
Why do the poor make poor decisions? - yusufp
https://medium.com/utopia-for-realists/why-do-the-poor-make-such-poor-decisions-f05d84c44f1a#.th0e5su00
======
jimrandomh
This article tries to shift perception from "poor people make bad decisions
because they're intrinsically dumb" to "poor people make bad decisions because
poverty makes them dumb." But this is also wrong; the decisions poor people
make are, for the most part, sensible decisions given the circumstances
they're in. Here's a list from the article:

> "The poor borrow more, save less, smoke more, exercise less, drink more, and
> eat less healthfully. Offer money management training and the poor are the
> last to sign up. When responding to job ads, the poor often write the worst
> applications and show up at interviews in the least professional attire."

Borrow more: because you only need to borrow if you don't have money.

Save less: because you can only save if you have money.

Showing up at interviews in poor attire: because good attire costs money.

Eat less healthfully: because healthy food costs more than unhealthy food.

Exercise less: because exercising requires the energy that poor diet and the
other stresses of poverty sap away.

Writing poor job applications: because applications are judged based on
whether they sound like something a poor person would write.

The only genuinely questionable decisions in the list are smoking and
drinking, but even these have sensible explanations that don't involve
moralizing.

I think the real answer is that things have been labelled "poor decisions" not
because they are strategically bad choices for the people who actually make
them, but because seeing someone make them provides others with evidence that
they're poor, which is stigmatized.

~~~
mac01021
I don't think that's the real answer. Each of your bullet points has some
truth to it, but is far from the whole story:

> you only need to borrow if you don't have money. > you can only save if you
> have money.

Certainly more income makes these easier. But consider the following
impossible-to-conduct-in-reality-experiment: Set group A to be a set of 100
randomly selected poor folks who are only qualified to be cashiers or stock
shelves. As group B, select a random set of people who currently earn 6-figure
salaries and doom them to only ever work the same class of jobs as group A for
the rest of their lives. I would not be surprised to find that the formerly
wealthy would, in general, borrow less and save more.

> healthy food costs more than unhealthy food.

While an optimal diet does certainly cost more than a calorically-equivalent
amount of cheetos, you can shop at walmart - buying only eggs, oatmeal, and
bananas - with the probable result that your diet will be both healthier and
cheaper than those of most low-income families.

> good attire costs money.

Maybe so, but anyone can get a dress shirt/jacket/slacks at a thrift store for
probably less than $30 all told. It won't be high-end clothing, but will at
least look professional.

> based on whether they sound like something a poor person would write.

Idk about this one. What would a poor person write? Is this just a matter of
whether they have good grammar? Nobody (almost nobody?) is conspiring to keep
the poor stuck where they are. I don't think anyone would reject a qualified
applicant just because they have no money.

I have no hard data to back this up, but I suspect that most of the
chronically poor's lack of success, and their poor decision making has much
more to do with the fact that their upbringing has not instilled into them (at
least not deeply enough) the idea that their current behavior can affect their
future wellbeing.

~~~
dyeje
I think this post is pretty ignorant.

Yea, people who were formerly rich will have better financial habits. If you
were born into poverty, who is going to teach you those good financial habits
in the first place?

Yea, that would probably be better diet. But do they even know how to eat
healthy? Do they have time to cook? Are they even able to get to a grocery
store?

