

Not only that, but you also need to ignore most of the world. Even traders, programmers and executives living in Bandra (a part of Mumbai more expensive than Manhattan) tend to have lifestyles worse than many US poor people. I.e., cramped apartments in poor condition, long commutes and very few luxuries.

Given this, the Karelis/bee sting/screaming guy theory would predict Mumbai's corporate lawyers would behave similarly to the US poor - never saving for the future, blowing their money on crappy food and booze rather than education, etc.

Strangely, that doesn't happen.

From Charles Karelis. Surely, as you point out, there is no absolute standard of poverty across different times and places. Nevertheless, the suffering of poor Americans today, some of whose objective circumstances would have qualified them for the middle class back in the U.S. of 1930, is real suffering, and seems to call for a response. In addition, I think it lowers the marginal utility of small improvements in their consumption. The conundrum is, that in a (we hope) super-prosperous future America, there will be poor people (by the standards of that time), who are objectively better off than middle class Americans today, and it is (for many people at least) hard to care a great deal about their plight. So do we absolutize contemporary intuitions about poverty and say these future people won't be "really" poor, or do we say they will be really poor but that that doesn't impose a moral obligation on us today, e.g. to conserve so they will be less "poor"? Neither answer feels totally right.

It's true that people have a sort of baseline happiness, and that they tend to drift back to that level of happiness when left in a stable situation. So, it's true that being poor doesn't automatically make you unhappy. But let's be honest: being poor doesn't help.

I also object to the relative definition of poverty, that if you have less than those surrounding you, you're poor. I've always felt that an objective definition is much more useful. Suppose we objectively define "the poor" as everyone not having access to basic human rights? Can you honestly say there aren't many people that fall into that category even today? To me that's a category worth reducing to zero.

I wish the proponents of this theory would carry it to it's logical conclusion: we should tax the poor more heavily than the middle class. Sure, we might be imposing one extra screaming guy on them. But so what? The harm to them is minimal, only $0.01 of diminished utility.

This is the logical conclusion to Karelis' bee sting theory of poverty. Yet neither he nor any of his proponents are willing to follow their theory to it's logical conclusions. I wonder why?

From Charles Karelis. This objection is treated in my book. I show that it would take only a small transfer from the richest people in the U.S. to the poorest to relieve their poverty entirely, which would have the greatest positive impact on aggregate well-being of all the options. The conventional wisdom, that the poorest people have the greatest marginal utility for a dollar, salves the conscience of the middle class by implying that small transfers can make a big positive impact on the well-being of the poorest people. The inconvenient truth is that only sizable transfers can make a significant difference to the well-being of the poorest people.

Maybe it's treated in your book, but your post here is dodging the issue. It's also internally contradictory:

I show that it would take only a small transfer...

The inconvenient truth is that only sizable transfers can make a significant difference...

So instead of dodging the issue, could you answer this question: if the small or large wealth transfers you describe are politically unfeasible, would you favor taxing the poor as a second best alternative? If not, why not?

From Charles Karelis. To begin with, I don't think the kinds of income transfers from rich to poor that would significantly raise aggregate utility from consumption are in fact politically unfeasible, so I am, as you appreciate, reluctant to get into this what-if area.

That said, taxing the poor and transferring the money to the middle class let alone to the rich would carry big negatives according to my approach. We ought to care not only about maximizing aggregate satisfaction from consumption, but about autonomy, including maintaining people's incentives to acquire what they want to consume through their own efforts. Making poor people even poorer will (on my hypothesis) lower (not raise) the marginal utility of their consumption and thereby undermine (not strengthen) their motivation for self-help. If someone with six bee-stings has enough salve to relieve five and the state takes that salve away, this action will probably reduce rather than increase the effort the person will make to get the salve needed to relieve a single sting, because the salve needed to relieve a single sting will make less difference now that the other salve has been confiscated.

A fuller answer to your objection than I can give here--including a discussion of the roots of the moral intuition behind your question--is offered in the last chapter of Persistence of Poverty.

This is a brilliant example, but even after reading the article, I feel like it needs a stronger connection to the problems of poverty.

So, anyway, Guys, the situation where you're in a room where people are screaming is poverty, but its only one moment of poverty. In poverty, you go into that room over and over and over again. You can't afford to keep your whole reality quiet, but you can buy a moment or two of peace, by paying more money than you can rightly afford to spend, if you've a longterm goal to support. You may go into debt for a TV to relieve the oppresive boredome, or spend change you shooldn't on a sweet, to eat something nice.

Those breif respites are massively appealing, even though they don't last, and very possibly set you back, because remember, you're living in a situation where everyone is always screaming. A moment's peace is worth not making it out.

If you tie in the theory of addiction this makes even more sense; addictive substances provide some temporary escape or pleasure but you quickly feel as bad as before or maybe even worse, which makes the next "escape" even more compelling.

The point is that solving one problem feels attainable, but having dozens of problems just makes you feel hopeless and resigned.

If you change the good to be "five guys stop screaming" or "ten guys ..." then then MU may be once again diminishing.

A common example of this is given with eggs. You may only like omelets, which take three eggs apiece. So, a third egg is worth more to you than the first two. But if the good is considered as "three eggs", a different good entirely, the LoDMU holds.

