
Your Brain on Poverty: Why Poor People Seem to Make Bad Decisions (2013) - bane
http://www.theatlantic.com/business/archive/2013/11/your-brain-on-poverty-why-poor-people-seem-to-make-bad-decisions/281780/?single_page=true
======
glup
There was a great study published in the journal Cognition a few years ago
revisiting the famous kids & marshmallows self-control study, but where the
researchers additionally manipulated the children's beliefs in the
environmental variability. They offered the kids some desirable thing and then
either gave it to them or not, then checked how much self-control they
exercised on the marshmallow task. The idea here is that if the payoff is
highly unreliable, the rational thing to do is to go ahead and eat the first
marshmallow because 1) there's a pretty good chance there aren't more coming
and 2) even the first marshmallow might disappear. I think there's a pretty
clear socioeconomic analog of this— if you have few resources and an
unreliable environment, it's rational to act on a much shorter timeline.

------
astral303
Wow first few top responses here reflect the upper-middle-class nerd myopia.

You don't understand what middle class is. Middle class is not a specific
dollar figure. It's not owning a large TV. Middle class is when you don't have
the set of anxieties that cloud your judgement and depress your day.

Middle class means you don't care if your paycheck gets delayed from Friday to
Monday. Middle class is when you don't have to count how many times a week you
go to the laundromat.

Sadly, middle class, as evidenced by these responses, also means that you
don't see why other people would care if their paycheck gets delayed by a
business day or two. It's no big deal, you are convinced. Yet, there's a woman
that just started working, waiting for her first paycheck, which already had
to be delayed due to starting date not aligning with payment schedules. And
she has been planning to pay rent with this money, on the promised date. And
yet, because some upper-middle-class manager with middle-class myopia forgot
to submit _everyone_ 's timecards on time (as required by the similarly-myopic
corporate policy), everyone's paychecks get delayed by a few days, including
this woman's. Now she has to deal with missing paying rent. True story, in
modern liberal bastion of Massachusetts.

All you have to do is understand why it's considerably more difficult for
someone to improve their life, when starting from a much lower point,
constantly being banged around by the ankles of the society.

~~~
mc32
Yes, but it's also good to understand how some people in really poor places
like Bangladesh or Malawi are able to overcome while others in the same class
and circumstance aren't, for example. What, is it in those people which makes
them overcome obstacles others can't or dont want to. What makes some people
succumb to circumstance while others persevere in the face of it?

~~~
rayiner
Your Bangladesh example really proves that social circumstances matter more
than individual qualities. A moderately intelligent and somewhat hard working
middle class American who goes to a decent state college enjoys a standard of
living that far outstrips that of all but the absolute richest Bangladeshis.
Why? Is he just smarter and more hard working than the top Bangladeshi
students who go to the top Bangladeshi colleges? Or is it because he faces
totally different circumstances?

~~~
mc32
Circumstance is an important factor. As you illustrate, Americans (or middle
class Nigerians, or Japanese, or Chilean) have a higher potential
circumstantially, but despite that many "underachieve" with respect to what
someone else could do with similar resources (education, infrastructure,
healthcare, economic stability, etc.) in other places.

So, yes in many ways it's relative. But additionally persevering is better
than succumbing to circumstance.

------
douche
Being poor means you have no cushion. Particularly if you are poor in an
urban/suburban area. You are one unfortunate event away from being wiped out.

Company downsizes or has a round of layoffs, and you lose your job? The rent,
the car payment, the grocery bill, the utilities, etc, don't go away. Some of
that you can scrape by on by shifting the bills onto credit, but most
landlords don't take VISA.

Get in an accident, and get seriously injured? Now you can't work, and you've
got either huge medical bills, or a deductible that you have to pay before the
insurance covers the rest. Maybe you heal up and your job isn't there any
more.

If you are poor in a rural area, you actually have more options than if you
are living in a city. My grandparents were poor as church mice, but if things
really hit the fan, at least they still had a roof over their heads (even if
it's a dirt-floor shack), they had a plot of land they could grow a garden in,
wood that could be chopped down to feed the wood stove, and deer that could be
poached to put meat on the table. They had resources and skills that could
help them subsist and ride out rough patches where money was tight or non-
existent.

~~~
lsc
> Being poor means you have no cushion. Particularly if you are poor in an
> urban/suburban area. You are one unfortunate event away from being wiped
> out.

