
 What Happens When the Poor Receive a Stipend? - MaysonL
http://opinionator.blogs.nytimes.com/2014/01/18/what-happens-when-the-poor-receive-a-stipend/
======
JoeAltmaier
The researcher supposed that the reduced stressors in poor parents' lives
allowed them to be more nurturing, resulting in reduced problems with their
children. Seems like a no-brainer to do, considering this analysis:

"Bearing that in mind, Randall Akee, an economist at the University of
California, Los Angeles, and a collaborator of Professor Costello’s, argues
that the supplements actually save money in the long run. He calculates that 5
to 10 years after age 19, the savings incurred by the Cherokee income
supplements surpass the initial costs — the payments to parents while the
children were minors. That’s a conservative estimate, he says, based on
reduced criminality, a reduced need for psychiatric care and savings gained
from not repeating grades."

That means, its not only a good idea, its free.

~~~
notdrunkatall
Correction: this is what happens when poor _Cherokee_ receive a stipend, but
let's not pretend that the Cherokee are the ones we're worried about here.
There are differences between the subcultures, and those differences almost
certainly extend to how they treat money.

Furthermore, the psychological and social difference between receiving money
from a source which a population would consider to be 'theirs' cannot be
overstated. If you're a poor black person (or latino, or Cherokee, or
whatever), and you're living in a land that's dominated by a group that's not
like you, you are less likely to respect that money than if a) that money came
from a source that was yours, and b) you knew that if that source believed
that you were disrespecting that money, they would cut it off.

Both stipulations apply here. Giving a small band of Cherokee profits from one
of their own casinos =/= giving poor blacks and latinos federal assistance.
They aren't even close.

Successfully repeating this experiment in poor black and latino populations a
few times would go a long ways towards convincing the skeptical that free
money for the majority of the poor is actually a good idea.

Anything else, as I said in another thread, is half-measures.

~~~
rauljara
You left out poor white people in your discussion. While white people do have
a lower rate of poverty than blacks or latinos, they actually make up a very
large majority (68.5% as of 2009) of the people living under the poverty line
in the United States. [1]

"... let's not pretend that the Cherokee are the ones we're worried about
here."

"Successfully repeating this experiment in poor black and latino populations a
few times would go a long ways towards convincing the skeptical... "

I'm all in favor of repeating the experiment in whatever populations, ideally
the general one on a large enough sample size to tease out demographic
information. I don't want to seem like I'm implying something here, so I will
instead say overtly that I find the way you've singled out certain populations
for skepticism with regards to whether they should be helped disturbing.

[1]
[http://www.census.gov/compendia/statab/cats/income_expenditu...](http://www.census.gov/compendia/statab/cats/income_expenditures_poverty_wealth/poverty.html)

~~~
notdrunkatall
Forgive me for offending your politically correct sensibilities, but it seems
that I'm going to have to be even more blunt: if you want to convince white
people in this country that doling out free money to the poor is a good idea,
you're going to have to convince them that blacks and latinos aren't going to
abuse that system _en masse._ The only way to do that is to try something
similar in neighborhoods that are comprised predominately of minorities and
cross your fingers that it is a success. It doesn't matter whether those below
the poverty line are 65% or 5% white - it's the minorities that they're
concerned with. That's just the political reality of the situation.

And while we're on the subject of statistics, I may as well go ahead and ask
about yours: where did you get that figure from? Because I found something
much different:

[http://www.census.gov/newsroom/releases/archives/income_weal...](http://www.census.gov/newsroom/releases/archives/income_wealth/cb11-157.html)

According to this, only about 25% of people living in poverty were white, and
that includes the somewhat dubious category 'white, not hispanic.' (It's near
the bottom, Table B)

That also includes white retirees, which inflates the figure as you're taking
the number of retirees from a large category and sticking them into a smaller
category, which means they will be over-represented in the smaller category.

And that's not even mentioning the _rate_ of poverty or welfare participation,
which is where the common perception that blacks and latinos abuse the welfare
system comes from in the first place. It's _much_ higher than it is or other
races. When you dig into the data, it usually turns out that stereotypes exist
for a reason, and this appears to be no exception.

~~~
djtriptych
Shocker: You completely misread the data from that source.

Table B in the link you posted shows 31,650* white people in poverty out of a
US total of 46,180. That's 68.5%.