From Charles Karelis. Of possible interest, the "lumpy good" rebuttal of my hypothesis is treated in detail in my book. In essence, while there are obviously goods such that sub-threshold quantities have no utility whatever (fewer than four tires or two shoes, perhaps), most "reliever goods" are not examples of that. For instance, if I have six dents in my car, I prefer the hammering out of the last unfixed dent to the hammering out of the first unfixed dent, the one that leaves five more to go, BUT I prefer the hammering out of that first dent to the hammering out of none.There is more to it, and lots of examples in the book, but that's the heart of the matter, in my view.

They finally hit on the real story halfway down:

"“Generally, it is clear that things that make life less boring are a priority for the poor,” they write in their new book."

Yes, the poor spend their money unwisely when they have extra. That's the real reason.

If a rich person finds themselves down on their luck, they knuckle down and work really hard to get into a situation where they can afford to buy luxuries.

It isn't about lack of opportunity. It's about wise choices.

I can't find the story now, but there was a fairly wealthy man who decided to give all that up and see if poor people could pull themselves up. He stowed his credit cards and cash and went to live on the street. He started at day-labor sites until his work ethic paid off and he got a steady job from someone. He had goals like an apartment, a car, etc, with a certain amount of cash in the bank. He gave himself 1 year. At 9 months, he had completed his goal, and a family member fell ill. He quite before the 1 year, but he had already completed his goals and was on his way to a good life.

In other words, he spent his money wisely and was able to vastly improve his lifestyle in less than a year. But most poor people say it's impossible. Are they not trying? Are they trying, but making too many bad decisions?

Hi. I'd like to see if I can offer you some personal insight about the plausibility of extrapolating evidence from the scenarios you describe into broader policy judgments.

Currently I'm in a Ph.D. program in a field I find extremely interesting, and am quite happy with my position relative to my goals and background. A few years ago, however, I was living in a one room apartment above an auto body shop, sharing a kitchen and bathroom with several tenants in various stages of socioeconomic distress (viz. social service dependence, street-level prostitution, drug addiction, &c.). My life was generally unpleasant. I was working as a day labourer in construction and drove my four hour daily commute in perpetual terror of being pulled over while driving on a suspended license (for failing to pay an old ticket that was sent to the wrong address). My "roommates" repeatedly stole my food and occasionally broke into my room to steal loose cash. I had no health insurance. When I bit the bullet and drove myself to the ER after receiving an inguinal hernia on the job (while carrying literal tons of demo debris down three flights of stairs in a Baltimore rowhouse in July), I was stuck with an 800 dollar medical bill that plagues my credit to this day. When my parked car was struck in a drug-related accident (remember I didn't live in the best part of town), the city ran my plates and booted my car, soon after which it was towed and I had to find another job. My life was brimming with problems, the solution to any which required money that I didn't have. Moreover, the concurrence of all of these problems seemed to frustrate action on any one of them: how do I work if I don't have a car? How do I recover and fix my car if I don't have any money? How do I find work if I can't lift heavy objects without aggravating the hernia? How do I treat the hernia without health insurance, which I don't have even if I had a job? I am not relating all of this in order to garner sympathy, but rather to explain the kinds of problems I encountered, and their apparent magnitude relative to my means then.

One aspect of poverty which is probably less salient to those not acquainted with it is that it alters parts of your personality that you previously considered stable. While I had always considered myself a relatively even and temperate guy, friends who saw me then would tell me that I seemed constantly angry and brooding. Things that I could have taken in stride before were usually occasions for despair.

Even my tastes changed. Whereas I had previously considered soda and individually wrapped danishes disgusting, I found I could hardly help myself in 7-11s on my way home from construction sites. I used to enjoy cooking, but could barely manage to throw a can of beans a 25 cent box of mac and artificial cheese when I got home. (I shopped at a discount off-brand grocery store full of security cameras, screaming children and expired fruit.)

There is a famous quote from Orwell's _Road to Wigan Pier_ which I had never understood until that point in my life:

"The basis of their diet, therefore, is white bread and margarine, corned beef, sugared tea and potatoes -- an appalling diet. Would it not be better if they spent more money on wholesome things like oranges and wholemeal bread or if they even, like the writer of the letter to the New Statesman, saved on fuel and ate their carrots raw? Yes, it would, but the point is that no ordinary human being is ever going to do such a thing. The ordinary human being would sooner starve than live on brown bread and raw carrots. And the peculiar evil is this, that the less money you have, the less inclined you feel to spend it on wholesome food. A millionaire may enjoy breakfasting off orange juice and Ryvita biscuits; an unemployed man doesn't.… When you are unemployed … you don't want to eat dull wholesome food. You want something a little bit "tasty." There is always some cheaply pleasant thing to tempt you."

This is just about one of the most accurate and robust observations you can make about the psychology of poverty.

So that's why I'm no longer terribly impressed about the exhortations of the rich to "knuckle down and work really hard" in order to bootstrap oneself into economic security and material comfort. My situation wasn't nearly as destitute as that of a lot of people in this country alone, and when I came home from work I wanted--very badly--to blow money I didn't have on cheap comforts and postpone thoughts of tomorrow.

Secondly, it's important to acknowledge that even while living with junkies and hauling debris for $10/hr, I was much better off than many in my situation, for reasons that make me much less impressed with riches to rags to riches stories such as you describe. Let me explain.