I think there is a more important distinction; really, one that is more
valuable than any reasonable amount of saved money is. Family with the
resources to support a person. I mean, most of the time, if you come from a
middle-class family, you can't remain dependent forever, but you _do_ have a
place to stay while you get back on your feet, and you have a network of
people who know people who can get you interviews for decent jobs.

I think this is a bigger advantage than it would seem at first glance;
bankruptcy is dramatically less frightening if you know that worst-case, you
can sleep at your parent's place, eat their food, and that they'll be calling
all their contacts trying to get you an interview.

------
Camillo
Here is the article itself:
[http://www2.warwick.ac.uk/fac/soc/economics/staff/amani/mani...](http://www2.warwick.ac.uk/fac/soc/economics/staff/amani/mani_science_976.full.pdf)

Note that the effects of financial concerns measured in this paper are large
and instantaneous. There is nothing here about persistent, long-term effects.

A couple of observations:

\- The proposed mechanism is that thinking about financial concerns ties up
mental resources that would otherwise be available to solve tests. But it
seems to follow that the poor do have their full mental resources available
when dealing with those financial concerns themselves, so it does not seem to
work as an explanation for poor decisions concerning finances.

\- The sugar-cane farmers end up poor towards the end of the harvest cycle
because they spend too much of their money soon after they have been paid (as
the paper says, they "find it hard to smooth their consumption"). In other
words, their eventual poverty is caused by poor decisions made when they are
_rich_ , not when they are poor.

------
RodericDay
The Logic of Stupid Poor People

[http://tressiemc.com/2013/10/29/the-logic-of-stupid-poor-
peo...](http://tressiemc.com/2013/10/29/the-logic-of-stupid-poor-people/)

> _I sat in on an interview for a new administrative assistant once. My
> regional vice president was doing the hiring. A long line of mostly black
> and brown women applied because we were a cosmetology school. Trade schools
> at the margins of skilled labor in a gendered field are necessarily classed
> and raced. I found one candidate particularly charming. She was trying to
> get out of a salon because 10 hours on her feet cutting hair would average
> out to an hourly rate below minimum wage. A desk job with 40 set hours and
> medical benefits represented mobility for her. When she left my VP turned to
> me and said, “did you see that tank top she had on under her blouse?! OMG,
> you wear a silk shell, not a tank top!” Both of the women were black._

> _The VP had constructed her job as senior management. She drove a brand new
> BMW because she, “should treat herself” and liked to tell us that ours was
> an image business. A girl wearing a cotton tank top as a shell was
> incompatible with BMW-driving VPs in the image business. Gatekeeping is a
> complex job of managing boundaries that do not just define others but that
> also define ourselves. Status symbols — silk shells, designer shoes, luxury
> handbags — become keys to unlock these gates. If I need a job that will save
> my lower back and move my baby from medicaid to an HMO, how much should I
> spend signaling to people like my former VP that I will not compromise her
> status by opening the door to me? That candidate maybe could not afford a
> proper shell. I will never know. But I do know that had she gone hungry for
> two days to pay for it or missed wages for a trip to the store to buy it,
> she may have been rewarded a job that could have lifted her above minimum
> wage. Shells aren’t designer handbags, perhaps. But a cosmetology school in
> a strip mall isn’t a job at Bank of America, either._

> _At the heart of these incredulous statements about the poor decisions poor
> people make is a belief that we would never be like them._

------
donatj
I grew up very poor, this did not make me stupid and implying such is
offensive. There are poor people who can work it out and there are those who
simply are incapable.

Knowing people that are still poor, including much of my own family, it is
very obvious that they're unwilling to apply themselves. They give in to the
easy quick fix, even when actively told not to and shown a better path. They
are largely beyond help.

The people I know will make just as bad of decisions if given money. They are
poor because they don't think about the future, they don't not think about the
future because they're poor.

~~~
wpietri
That is a common view, but I don't think it's correct, and I don't think it's
supported by the science.

I also grew up poor, but having been in tech for decades, being well off is a
shit-ton easier. When thing go wrong, I have a cushion that I didn't before.
That gives me time to think, time to recover from trauma, time and patience to
consider and plan. I would love to attribute my new circumstances to my
enormous virtue. But honestly, I think it's more about having lucked into a
career that happens to be a great match and also be highly rewarded.

For those interested in the science how scarcity shapes cognition, this is a
good book:
[http://scholar.harvard.edu/sendhil/scarcity](http://scholar.harvard.edu/sendhil/scarcity)

For those unfamiliar with the experience of poverty, John Scalzi's piece
"Being Poor" is evocative:

[http://whatever.scalzi.com/2005/09/03/being-
poor/](http://whatever.scalzi.com/2005/09/03/being-poor/)

And unlike most sites, that one definitely benefits from reading the comments.