* all numbers in thousands

~~~
stephencanon
To be fair, he’s describing “non-black, non-latino”, which I suppose most
closely aligns with “white non-hispanic” in that table: 19,599/46,180 or 42%.
No longer a majority, but still a plurality.

The whole argument is ridiculous, of course:

> If you want to convince white people in this country that doling out free
> money to the poor is a good idea, you're going to have to convince them that
> blacks and latinos aren't going to abuse that system en masse. The only way
> to do that is to try something similar in neighborhoods that are comprised
> predominately of minorities and cross your fingers that it is a success.

When did we have the double-blind controlled study showing that the mortgage
interest tax deduction wouldn’t be abused by the upper middle class "en masse"
as a tax-protected store of wealth, contributing to a wildly over-inflated
housing market?

Perhaps you can point me to the literature showing that carried interest being
taxed as capital gains wouldn’t lead to wealthy fund managers being able to
claim zero “income”?

Budget policy in the US (or anywhere, really) isn’t set by enlightened
scientists who carefully consider the sociological and economic consequences.
Voters and politicians are swayed by pundits and lobbyists, not by scientific
studies. Get the right people to endorse an idea with the right (specious but
superficially convincing) talking points and you too can help set public
policy.

~~~
lmm
> When did we have the double-blind controlled study showing that the mortgage
> interest tax deduction wouldn’t be abused by the upper middle class "en
> masse" as a tax-protected store of wealth, contributing to a wildly over-
> inflated housing market? > Perhaps you can point me to the literature
> showing that carried interest being taxed as capital gains wouldn’t lead to
> wealthy fund managers being able to claim zero “income”?

It doesn't matter. Voters don't hate the upper-middle-class, and they don't
hate fund managers enough to vote differently. And sure, it would be nice if
the electorate were less racist (and I'd support efforts to change that), but
in the here and now we want to introduce positive policies, and we have to do
that with the electorate we have rather than the electorate we wish we had.

------
dahart
This idea was explored a bit more thoroughly in an episode of This American
Life

[http://www.npr.org/blogs/money/2013/08/16/212645252/episode-...](http://www.npr.org/blogs/money/2013/08/16/212645252/episode-480-the-
charity-that-just-gives-people-money)

They discuss and question the validity of the very deeply held belief that if
you "give a man a fish and you feed him for a day; teach a man to fish and you
feed him for a lifetime."

While its very hard to argue with this logic, and it seems so true and
obvious, it also implicitly assumes that the poor are poor due to lack of
education, rather than due to lack of money.

I can't defend GiveDirectly or stand by any claims made on either side, but
apparently the results they're achieving is some evidence that the poor really
do just need some seed funding to launch from, much like startup companies
need inital funding in order to launch.

One thing I'm sure of, whether you're poor or trying to start a company is
that its _very_ hard to start your virtuous growth cycle without a little
money.

------
jusben1369
This is really interesting stuff. I know they touched upon it but these
studies, if they really want to change things, need to do a much better job of
showing an "ROI". Too often these studies seem goaled around showing that
poverty has a negative impact and assume the logical next step is so we'll
address that. However, many people don't have an issue with others being in
poverty; particularly if they believe they're being asked to have to take
anything out of their pocket to solve that problem.

Generalizing; those that are against wealth redistribution aren't going to be
convinced otherwise based on the decrease in mental illness amongst the poor
or higher grades in school. The numbers around the cost of someone spending a
year or more incarcerated is well known. The cost of a transfer is well known.
_IF_ you can show "You really want to ensure that a family of 4 has this much
coming into the household to ensure it doesn't cost _you_ much more later"
then you could go a long way to bringing new supporters into the fray.

~~~
joelrunyon
I'm always surprised people yell about the U.S. not wanting to help those in
poverty. I think that's pretty well refuted by noting that the U.S. is #1 in
charitable giving [1]. The bigger problem seems to be people trusting
government imposed redistribution schemes rather than the rejection of them
altogether.

[1][http://www.huffingtonpost.com/2011/12/19/world-giving-
index-...](http://www.huffingtonpost.com/2011/12/19/world-giving-index-us-
ran_n_1159562.html)

~~~
anigbrowl
The US is #1 in charitable giving because it's so easy to get a tax deduction
for doing so. If people had to give out of their after-tax income I suspect
you'd see a quite different picture.

~~~
grkvlt
It's not _exactly_ a tax deduction though... In the UK, for example,
charitable donations are 'tax free' effectively, since the recipient will
recieve an extra amount based on the marginal income tax rate you are paying.
The only beneficiary here is the charity, and only if you make an explicit
donation from your after-tax income. It's not like the government is allowing
you to choose to redirect the tax you're due to charity. In the US, I believe
the situation is similar.