When I first began applying for construction jobs, I was objectively under-qualified in comparison to almost any other applicant, of which there were many since construction jobs were becoming scarce around 2008. I remember one interview where I flatly failed the ``technical portion" and had over-estimated my competence to boot, demonstrating that I didn't even know what I didn't know. I was nevertheless hired because I "talked educated" (verbatim quote, I swear to god), which I assume meant either that I was white, or didn't come from the working class backgrounds of south Baltimore of the other applicants. About three months after my first day labor gig (which I only found because I had internet access and at-the-time reliable private transportation), I was running a crew under my boss. I was offered this not because I was an objectively knowledgeable and competent carpenter, but because 1) I had learned serviceable Spanish in an enrichment program as a kid, and 2) the college-educated owner felt that I was "more like him" than the Salvadoran guys who actually knew what they were doing.

I was also able to pull in some lucrative (to me) side gigs tutoring math and Latin in-home (again, internet and car), which ultimately allowed me to get out of construction and start teaching rich kids full time. That obviously would not ever have happened if I were a day labourer from west Baltimore, rather than a middle-class kid from the county who happened to be very down on his luck.

The differences that separated me from the people I met during that period were vast. If I had found myself in those circumstances without the advantages of white skin, middle-class education and secret-handshakes, and freedom from further complications like care-giving responsibilities (as you somehow manage to mention and dismiss the significance of), I'm not sure that things would have turned out the same way. Really, I'm not so sure that things were guaranteed to turn out the way they did for me at all.

>"The basis of their diet, therefore, is white bread and margarine, corned beef, sugared tea and potatoes -- an appalling diet. Would it not be better if they spent more money on wholesome things like oranges and wholemeal bread or if they even, like the writer of the letter to the New Statesman, saved on fuel and ate their carrots raw? Yes, it would, but the point is that no ordinary human being is ever going to do such a thing. The ordinary human being would sooner starve than live on brown bread and raw carrots. And the peculiar evil is this, that the less money you have, the less inclined you feel to spend it on wholesome food. A millionaire may enjoy breakfasting off orange juice and Ryvita biscuits; an unemployed man doesn't.… When you are unemployed … you don't want to eat dull wholesome food. You want something a little bit "tasty." There is always some cheaply pleasant thing to tempt you."

So, calories, or not enough of them. Cooked food has more net calories than uncooked food. It's probably the same reason that, nowadays, poor people like to watch TV: it shuts your brain (20-30% of your metabolism) down harder than falling asleep. It's a decision that doesn't make any sense until you think of it calorically.

It's also not cheaper to buy brown bread and raw carrots. It's less expensive to buy the "tasty" higher-sodium canned foods. Eating healthy is not inexpensive. Add to that that raw foods in quantity go bad sooner than cheap canned items and the cost of raw and healthy give up because of the extra waste.

As for entertainment, the more wealthy enjoying turning off their brains as well. But they spend money on going to live performances at playhouses or symphonies. TV is comparatively cheap. Also with TV, you have more immediate choices (especially with something like Netflix): to watch more cerebral material or dumbed-down garbage.

> It's also not cheaper to buy brown bread and raw carrots. It's less expensive to buy the "tasty" higher-sodium canned foods. Eating healthy is not inexpensive.

Also, you have to factor in how much it costs in terms of time to prepare a meal from fresh, more-or-less whole ingredients compared to throwing something prepared into the microwave or onto the stove. If you have the time to cook after your job, wouldn't you be tempted to get a second job instead of cooking, if only to make your constant, grinding debt go away faster?

Then you get into 'cultural poverty', where someone flatly doesn't know how to cook because their parents never cooked and only ate at cheap restaurants (which isn't cheap) and used prepared food. You might say 'oh, just get a cookbook', but I know first-hand how much implied knowledge you have to have to get much out of a cookbook. Implied knowledge has to come from somewhere; if you didn't get it from your parents, you likely don't have it.

why do you need to invoke calories? cooked food is tastier than raw food (okay, that could be an evolutionary bribe to cook your food, but i doubt it given the time scales involved). likewise, tv is a cheap form of entertainment, and requires very little energy to watch (energy that might not be left, after a hard day, for more involved pursuits).

Cooked food is tastier than raw food eh? Sounds like the mother of all generalizations....

You've obviously never tried my grandmother's baked lettuce.

Very good comment with some really good observations, thanks!

Thanks.

Out of interest, what are you doing a Ph.D. in?

Computational biology. I had studied math and philosophy as an undergrad (after I finally got my stuff together) and had become interested in mathematical approaches to biological problems.

>>> Are they not trying? Are they trying, but making too many bad decisions? <<<

I think that the answer is a combination of bad memes and human nature. I ask almost every auto-rickshaw driver whose vehicle I sit in about their income and how do they live. I then listen to them and offer them suggestions that might help them out. It turns out that things just aren't that simple.

From the article;

>>> Indeed, they may well be more driven by ideas, simply because they have less information about the world outside and, therefore, feel a greater need to use their collective imagination to fill the gaps in their knowledge <<<

It's crucial to understand that these people haven't seen any examples to the contrary. They just don't have access to them. They live in societies that are highly stratified and tend to learn, quickly, to obey the hierarchy when it comes to outsiders, because if they "step out of bounds" the consequences can be ugly. So, they simply don't have access to people with good memes, and their minds are shaped by that narrow microcosm. Neither do they have the means to understand how to attain something better, because for them that's the only existence they know and it is what it is.

