
Why are we so quick to scrutinise how low-income families spend their money? - ingve
https://digest.bps.org.uk/2020/06/16/why-are-we-so-quick-to-scrutinise-how-low-income-families-spend-their-money/
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xupybd
>In the first couple of studies, participants read about Joe, who was
described as having either a low- or high-paying job. They learned that Joe
had won a $200 gift card which he spent on a flat screen TV. They then rated
five statements which measured how “permissible” they thought his purchase was
(e.g. “He made a responsible purchasing decision” and “He deserves to buy what
he did”). Those who read that Joe had a low income rated his purchase as less
permissible than those who read that he had a high income, or who were given
no information about his income.

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.

~~~
Rotten194
If you read the original study, participants were only asked about one version
of Joe, not asked to compare. In another version of the study where an
additional third framing, where Joe's income was not mentioned, rich Joe and
neutral Joe were rated the same, and poor Joe more harshly.

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...](https://sci-
hub.tw/downloads-ii/2020-06-09/9a/10.1073@pnas.2005475117.pdf)

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ardit33
Interesting article. If a country has some kind is social net for low income
folks, (most developed countries do, even the US) then the assumption is that
the whole society is helping them, and some of your own money is going towards
that help via taxes.

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.

~~~
rizzom5000
I've heard that this is one of the reasons that obesity is a much bigger
problem in the US vs. Europe.

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.

~~~
BrandoElFollito
Thereis probably some of this butthis would not be the first thing which comes
to mind.

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.

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CurtHagenlocher
Fascinating research! I wonder where it was conducted and whether or not the
result would vary between countries. I think in the United States there's a
pervasive belief that the wealthy deserve their wealth because they earned it
through hard work and/or personal merit. The counterpoint to this must be that
poor people are undeserving because they don't work hard or because they lack
merit.

~~~
zo1
Odd, I've seen a pervasive belief that the wealthy did not gain their wealth
through hard work/merit and either somehow stole it or inherited it. And I've
also seen pervasive beliefs that the poor are only poor because of things such
as: lack of education, evil capitalism, lack of opportunities, hunger,
systemic issues, racism, etc.

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.

~~~
alistairSH
Not sure why you're being downvoted for sharing an opinion/observaton, but in
my experience, opinions are changing slowly from the parent comment to your
comment.

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.

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pickdenis
> And when deciding whether to gift a low-income individual either a $100
> grocery voucher or a $200 electronics voucher, only a quarter of
> participants went for the latter, even though it was worth twice as much.
> More than half said they would give a high-income individual the electronics
> voucher, however. “Paradoxically, the result was that participants
> effectively allocated more money to higher-income people than lower-income
> people,” the authors note.

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.

~~~
boomboomsubban
It just says the person has a low paying job, it doesn't say they are
struggling financially. People know that food is more important, but if you
already have enough for food the $100 grocery gift card just becomes a $100
you can spend on "luxury" goods.

------
arthurjj
I'm disappointed that the article doesn't take into account opportunity cost.
One of the questions was "He made a responsible purchasing decision" when
buying expensive or luxury goods. That's clearly going to have a different
answer for low or high income people

~~~
gshdg
Bingo!

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MattGaiser
In most countries with a welfare state, "low income" means using government
money. Joe spending $200 on a TV means the state kicked in an extra $200 for
rent/food that he didn't truly need.

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RickJWagner
I think it's often appropriate. People need to understand-- financial skills
are acquired skills, and they have everything to do with your own fiscal
fitness.

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.

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viburnum
Related, social dominance orientation:

[https://en.wikipedia.org/wiki/Social_dominance_orientation](https://en.wikipedia.org/wiki/Social_dominance_orientation)

------
thiht
I judge low income families in my circles for two reasons:

\- 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.

------
aklemm
Surely the just-world fallacy is at play at here. We tend to attribute fault
to those unfortunate in order to preserve a belief that the world is just; we
get what we deserve. Of course that’s ridiculous, but we think it anyway.

[https://en.m.wikipedia.org/wiki/Just-
world_hypothesis](https://en.m.wikipedia.org/wiki/Just-world_hypothesis)

------
simonh
I have been on a low income, had a wife and child when my wife was unable to
work and we saved as much money as possible. We had a cheap phone and internet
package, made do with a second hand a TV set and microwave. When we had enough
money to get a car, we bought a low end car seat and I got my first iPod when
I won it in a competition.

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.

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david38
Uh, because there is endless discuss by do gooders on how to help the poor and
endless comments by the poor that they’re poor and can’t make ends meet.

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radicalbyte
Keep the poor focussed on each other and they won't see the excesses of the
rich.

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.