~~~
lmm
In theory a donation of $1 in the US is exactly equivalent to a donation of
$.70 or so in the UK. But psychologically it seems that people are much more
willing to donate more and get money from the government.

(The other thing I've wondered about is how much of the US's charitable
donations are simply tax fraud).

------
pasbesoin
The outfall of WWII could perhaps be considered one of the largest instances
of "stipends" (both domestically for the U.S. and overseas) ever perpetrated.

The outcomes, from my perspective, were "not so bad".

From my perspective, the question can be broken down to two points or serial
steps:

1) Do people have the resources to take care of and improve themselves?

2) Do they use and apply those resources well?

Without 1), you can't have 2). And research appears to be showing that, given
1), people and extant systems are or can actually be pretty good at getting 2)
right.

Otherwise, it seems to come down to poverty as the reason and excuse for
perpetuating poverty. (AKA they -- or/and _we_ \-- aren't capable of any
better. (And in some cases, don't appear to want any better -- "my, me,
mine".))

I, for one, am not willing to accept and settle for such a perspective and
approach.

~~~
gjmulhol
Well said. I think there are valid arguments on each side. What, to me, seems
to hold back a lot of healthy discussion is a reliance on anecdotes by both
sides. It is very easy to assume that if you give an alcoholic father some
money, he will spend it on alcohol. I am sure this is the case in some
situations, but I think your point about applying resources well, especially
when children are involved, is critical and true.

------
programminggeek
I'm not exactly sure where the meme of giving a minimal guaranteed income came
from (and I only mention it because this seems to be along the similar lines).
However, it is worth noting that income inequality has as much to do with the
middle class as it does the poor.

I'm not exactly pro-union as they tend to outlive their usefulness, but in the
absence of something similar, the average employee basically gave up their
bargaining rights probably decades ago and since then the people at the top
who know how to bargain are getting ahead faster than anyone else.

I don't know if a guaranteed income for the poor would help out a lot and I
don't know how you would even pay for such a program. What I do know is in a
consumer driven economy, more money is made by all if people are spending it,
and the people at the top who get paid the most just don't spend enough to
keep things moving up and to the right forever.

I do agree with the idea that somehow people lower on the economic ladder need
to get paid more and that would benefit society as a whole. Heck, even Henry
Ford seemed to understand that point. Somehow, that notion has been lost on
modern society and I find that to be somewhat sad.

------
splitrocket
Give a man a fish, he will eat for a day.

Teach him to fish, he and his family will eat fish the rest of his life.

Give a man a consistent supply of fish and maybe, instead of fishing all day
to feed his family, he could go to trade school and learn to be an HVAC
engineer, send his kids to MIT and retire at 55 to Naples Florida.

------
protomyth
I should point out that not all state compacts with tribes that enable casinos
allow for direct payments to tribal members. This is generally done to "allow
the money to go into social programs", but it generally increases corruption
to some amazing levels.

~~~
icelancer
Correct. In WA state they force the tribes to spend it "within the community,"
which ends up as huge hotels and other ridiculous expenses that don't help the
poor members of the tribe.

~~~
vl
I live in WA and I don't understand why local city casinos are choked, but we
allow some specific groups to run casinos 30 minutes away by different rules.
How is it making any sense? Lets run casinos on the same enabling rules and
get taxes back to communities. The situation now is that members of all
communities play, 3 communities pocket the profits.

~~~
icelancer
Well... my point was a bit different. WA state grants tribal casinos better
licensing for gambling as well as other breaks, but X% of the profits must be
"re-invested" into the tribe by law.