This might be maddeningly annoying for you and me, but think about how your upbringing and the social circles you run in have shaped you to thrive in your environment. How can someone use those metrics and ideas to eke out success in the hierarchy of a remote african tribe? (I'm talking about concrete, implementable ideas not abstract ones)Well, you say that you'll learn them, but if no one is around and you don't have the means to teach yourself said memes how will you ever learn? Yes, you'll scrape on by, but you just won't thrive.

They just don't know any better. Moreover, they don't even know that can be changed.

Think about it.

Here's what I think is the crucial ingredient;

>>> They don’t just need nutrition that will keep them alive longer—they also need a reason to want to live longer. Being healthier by denying yourself the little pleasures you can afford, a cup of tea or a bowl of steaming rice, makes little sense if you have nothing else to look forward to, <<<

That man had something to look forward to. They don't.

For them survival is ugly and fraught with absolutely no meaning and it's been that way their entire lives. Anyone would ponder suicide in their environment at least once. This helps them to keep sane and escape the drudgery, which is a bit like the rich and the middle class taking extravagant holidays, or going out to get drunk etc. It's something to look forward to, but for us we have other options that give us the same satisfaction. They don't. Partly because they can't visualise them, but mostly because of the daily grind to survive.

So, don't judge them. They are real people just like you and me.

At 9 months, he had completed his goal, and a family member fell ill.

Wait, what was this? He got faced with a situation he couldn't handle with wise decision-making, saving, and elbow grease and had to tap into his riches to get himself out?

You know, the real problem is that he got a nice apartment and car. If he lived in a shack and walked everywhere, I bet he'd have been able to help his family member out. Was he just not trying, or was he trying and making bad decisions?

This is an excellent point: Unexpected and unavoidable costs are precisely the sort of problem that have repeatedly been shown to thwart the accumulation of wealth among the poor.

Ironically, the referenced book (http://en.wikipedia.org/wiki/Scratch_Beginnings) was specifically written to rebut Barbara Ehrenreich's first person book on poverty, Nickel and Dimed. A major theme of that book is the debilitating impact of catastrophic costs, health care in particular, on the poor. "Without health insurance you risk a small cut becoming infected because you can afford neither a visit to the doctor nor antibiotics... [an] impacted wisdom tooth requir[ed] frantic calls to find a free dental clinic" was the NYTimes summary (http://www.nytimes.com/books/01/05/13/reviews/010513.13galla...)

So the book referenced by the grandparent comment was derailed exactly as predicted in the very book it was trying to rebut.

It is not only the poor who like "things that make life less boring." We all do, and I'd argue we all need these things for sanity. That's why I don't beat myself up too hard for occasionally wasting time doing things like, say, posting comments on Hackers News.

The only reason he had to help his relative when they fell ill is because although he was playing poor, he technically still had the money. Refusing to help the family member for the sake of making a point would be highly unethical.

Had he actually been that poor (only 5k in his name at the time), then he would have been under no real obligation to drop everything and support that family member.

If you are right, and money is "the only reason he had to help his relative," that would actually prove his experiment failed -- that for all his pluck, his savings of $5,000 were not sufficient to help a sick relative. The fact that his relatives tend to be better off than those of the genuine poor would only reinforce this.

As it happens, his experiment might not actually be a failure, because what you're saying seems dubious -- people help sick relatives for all kinds of reasons beyond possessing money. If he quit the experiment to contribute love or support, for example, that does not conclusively prove it wrong (although it does raise the issue that it would be much harder for a poor person to contribute such support to a sick relative -- time is not free and quitting a job has more dire consequences when you're poor).

In absence of money, he would be unable to help the relative. The reason why he helped is because it's human to do so. The reason why that was an option is because he had money.

I see. So you're saying if he did really only have 5k to his name, that family member wouldn't have gotten any help from him and could have died. But hey, he'd have been in the right though, wouldn't he have? That's what's important after all. The family member's concerns are only secondary.

He certainly wouldn't be in the wrong. 5k won't get you anything as far as medical care in the US goes. If he were unable to do anything, how could he possibly be in the wrong for not doing anything?

He could have continued to pretend like he only had 5k, and like someone with only that much money been unable to do a thing, but then he would be wrong. What he did was not, and what anyone else would have had to do wouldn't be either.

Agreed. Dead family members are ok as long as you can't be blamed for their deaths.

Clearly you are being purposely dense.

"In other words, he spent his money wisely and was able to vastly improve his lifestyle in less than a year."

He also had the privilege of a good education and good upbringing. You are making way too many assumptions to think that all it takes is wisdom and good decisions. What we can think and do is strongly shaped by our environment, and getting yourself out of poverty is harder than you think.

One year is nothing. From experience I'd say that being poor is not hard for a year. It's the 3rd, 4th, 7th year, ... when your clothes all have holes that you've no energy to repair, your home starts to fall in to disrepair, you've been wearing leaky shoes for over a year, there appears to be no hope of ending your situation ...

You have entirely and completely missed the point. The point is that they are buying things that make their lives better. They aren't buying things that make themselves healthier, no, but they're buying things that make their lives bearable, and you're making the assumption that that's an 'unwise' choice. Their preferences aren't in the line of work hard for nine months, they're on doing well enough to have a bearable life.