~~~
fencepost
"Being poor is knowing exactly how much everything costs."

There was a time when I could say exactly how much breakfast ingredients were
per serving: oatmeal serving $0.xx; 2 eggs $0.20 (obviously not this year), 2
sausages $0.20 (frozen, buy when on sale for $1/box). I wasn't really
constrained by those prices, but I was certainly sensitive enough with
irregular customer payments to be well aware of them.

------
Kinnard
This is spot on. And if you think about it neurologically, changing patterns
of thinking that have grown into your brain make it even harder, like breaking
a facebook habit.

It's a process of learned helplessness:
[http://braythwayt.com/2015/01/20/learned-
helplessness.html](http://braythwayt.com/2015/01/20/learned-helplessness.html)

The cognitive portion is only half the picture though, and I think wealthy
people(especially moderately wealthy people) suffer from something
similar(e.g. doctor just trying to get through the day rather than save lives
and cure diseases.)

The other half is the social mechanisms that make poverty endemic. Going right
to the root: it's the monetary system itself.

~~~
bmh_ca
> Going right to the root: it's the monetary system itself.

Please pardon me for being pedantic, but there is distinction worthwhile,
here.

The monetary system is a mechanism of liquid exchange for goods and services.
It is largely good for everyone because it facilitates trade of otherwise
incomparable goods, as well as possession of assets that can in the future be
exchanged (i.e. savings). One cannot trade apples for oil tankers directly.

There are a few places that are considered the root of inequality, though. In
my opinion, these include the tax system. A "progressive" tax leads to greater
equality; optimally this will not diminish individual incentives, but one does
not want to apply regressive (and often hidden) taxes that create systemic
perpetual and inescapable poverty.

Second, the social commons. School, health care, policing, roads, etc., that
give everyone opportunity to apply themselves to success. These are the things
that lead to "social mobility". With poor social mobility, the poor stay poor
and the rich stay rich, regardless of their competences.

It is an oversimplification and arguably inaccurate to say that the monetary
system makes poverty endemic. I believe the root of the problem is founded in
the two points above: the fairness of how we collect taxes; and, how
opportunities for advancement come about – be they smarts and hard work and
social institutions that recognize and reward those, or just being born with
rich parents.

~~~
Kinnard
The monetary system is more than that. It's a monopolistic mechanism of social
control founded on debt(an asymetric social relationship) and which can only
be sustained by debt(more asymetry).

Starting out, the list of who has what wealth, defined in terms of our
arbitrary monetary system, places some on the bottom and some on top then
applies a massive downward force on those on the bottom.

I recommend Paul Grignon's Money as Debt:
[https://www.youtube.com/playlist?list=PLdMxiaZGboJSgU2raUksC...](https://www.youtube.com/playlist?list=PLdMxiaZGboJSgU2raUksCFGSUfWS8eHR8)

~~~
laotzu
There is also the fact that the monetary system is not a zero sum game for its
users. Hence the perpetual indebtedness to central banks as we see with all
major nations.

Professor Franz Hörmann of the Vienna University of Economics explains this
design in his Banned Ted Talk:

[https://m.youtube.com/watch?v=FYWVbdSX7B4](https://m.youtube.com/watch?v=FYWVbdSX7B4)

TLDW: When central banks create money and loan it out to nation states they
charge an interest rate on top of the principal. However, the principal was
the only money created, so the money which is contracted to be paid as
interest physically does not exist. This systemic flaw is, Hörmann suggests,
what creates poverty

To put it in even simpler ELI5 terms: it would be like going up to a 5 year
old and saying, I've got these 10 widgets that only I can make and that you
rely upon to survive. I'll let you borrow them if you agree to give me 11 of
these widgets back when you're done, or else!

------
thedevil
The idea of handing out cash has become popular lately but I'm skeptical.

Does anyone have an argument why handing them cash would be better than paying
for needs?

It seems to me (less restrictive) housing subsidies, food stamps for everyone
and child healthcare would help the poor a lot more than cash.

My argument is that paying basic needs will reduce stress level and help them
deal with the problems. Not only does it make more intuitive sense, but when
I've helped troubled family members, this has worked much better in practice
than giving cash.

The article, which seems to support giving out cash, admits they don't make
good decisions. A more generous assumption is that they spend it on their
needs but spend all their will power doing so, leaving less willpower to
address other problems.

Note: I'm in favor of helping the poor and I'm not bashing them. I think the
stress of poverty partly causes them to make bad decisions and I think people
have value even if they make bad decisions.

Also note: Please don't just downvote me if my argument isn't consistent with
your ideology. That's lame (100% chance I get downvotes anyway). Rather,
provide an argument if you disagree.