Although the tribes by and large fund education, medical expenses, and other
stuff rather well, it still leaves a huge surplus of money they are forced to
spend on community "reinvestment." And that's how you get the ridiculous
Tulalip hotel, and there's tons of outrage at the tribe for this - when in
reality the law is forcing them to spend it.

~~~
vl
Are you talking about hotel on top of the casino? Why is it ridiculous? It
seems like natural and good business development for casinos to have hotel
near by. Or are they pissed about funds reappropriation back into business
instead of being spent on community needs?

------
randall
As a weird startup parallel: As a bootstrapped company, you make very very
different decisions than you would as a company who has even the tiniest bit
of runway. I imagine (not to trivialize poverty) things would be similar.
Instead of seeing bigger picture, you're trying to figure out how to pay the
bills already owed, etc.

------
nnq
Another restatement of the obvious. Hopefully the studies' data will help
convince people once and for all that:

 _MONEY matters_ a lot, in all aspects of life: it makes people healthier
(both physically and mentally), improves actual/usable creativity and
intelligence, leads to better education and better social webs, _ESPECIALLY
when coupled with MORE FREE TIME_ (yes, it matters a lot that the Cherokee
that got that money didn't have to spend more time working in order to get
it).

Doing what you love matters, but until a certain wealth threshold, being
better compensated for what you do (whether you like it or not) and having
enough free time, matters more (an no, people that get more by working more
don't get all the benefits of that "more" they get, it also matters to "get
more by giving less").

------
vinceguidry
The problem with this, I think, is that people will quickly forget about the
bad conditions that created the need for the stipend and only see the people
using it for drugs. Politically, this works out to 'unfeasible'.

After all, isn't this almost exactly what food stamps are? Technically not a
stipend, but they're pretty readily converted to cash on the secondary market.

~~~
1stop
Australia has the equivalent of a "stipend" for poor, unemployed, students,
single parents, etc. Plus free healthcare for everyone.

It is a hugely successful program with a very low percentage of exploitation
(i.e using the money for drugs, or contributing to unemployment rate). It has
been constantly tweaked for the last 20 years.

You don't need to look at obscure tribal examples within America, you can just
look at Australia (a very similar society to the U.S) to see this is a good
policy with extremely positive outcomes for society.*

* I'll caveat this with, if you can afford it. Australia is in a super good position with regards to it's GDP/Capita and has been for the last 20-30 years, so it's difficult to say whether this is sustainable in the (even) longer term, or in countries without the same advantages.

~~~
vectorsys
The healthcare isn't free no matter how many times you people say that.

But you're also wrong about Australia being "a very similar society to the
US". Maybe at one time, but Australia has some very authoritarian laws these
days - from gun control to internet filters, etc..

~~~
1stop
Healthcare is free in that anyone anywhere can go to a hospital with anything
and be treated for it without paying anything. (And everyone who earns enough
money pays taxes).

You really want to argue that healthcare isn't 'free'?

Gun control isn't 'authoritarian' it's sensible. Only with a screwed up U.S
agg-prop point of view could you construe it as 'authoritarian', there is no
mention of guns as a "right" in any of Australia's (or almost every other
country in the worlds) constitution or case law... So could you justify how
you came to your point of view?

There are no active internet filters in australia... Though there is talk of
them, and some ISPs filter stuff... Do I need to remind you about Wikileaks
getting it's Amazon servers shutdown... Even if there was a filter in
Australia, it would be 'closer' to the US not further in similarities.

~~~
vectorsys
Australia is very authoritarian. They actually confiscated the guns. not just
made them illegal. They threatened law abiding citizens with prison time for
not turning them in.

Here
[http://rense.com/general81/ligun.htm](http://rense.com/general81/ligun.htm)
when other authoritarian regimes have confiscated guns.

Not only that, but crime went up in Australia. Obviously the criminals didn't
turn in their guns.

Australia also makes it mandatory to vote. Any kind of forced action like that
is very authoritarian.

~~~
chii
Mandatory voting is more democratic. The US should do the same.

~~~
biafra
What does mandatory voting mean exactly?

Can I still vote invalid?

What ist the punishment for not voting?

~~~
1stop
You have to show up (or post) a vote, there is no requirements on your actual
vote (it can be completely blank, or a picture of ponies... but you have to
put your bit of paper in the ballet box (or postbox)).

Punishment for not voting is usually a fine. Though encouraging people not to
vote or to post invalid votes (i.e. subversion), can carry jail terms of up to
12 months (from memory).

------
splitrocket
From Milton Friedman, archmage of conservative, supply side economics:
[http://en.m.wikipedia.org/wiki/Negative_income_tax](http://en.m.wikipedia.org/wiki/Negative_income_tax)

------
mathgeek
I would think one of the important elements here is that the sample is so
small, allowing for less fraud and less room for overlooking errors in the
payments. I think the effects would be similar on a larger scale, just as a
guess, but the "headline making" fraud and mistakes would draw more negative
reaction than they should.

------
beedogs
One thing that happens is that conservatives pitch a hissy-fit.