And, anyhow, your story is about a single, healthy man, with a very clearly defined plan and an escape valve, not a bunch of trapped mothers trying to raise children.

A single, healthy man in a developed economy.

Who didn't even finish his own experiment. He ejected after 9 months when shit got real.

The poor don't have an eject button. This is the whole fucking problem.

A single, healthy, white man with a college education (the credentials from which he did not use, but the education is itself significant) in a developed economy who could not last more than 9 months.

It may not be quite that easy though. This person would already have prior knowledge on making good decisions whereas the poor (probably) don't.

That being said, here's a book with a similar premise and a different outcome: http://www.amazon.com/Nickel-Dimed-Not-Getting-America/dp/08...

The author finds herself barely able to make it. Grant it, she approaches the situation rather pessimistically, the book still paints a decent picture as to why so many people are struggling.

Tell me. Is defending your betters on a internet form likely to make you more rich? Are you making a good choice by wasting time on hacker news? or one that is likely to leave you in your current financial position?

From your comment history, I'd guess you are no more wealthy than I am, and much like me, you are not significantly more wealthy than your parents. Of course, this is just a guess based on little information, but the self-made rich people I know? they do rather than talking about doing.

It's actually fairly rare for people to change from their parent's class. Heck, most of the 'super rich' success stories are people who come from rich parents becoming super rich; I mean, I don't want to disparage Bill Gates achievements; but you need to recognize that he started with parents who could afford to send him to Harvard.

I mean, I think most people agree that a conscientious and hard working person can better their economic situation, but I don't think it's as cut and dried as you seem to think it is. First, going from middle class to upper class requires very different skills than going from abject poverty to the low end of working class and from there to middle class.

It's interesting, 'cause I've lived most of my life as an upper middle class person, but for the last few years I've been living on a working-class salary, as I'm trying to get my business of the ground. It's very different, and I can see how someone who wasn't particularly punctual about, saying, paying bills or tickets on time (something that doesn't matter at all as a sysadmin with a six figure salary) could easily get over their head on a working-class salary. Really, I'd be having a very hard time of it if I didn't have the business with it's reasonably large cashflow to give me a 'bonus' when I get into a really tight spot.

Regarding Gates: A lot of people can afford to go to Harvard given financial aid. I think the more relevant point to his story is that his parents were so wealthy they could send him to an elite private _middle and high school,_ where he had access to a computer.

yeah, my understanding was that his parents were pretty wealthy; beyond the minimum to give their kids an elite education. My point is just that Gates turned a small fortune in to a large fortune. And while that was certainly a feat; it is rather different from starting middle or even working class and building up even a small fortune.

They say the first million is the hardest. Considering that is my current challenge, that's how I feel. But, I bet that if I didn't already have the skills to land a $100K+/year job, maybe I'd feel that the first hundred grand was the hardest. If I lived in Africa or India, maybe just saving a few hundred bucks would be difficult. Saving even just a year's salary when you aren't making a lot more than what you need to buy minimum food and shelter is a difficult task.

I think that's quite funny. If he really was poor, that unexpected family member becoming ill would probably have knocked him back financially / meant he had to take time off work to care for them whatever.

Sudden unforseen and expensive illness in the family isn't really all that common though. Furthermore, it is only really a problem in countries such as the US which don't have affordable healthcare for the poor.

There certainly are many people in this world that are poor because of a series of very unfortunate incidences that put them at a disadvantage. However, I think it's pretty clear that despite how common that may be, it cannot begin to explain the majority of poverty in "1st world" societies.

No, sudden unforeseen and expensive illnesses aren't that common. Sudden costs are. Costs don't even need to be unforseen, they just have to be more than you can deal with on a timescale.

Most very poor people are not young, athletic, with good physical and mental health, no dependents, and the background security of being able to leave their circumstances immediately any time they want.

The book is "Scratch Beginnings" by Adam Shepard, btw.

I agree. The book is a poor analogy of actually being poor. Let's put aside the money reserve for a moment. From wiki, it looks as if he put aside anything that would help him, such as his college education. Ok. But poor people also have things that weigh them down, things that hurt them, for example, dependents (children, family), addictions, debt, and what you mentioned.

Chicken and egg problem?

From a statistics point of view, your argument seems to be flawed. It's very unlikely for someone who is born poor to end up rich, no matter how wise their choices are.

From the wikipedia page on "Economic Mobility" [1]: "Children previously from lower-income families had only a 1% chance of having an income that ranks in the top 5%"

I can't imagine that making perfect decisions for one's entire life would change those odds too much. If you're born poor, you're probably going to stay poor. It seems that the decision for most poor people is "Do you want to struggle and deny yourself for a 1% chance at being rich, or do you just want to enjoy yourself while you're here?"

It's always made sense to me that poor people spend most of their money on making life less boring. It's not like they had bright futures lined up but they threw it all away for booze. Most of them were born screwed and had sense enough to see it.

[1] http://www.americanprogress.org/issues/2006/04/Hertz_Mobilit...