~~~
datashovel
From what I understand the primary reason people seem to think giving money
instead of services is better is due to overhead. If you need to monitor how
the money is distributed and how the money is spent, then that requires entire
branches of government to make this possible. Instead if you're just giving
money you are giving those in need more, which more than likely will help them
considerably more than if you're paying a ton of overhead in salaries and
buildings and bureaucracy just so you can distribute money to those in need.

~~~
sheensleeves
I think the appeal of basic income to HN crowd is that is a solution that an
engineer would like. Very neat.

Some people can't manage their money though, however complicated that is.

~~~
thedevil
Yeah, I would guess that the huge overhead is still more efficient given how
poorly some would use the money, but that's just a hunch. I have nothing to
back that up (and would love any argument on either side of that)

~~~
datashovel
Here's a link to an article that summarizes one of the more interesting
stories.

[http://www.nationofchange.org/utah-ending-homelessness-
givin...](http://www.nationofchange.org/utah-ending-homelessness-giving-
people-homes-1390056183)

About 1/2 way through it says:

"In 2005, Utah figured out that the annual cost of E.R. visits and jail stays
for homeless people was about $16,670 per person, compared to $11,000 to
provide each homeless person with an apartment and a social worker."

------
Mikeb85
It's simple maths. Wherever you live, there's a baseline amount of money that
it costs to survive. Food costs the same whether you're rich or poor. Housing
varies, but there is generally a baseline. If the baseline cost of living is
$2000/month, and you make $2000 a month, you have $0 disposable income. If you
make $4000 a month, you have $2000 in disposable income. If you make $8000 a
month, you have $6000 per month disposable income, or 3 times that of the
second scenario. Since the cost of certain things is constant, as you make
more money, your disposable income rises dramatically (until a certain point
where gains are seemingly only incremental, at which point you're no longer
middle class).

The rich have more opportunity to save, thus they learn about saving. They
have capital, thus learn how to use it. If you never save and never accrue
capital, you'll never understand it. So any time you do end up with a
windfall, you will inevitably squander it, since you've never had the
experience of what to do with it.

Plus, money problems lead to stress. My wife grew up poor, and even though
we're not doing badly today, it causes an immense amount of stress and is
'mental overhead' for her. She never wants to invest, is apprehensive about
going to school herself, or basically doing anything that would deplete any
amount of savings. This inevitably prevents her from attaining a 'higher'
equilibrium, but I do understand the feeling (and for the record, based on
where she came from, she's actually doing fantastic and has experience doing
things that none of her relatives even contemplate doing). I grew up working
class for this country (so probably the bottom end of 'middle class'), but I'm
stubborn with a bit of a gambling streak. So I'm going to university,
investing money, occasionally hustling for extra here and there (gambling,
side jobs, etc...), and it's mostly going OK.

Plenty of relationships end over money. And when your world is falling all
around you, it's all too easy to turn to 'escapes' such as drugs and alcohol.

This is a tech forum, so a little analogy. A poor person is like a phone whose
specs are just barely enough to run Android. The experience is poor, laggy,
and you can't play too many games, or do any 'productive' tasks. Middle class
is like an iPad pro or a decent laptop, you can do what you want for the most
part, it's a pleasant experience, but there are certain limitations. Being
rich is like having a super-computer - the potential is seemingly limitless,
you can solve problems that are out of reach of the first two.

Right now I'm in University, and being working-class, it's hard to compete
with rich kids who live on their parents dollar. Every day I work is less time
to study. Every time I have to cook dinner is less time to study. And if I
need to study a 'minimum' amount to pass my courses, then I need to either
sacrifice sleep or time with my wife. And neither leads to a particularly
great outcome. So mostly I just suck it up and lose sleep, live off coffee,
and am a solid 'B' student rather than actually competing with the more
privileged kids. In the job market I'll probably have to use my life
experience and hustling streak, since I won't compete on GPA or extra-
curriculars.

Anyhow, just a few thoughts on the matter. And these sorts of problems with
income inequality are why more and more economists support the idea of a basic
income. It'll allow the 'poor' to have the ability to have disposable income
with which they can get an education, or invest in themselves rather than work
like dogs to barely survive. While this may not seem fair for those who have
already attained middle class or higher (who always claim they 'earned' it,
never mind the societal advantages they used), it's better for society. Unless
you think having a serf class is a societal advantage (and there are people
who think this)...