~~~
wildrhythms
Working class people have been ingrained with a crabs-in-a-bucket mentality.
Meanwhile, we've allowed 1% of Americans to sit on over 50% of the wealth, and
people still ask "but how do we pay for it?" when it comes to actually
improving the material conditions of the working class.

~~~
jonfw
It seems like you're using one metric to shit on the 1% (net worth) while
you're using a different metric to discuss impact on the middle class
(material conditions)

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.

~~~
mandelbrotwurst
The point is that would be more and better houses and other things that would
benefit more people if some of that net worth were redirected toward building
them.

~~~
makomk
In a sense it already is. The ultra-wealthy own and run the businesses which
supply everyone else with all those things, and their wealth is largely just
the nominal paper value of a whole bunch of successful attempts to supply
society with things. What doesn't and cannot happen is redirecting their
wealth in the sense that a lot of the American left imagine, where we can just
take their billions and turn them into billions of dollars of healthcare or
housing or anything else that would benefit the less wealthy.

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.

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foogazi
> Now a new study in PNAS provides some clues as to the origins of this bias.
> Across a series of 11 studies involving more than 4,000 participants, Serena
> Hagerty and Kate Barasz from Harvard Business School find that we tend to
> believe lower-income people need less than those on higher incomes,

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

------
MintelIE
Nobody would mind how they spent it if it was actually theirs to start with.
When you give out free money it becomes everybody's business.

~~~
JaimeThompson
SpaceX gets lots of money from governments as incentives to expand their
production facilities so should all their spending be subject to such scrutiny
as well?

~~~
WalterBright
If SpaceX gets a contract to provide X in exchange for $Y from the government,
and delivers on their contract, the government has no further business
scrutinizing SpaceX's spending.

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.

------
minikites
If poor people can't be trusted to make rational market decisions, what does
that imply about capitalism as a system?

~~~
programmarchy
...that it's a utopian ideology, a false idea which can ultimately never be
fulfilled, but which develops a "false consciousness in people about the
world, how it works, and their place in it".

> 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](https://bigthink.com/culture-religion/slavoj-zizek-ideology)

------
WalterBright
A couple reasons come to mind:

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.

~~~
elliekelly
Several scenarios described in the article made no mention of someone else
paying the bill or providing funding to the person but the results showed the
same scrutiny of their purchasing decisions.

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.

~~~
WalterBright
> Several scenarios described in the article made no mention of someone else
> paying the bill or providing funding to the person

"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.

~~~
elliekelly
There are many opportunities to volunteer helping low-income people with
budgeting and finances. I would encourage you to sign up as a volunteer for
one of those programs. I’ve done work with the IRS VITA program to counsel
low-income families on tax planning and budgeting how to “best” spend their
EITC. You might need a legal and/or tax background to volunteer solo with VITA
but there are lots of opportunities to sit in on client intake and budget
planning/coaching. You’ll see first hand that poor people aren’t stupid when
it comes to how they spend their money and they aren’t making irrational
financial choices.

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.

~~~
WalterBright
> You’ll see first hand that poor people aren’t stupid when it comes to how
> they spend their money and they aren’t making irrational financial choices.

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.