"Children previously from lower-income families had only a 1% chance of having an income that ranks in the top 5%"

That phrase is almost devoid of content. In the extreme, both that statistic and

   "Children previously from lower-income families had a
    90% chance of having an income that ranks in the top
    25%"

could be true. I would be surprised if that was the case, but I couldn't find the data to proof that in that link you posted, either. What I would like to see is the distribution of upward/downward mobility.

from wikipedia[1]: Moving between quintiles is more frequent in the middle quintiles (2-4) than in the lowest and highest quintiles. Of those in one of the quintiles 2-4 in 1996, approximately 35% stayed in the same quintile; and approximately 22% went up one quintile or down one quintile (moves of more than one quintile are rarer). However, 42% of children born in the bottom quintile are most likely to stay there, and another 42% move up to the second and middle quintile[3]. On the opposite end of the spectrum, 39% of those who were born into the top quintile as children in 1968 are likely to stay there, and 23% end up in the fourth quintile[3]. Children previously from lower-income families had only a 1% chance of having an income that ranks in the top 5%[4]. On the other hand, the children of wealthy families have a 22% chance of reaching the top 5%[4].

[1]http://en.wikipedia.org/wiki/Economic_mobility#United_States

That story ignores so many of the issues related to growing up in poverty. If poverty is all you've ever been around, it's never as simple as just "working hard and making good decisions".

Andrew Carnegie would disagree. He didn't start out rich, but he ended up (very) rich.

Not everyone is Andrew Carnegie. Perhaps other mechanisms to reduce poverty will be more effective.

Capitalism reduced the poverty of Singapore, South Korea, Vietnam, Chile, and Estonia (to name a few).

What country was built from foreign aid?

Perhaps changing the subject from Andrew Carnegie will express my discomfort with the implicit syllogism more effectively.

Cory Doctorow gives his books away for free. Cory Doctorow has achieved great financial and literary success. Therefore, everyone who gives books away for free will achieve great financial and literary success.

I don't really buy that argument (you could take any property they shared, no matter how irrelevant, and make the same argument, i.e. they both had two feet): Cory Doctorow makes money because he has spent a large amount of time to create an audience, because he writes interesting books and because he is constantly on the lookout for new ways to monitize them.

And yeah, most people who pull that of would properly experience success.

And yeah, most people who pull that of would properly experience success.

Agreed, but too few of the discussions I've encountered leave out that part and focus on the "Why don't you just give your books away for free?"

You could argue that most of Western Europe and indeed Japan was only able to recover as quickly from WW2 because of aid from the United States (e.g. the Marshall Plan in Europe) - and both areas seem to have done quite well.

Isn't it also arguable that present day countries that started as colonies also benefited from a degree of aid/investment from the countries doing the colonizing? Setting up colonies was an expensive and risky business, indeed the country I am in was forced to unite with our larger and richer neighbor to the south largely because of a failed attempt to establish such colonies:

http://www.bbc.co.uk/history/british/civil_war_revolution/sc...

The Western European nations were developed before the Marshall Plan. The Plan did not build the countries in the first place.

Re: colonialism, our fundamental difference may be that you may not believe wealth can be created (or destroyed), only redistributed. Is that a fair guess? No blame intended, the distinction between money (zero sum) and wealth (nonzero sum) is not trivial.

South Korea was build heavily from foreign aid, both military and otherwise. How about Japan and the Marshall plan?

Japan was quite rich before the war. They were powerful enough to take on the US in the sea and air, and China on the ground, at once; and bounced back after the bombs stopped falling.

Estonia wasn't really poverty-stricken.

>It isn't about lack of opportunity. It's about wise choices.

...and knowing wise choices exist. If you're brought up to just get by and the people all around you have the same mentality knowing that there's a superior mentality requires looking outside the box. This is where mentorship and real education (beyond education that conditions you to just show up on time) are valuable.

Agree. Dow chemical had a program where they would employ people from welfare families. They had to explain to them telephones, teach them about being on time, teach them to file (sometimes the alphabet as well), etc. Most came in for a week and left. Working was such a foreign concept to them, their families, and community that it did not make any sense to them. It is similar to the fish in water analogy or a reverse of 'if you want to be self-made rich hang out with self-made rich people'

Do you have a link or a keyword to look for? thanks.

Dow has changed a lot since then, and I am unsure if they have continued the program. This was at their Michigan plant in the 80s.

Now it looks like they have moved more to diversity, cultural, disability, and gender issues: http://www.dow.com/diversity/beliefs/outreach.htm

For one thing, it makes a lot of difference whether or not you have a safety net when you're on a tightrope.

I'm not sure that analogy holds. I'll accept that in the literal case it does, since I can easily see how being nervous would effect physical coordination while walking on a tightrope, but I don't see how being nervous of failure would render you unable to work hard unskilled labor jobs or save money. On the contrary, I expect it would help by providing real motivation.

I think what I meant was that being nervous about falling down most likely means you'll be walking a lot slower than the person with the safety net. If you only have what you need to survive, you're far less likely to take any chances with it.

Working hard, despite much propaganda to the contrary, isn't a solution. I'm not even sure what it means in this context. Being poor is very hard work in and of itself, as taking care of the basic necessities of life takes a lot more time and effort when you can't use the expensive short cuts that middle-class people take for granted.

When you're poor, everything takes longer, everything associated with money causes anxiety, the social stigma can prevent you from making useful connections, healthcare becomes more difficult to access, you have to spend time fixing or working around broken items, if you have a job you likely work longer and/or more uncomfortable hours, if you don't have a job there's the added stress and stigma from that, many government programs in reality become traps due to their desire to control poor people's lives, you cannot afford and/or do not have the time or energy left to make healthy food, etc. There are many, many other factors, many of which can be trivially seen to magnify other factors.