~~~
foobarian
As someone with input into hiring decisions, I don't remember the last time I
actually registered someone's GPA off a resume. Your background on the other
hand would give you a huge leg up in our org (and I imagine others like it
too).

------
jqm
We like to think hard work and correct attitudes towards education, savings
and investment results in being well off. And to a certain extent it does.

But, many people who are well off, in fact likely some of the most well off,
have an entirely different attitude that doesn't have anything to do with the
above traits of the middle class. And that is the burning desire to fuck other
people over and to take unfair advantage of others at every opportunity
regardless of the effects it may have on the victims.

Poverty sometimes isn't all about short term thinking and bad choices.
Sometimes it's just being fucked over at different scales again and again and
not being able to defend oneself against it. Education and going to work
everyday doesn't necessarily help in this regard.

------
scotty79
[http://playspent.org/](http://playspent.org/)

------
youngButEager
It's a Leftist recruitment article to get people feeling sorry for the poor
who, SUPPOSEDLY, according to this article -- unlike most other humans, the
poor are incapable of making good decisions, only bad ones.

I was living on the street as a teenager after making bad decisions and having
my parents abandon me.

How did I start making good decisions (finally) ?

I quickly grew to HATE being poor.

That hatred of poverty helped me ask "okay, how do I get out of this, living
on the street and having no prospects?"

I had independent means within 20 years (in my 30s) after that hatred of my
poverty forced me to put more effort into what I did every day.

I was still making _some_ bad decisions for a few years but over time I became
very practiced at knowing what to choose (go to college? go in the military?
get away from all my current acquaintances?)

Within a year of my peak of hating poverty I stumbled on the idea of having
goals. I read "Your Erroneous Zones" by Wayne Dyer.

20 years later I had independent means (no boss, good income).

HATRED OF POVERTY. People who stay poor lack _that_.

THEIR RESPONSIBILITY. No one else's.

That article is a recruitment tool for Leftists, as in "we should feel sorry
for the poor, it's not their fault."

Life _will_ hold you individually responsible for YOUR DECISIONS.

So will the criminal justice system.

Articles like this one try to convince us that some people should NOT be held
responsible for their behavior.

WRONG. WRONG. WRONG.

~~~
vezzy-fnord
I realize that having initiative is important, but you're implying a level of
determinacy in life that doesn't exist.

~~~
WalterBright
I see the consequences of my decisions, large and small, good and bad, every
day. I made those decisions, and so the consequences are to my credit and my
fault.

I don't subscribe to the fatalistic point of view that my path in life is
predetermined. Not for a minute.

~~~
vezzy-fnord
I'm not advocating determinism in the slightest. I'm saying that the GP is
pretending as if exogenous factors and entities are ineffective.

------
dplgk
[https://hn.algolia.com/?query=Why%20Poor.%20People%20make%20...](https://hn.algolia.com/?query=Why%20Poor.%20People%20make%20bad%20decisions&sort=byDate&dateRange=all&type=story&storyText=false&prefix=false&page=0)

------
ratsmack
People with weak character, poor morals and low IQ will probably be in
poverty. I can't tell if the study takes this into consideration.

~~~
cryoshon
Can you define weak character and poor morals? Can you explain to us how these
things will lead to poverty?

~~~
im2w1l
Spending your money on drugs and/or alcohol that you are addicted to.

Buying nice things you can't afford on expensive credit.