------
kiddz
I read through a lot of the comments so far and they expectedly turned into a
stream of educated opining for and against the validity of stipends for the
poor. Although many points are well said, do they really matter? Seems like
the fundamental point is the ongoing lack of experimentation around poverty
alleviation that leads to a Duke researcher only having a small Indian
community that she has been studying who then gets a casino to be the only
opportunity to see potentially innovative policy initiatives.

I'd love to see block grants distributed to states for a competitive process
of poverty reduction (or pick any another long term social cost) where such
experimentation could become institutionalized and there'd be a lot more to
talk about.

~~~
nickthemagicman
This. Every libertarian has some anecdote about a lazy poor person driving a
lincoln navigator on food stamps and every democrat has an anecdote about some
old lady shivering at a bus stop with starving kids.

What we need here is science! We're in the stone ages stil.

------
logicallee
I wonder what would happen if you gave a stipend to kids with a high IQ, just
take a test monthly and get a bit of cash no questions asked. They could eat
and support their family or wahtever. start a business with it. Also would
motivate them to study hard.

Steve Jobs was supposedly given a few dollars in exchange for performing his
schoolwork, by one of his teachers. Could that have had a positive effect on
establishing a virtuous cycle of hard work for him?

~~~
bluedevil2k
The problem with this idea is that in general, smart kids come from smart
parents, and in general, smart adults earn more income (and thus are less in
need of a supplemental income)

~~~
clavalle
The problem with your analysis is 'in general'.

There are a lot of kids who fall into the Mariana trench size cracks of 'in
general'.

~~~
bluedevil2k
"In general" is good for macroeconomic proposals - I'm saying if you give
money to all smart kids, it would end up on average transferring money to
higher income families.

------
nathanvanfleet
It's sad that long-term programs just don't happen. And if they ever do happen
they don't survive forever due to "austerity" measures.

------
mattgibson
FYI: View with JS turned off to avoid the paywall overlay and stop the article
from disappearing.

------
protomyth
I have a sever problem with equating what is a dividend from a group owned
business with welfare. It is insulting in the extreme. There is a sense if
ownership that is not present in our welfare system.

------
GotAnyMegadeth
> Today, more than one in five American children live in poverty.

Wow

------
af3
Someone, put it on the pastebin please!

~~~
ChrisNorstrom
Just copy the URL and paste it into a Google Chrome Incognito Window.

------
fuckpig
Another cherry-picked study that will be refuted in the coming years.

What happens when you distribute money: it dissipates and poverty for all
results.

But don't take it from me, Comrades!

------
frogpelt
Why do we even need to ask what happens when the poor receive a stipend?

Go look in the inner cities. Go to the rural communities and find a trailer
park. It's happening now. What has the result been?

~~~
paperwork
Not clear what you mean by "It's happening now." What's happening?

~~~
bluedevil2k
Welfare, food stamps, Social Security disability

~~~
danudey
Those three programs are, in most cases, barely enough to live on, especially
not to live comfortably. Even if you make good choices, being on welfare and
food stamps still provides you almost no opportunities other than getting as
many minimum-wage jobs as you can.

You're talking about programs designed essentially to keep people alive and
nothing more; to prolong life for its own sake. Minimum income is a way of
ensuring that people can remove the stress and worry of being constantly broke
and hungry so that they can focus on bettering their lives - going to school,
choosing a good job, being able to afford a car, feeding their kids proper
meals, and so on.

There is no comparison between the minimum subsistence that welfare provides
and the programs that are being discussed here.

~~~
frogpelt
Food: The SNAP program spent $76.4 billion in 2013. The maximum amount that a
family of 4 can receive is $632/month.

Other: The TANF program spent $33.3 billion in 2013. Maximum benefit for
family of 3 in California is $702/month.

Housing: Section 8 Housing Choice Voucher Program spends somewhere around $17
billion per year to provide housing. The maximum voucher that can be received
is $2,200/month.

Education: K-12 Public schools are free with free lunches for the poor.
Depends on the neighborhood how good the education is.

Pell Grant: The program was appropriated ~$36 billion to award in 2011. Most
recent maximum benefit per year was $5,645. Max number of years is six. 6 x
$5,645 = $33,870.

In addition, to these benefits if a family does earn an income low enough to
qualify for these benefits another benefit is not having to pay taxes. There
is a 10% tax on the lowest bracket but it is returned in credits and
deductions thus moving the effective tax rate to zero and if the W-4 is
adjusted the taxes that will be taken out are almost nil.

If a family received half of the max for each of the items above they could
for five years receive ~$1700/month plus Pell Grant money to go to college.
After 5 years, TANF is no longer available.