Poor people have a different mindset, and I suspect that many of them have a feeling of hopelessness (justified or not, I don't know). I suppose that it could be really easy to improve your situation in a year but then saying that it is possible doesn't actually change anything. If it is truly easy to change your situation, the mindset (which then is the main cause of continual poverty) is not changed, that is. I feel that that would be blaming the poor for their problems while not actually taking steps to change their mindset. Perhaps we cannot change everyone's mindset, but we should take steps to change some people's (?), making a difference in their lives (and not just "it's your fault").

The fact that he could give up without consequence when his family member got ill is significant. If he was actually poor, caring for his family member could have put him back at square one again.

[Edit: oops, someone else beat me to it]

here's the story: http://en.wikipedia.org/wiki/Scratch_Beginnings

"At 9 months, he had completed his goal, and a family member fell ill. He quite before the 1 year, but he had already completed his goals and was on his way to a good life."

Unexpected costs, such as medical costs, are one of the biggest hurdles to digging one's self out of poverty. Poor people don't access to insurance to help smooth out their costs. Of course, bad decisions play a part as well, but its not as easy as this guy's experiment made it seem to get out of poverty.

It is really as simple as noting the robust heritability of cognitive traits (see "The Blank Slate") and the strong correlation between intelligence, conscientiousness, and wealth.

But surprisingly, many highly intelligent people (including many in this very thread) will actually deny that they have any natural cognitive advantages over the poor. They will readily admit they are smarter than those "idiots" who can't code Fizzbuzz, or the ones who comment at Youtube, or the software engineers who're still doing Cobol, or the tea partiers...but they won't admit they are naturally smarter than the average poor person.

In fact, they are actually more ready to characterize themselves (or others) as oppressors of some sort than to admit that they are gifted.

(see "The Blank Slate")

The book The Blank Slate was published almost a decade ago

http://www.amazon.com/Blank-Slate-Modern-Denial-Nature/dp/06...

and research has moved on. The chapter in The Blank Slate that has the most to do with heritability of cognitive abilities is largely based, as author Steven Pinker acknowledges in his bibliographic references, on the work of Eric Turkheimer. But Turkheimer has revised his point of view in the last decade, and if Pinker is still reading Turkheimer's writings, Pinker should too. I'll recommend here two articles from Turkheimer's faculty web page

http://people.virginia.edu/~ent3c/vita1_turkheimer.htm

that more readers of Pinker's book ought to know about, to bring their understanding of human behavioral genetics up to date.

Johnson, Wendy; Turkheimer, Eric; Gottesman, Irving I.; Bouchard Jr., Thomas (2009). Beyond Heritability: Twin Studies in Behavioral Research. Current Directions in Psychological Science, 18, 4, 217-220

http://people.virginia.edu/~ent3c/papers2/Articles%20for%20O...

is an interesting paper that includes the statement "Moreover, even highly heritable traits can be strongly manipulated by the environment, so heritability has little if anything to do with controllability. For example, height is on the order of 90% heritable, yet North and South Koreans, who come from the same genetic background, presently differ in average height by a full 6 inches (Pak, 2004; Schwekendiek, 2008)."

Another interesting paper,

Turkheimer, E. (2008, Spring). A better way to use twins for developmental research. LIFE Newsletter, 2, 1-5

http://people.virginia.edu/~ent3c/papers2/Articles%20for%20O...

admits the disappointment of behavioral genetics researchers.

"But back to the question: What does heritability mean? Almost everyone who has ever thought about heritability has reached a commonsense intuition about it: One way or another, heritability has to be some kind of index of how genetic a trait is. That intuition explains why so many thousands of heritability coefficients have been calculated over the years. Once the twin registries have been assembled, it’s easy and fun, like having a genoscope you can point at one trait after another to take a reading of how genetic things are. Height? Very genetic. Intelligence? Pretty genetic. Schizophrenia? That looks pretty genetic too. Personality? Yep, that too. And over multiple studies and traits the heritabilities go up and down, providing the basis for nearly infinite Talmudic revisions of the grand theories of the heritability of things, perfect grist for the wheels of social science.

"Unfortunately, that fundamental intuition is wrong. Heritability isn’t an index of how genetic a trait is. A great deal of time has been wasted in the effort of measuring the heritability of traits in the false expectation that somehow the genetic nature of psychological phenomena would be revealed. There are many reasons for making this strong statement, but the most important of them harkens back to the description of heritability as an effect size. An effect size of the R2 family is a standardized estimate of the proportion of the variance in one variable that is reduced when another variable is held constant statistically. In this case it is an estimate of how much the variance of a trait would be reduced if everyone were genetically identical. With a moment’s thought you can see that the answer to the question of how much variance would be reduced if everyone was genetically identical depends crucially on how genetically different everyone was in the first place."

I've enjoyed learning about this line of research from several well known behavioral geneticists, including some of the doyens of twin research, as I participate in the journal club in individual differences psychology and behavioral genetics

http://www.psych.umn.edu/courses/fall10/psy8935/default.htm

at the university where those researchers are based. There is always lively discussion on what the data show, and what the data don't show. Thus far, there are no data to show that poor people are poor solely because they lack academic ability (and anyway studies show

http://www.jkcf.org/assets/files/0000/0084/Achievement_Trap....

http://tcf.org/publications/pdfs/pb428/carnrose.pdf

http://reason.com/archives/2008/02/19/legacies-of-injustice

that poverty is a meaningful disadvantage even for high-ability young people).

Nor is there any predictable limit on how much poor people might be able to use their abilities, whatever their current ability level, to improve their condition in life if the undeniable disadvantages of lacking money were alleviated.

If you want a modern reference on the heritability of intelligence, read Paul Thompson from UCLA:

www.loni.ucla.edu/~thompson/HARDI-IQ/hardiIQ-PR.html

He and his colleagues can predict IQ from a 3D brain scan, a concrete dataset of voxels; it is not just about correlations between relatives any more.

Read his numerous papers and those of his peers; the heritability of intelligence is an empirical, easily verifiable fact based on direct scientific measurement. The observed associations between brain structure, inheritance, intelligence, and income exist even if one refuses to look at them.

A press release? I'm a lot more familiar with the relevant peer-reviewed literature than that.

The self-promoted study you kindly linked has many of the usual problems with study design

http://norvig.com/experiment-design.html

common in studies cited by the popular press about IQ. Try again when you can cite something meaningful, better peer-reviewed, and more on point to the subject of this thread (causes of poverty).

Thompson's work is peer-reviewed. Of course, that does not mean it does not fall into some of the experimental issues pointed out by Norvig. His works certainly has no link with poverty.

You paste that link over and over again. I do not think it means what you think it means. And if you look at Thompson's 200+ papers, including the linked one that is the subject of the press release, you might be enlightened.

For whatever ideological reason you've convinced yourself that genes have nothing to do with brains, intelligence, or wealth.

IQ tests don't measure anything in particular unfortunately.

No.

This isn't a question of intelligence. It's a question of how people with different levels of wealth/status have different priorities. I've experienced it in periods of my own life, depending on how financially secure I've felt - and so far as I can tell, my intelligence hasn't changed. Abraham Maslow discussed the psychology behind this half a century ago. (1)

Of course there are many other issues affecting the poor, which this article doesn't address and which you completely ignore. The fact is that it's simply more expensive to be poor. Not having a car can mean you might have to sacrifice an entire day of work just to take your child to the doctor by bus (and this isn't an abstract hypothetical - I've treated these families). When you don't have extra money you sacrifice income to late fees, pay higher interest rates, are unable to benefit for long-term or bulk discounts. And don't even get me started on predatory services like check cashing or rent to own companies.

Bottom line, it's cheap to be rich, and expensive to be poor. And when every day is a struggle you see the world differently than a high paid yuppy with a secure tech job in an otherwise miserable economy (that's not a personal jab, I put myself in this category as well).

1: http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs

Poor people are human beings, so I assume it's the same things that drive other people.

it's amazing how few policymakers realise that. mostly, the poor tend to be infantilised and patronised.

To be blunt, quite a few politicians really don't want changes to the current status because it would endanger their power-base. If you ran on an issue, it is helpful not to solve the issue and blame the other guy for not solving it.

One example is bilingual education. There are very effective groups and lessons that can teach students English in a short amount of time, allowing the student to be in the same classrooms as everyone else. But if that student (or anyone else) doesn't speak the language of the majority, they are easier to control because they are not independent and need "special" programs. If they were bilingual, then they would have a better chance than 1 language people to get jobs and opportunities. More language = More options. Instead we get a lot of empty political rhetoric that keeps everything the same.

Not only that, but there's money involved. How many billions are sent in foreign aid? Some of that money disappears due to corruption and who doesn't want some corruption happening ;p

I read the whole article, however, I didn't think it did a good job of getting to the bottom of everything that does matter. The article needed to give people a better sense of the situation of the poor, by providing more insights. Otherwise, people who've never experienced poverty would not understand why it's so important to help these people out. The best reporter on an issue like this is someone who actually made it out of poverty and is actively trying to help their own people.

Are Untouchables allowed to own/operate a restaurant in India? https://secure.wikimedia.org/wikipedia/en/wiki/Untouchabilit...

“Generally, it is clear that things that make life less boring are a priority for the poor,” they write in their new book.

“They don’t just need nutrition that will keep them alive longer—they also need a reason to want to live longer. Being healthier by denying yourself the little pleasures you can afford, a cup of tea or a bowl of steaming rice, makes little sense if you have nothing else to look forward to,” says Banerjee. “I think they make exactly the choices I would make in their place as regards food.”

...isn't that fucking obvious? You can extrapolate from our own rich society where people would rather spends thousands on electronics than on non-fast-food. Paying double for healthier food? Fuck no. Paying hundreds for an iPhone? Fuck yes.

im getting some weird html on this url. the body is empty and its followed by a style/css tags with flash embedded in it. wtf?

Good insights, though instead of biometric (?!) based money transfers, I'd like to see a further push on phone based transfers and other branchless banking. Recent research reported through CGAP shows branchless transfers being used increasingly by the poor, http://technology.cgap.org/2011/06/17/does-branchless-bankin... I was hoping they might discuss Microfinance's role in helping the poor reach their goals, since at kiva.org we tend to think of microloans as one of the small steps towards solving the problems they face.

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