Yea, you could probably get a decent suit at a thrift store for $30. But some
people literally can not spare that money. $30 could be the difference between
your kids eating or having a roof over your head.

~~~
mac01021
> I think this post is pretty ignorant.

I'm not expressing any animosity toward, or disdain for, people in poverty. I
agree with the article that being poor inhibits people's ability to make good
decisions for themselves, and that the best way to break the vicious cycle may
be to provide them with enough income that they have more freedom to make
decisions that will improve their circumstances.

I disagree with the parent comment's thesis that the poor don't make bad
decisions in their lives. That doesn't mean I blame them for their poor
circumstances or think that they deserve what they get.

> Yea, people who were formerly rich will have better financial habits. If you
> were born into poverty, who is going to teach you those good financial
> habits in the first place?

I agree. Your rhetorical question is correct.

> Yea, that would probably be better diet. But do they even know how to eat
> healthy? Do they have time to cook? Are they even able to get to a grocery
> store?

They probably don't know how to eat healthy - just like with the financial
habits. I think it must be a pretty small fraction, though, that doesn't have
access to a better diet than what they eat now. Cooking need not take more
than a single-digit-number of minutes.

> Yea, you could probably get a decent suit at a thrift store for $30. But
> some people literally can not spare that money. $30 could be the difference
> between your kids eating or having a roof over your head.

It's true that some people's circumstances are so poor that they cannot
survive an additional one-time $30 purchase and can't even set aside $1 per
day for a month despite their best efforts. If such a person interviewed for a
job that needed professional garb, I would hope that they would explain their
situation to the interviewer and that the interviewer would give them special
consideration. Maybe they wouldn't, but this scenario seems pretty rare to me
and not especially relevant to the discussion at hand.

~~~
dyeje
Yea, I didn't think you were being harsh or anything. I meant ignorant
literally. Certainly people in poverty make bad decisions, everyone makes bad
decisions, but alot of those bad decisions are based on a lack of education
that is largely out of their control.

I don't have hard numbers, but I think you are overestimating people in
poverty's disposable income and access to fresh groceries.

------
projectramo
TL;DR

Duke researcher Jane Costello tries to answer the question: do poor people
make poor decisions, or is it that poor decisions lead to poor people. In
order to answer this question, she looks at the extra money that a casino
brought in to a poor native tribe.

She concludes that it was poverty that was leading to the "poor decisions":

"Ten years after the casino’s arrival, Costello’s findings showed that the
younger the age at which children escaped poverty, the better their teenage
mental health. Among her youngest age cohort, Costello observed a “dramatic
decrease” in criminal conduct. In fact, the Cherokee children in her study
were now better behaved than the control group."

Importantly, the parents didn't work less. They worked just as hard but the
labor was redirected towards parenting.

~~~
dpc59
The second part of the article is pretty interesting too. Apparently giving
poor people money would save money in the long run.

~~~
dpc59
"Granted, it would take a big program to eradicate poverty in the U.S.
According to economist Matt Bruenig’s calculations, it would cost $175
billion. But poverty is even more expensive. A 2013 study estimated the costs
of child poverty at as much as $500 billion a year. Kids who grow up poor end
up with two years’ less education, work 450 fewer hours per year, and run
three times the risk of bad health than those raised in families that are well
off."

~~~
G43nm45ji
It seams like a lot, but then I think about military spending and at least its
less then that.

Can't really compare them more than that though.. I'm not trying to start
something. Just a thought.

~~~
noir_lord
I think the last figure I saw for military spending was 650bn a year.

Of course if you cut that by half you'd lose a lot of workers many of those
with families (in one respect you could look at the military as a jobs
program, what was the last time the US had more than 10% of it's total
military personal actually _fighting_ a war).

~~~
gertef
Imagine if the military was converted to be mostly Corps of Engineers,
building schools and roads and cafes, instead of building stuff to blow up.

~~~
majewsky
The left opposition in Germany has actually recently run a bill in Parliament
to establish a "Willy Brandt peace corps" next to our army. The line of
thinking is that the army is well-regarded because of their development aid
during foreign missions, and especially because of their help during domestic
natural desasters. If that reputation went towards a peace corps instead, we
would have an easier time arguing for less military spending.

------
pnut
I know more than a few poor people, and the one thing they all have in common,
is that they either consciously or by virtue of their personalities or
aptitude, do not treat maximizing financial impact as the primary criterion in
their decision making.

And I would venture that in general, this group of people thinks running
around, chasing money 'cause the man says it's important, is a sad way to live
your life.

------
elcapitan
"Poor Economics" is a good book about that topic, based on field studies of
the authors. I found the investigation of economics at those margins very
interesting. Most concepts of small business etc as people who have grown up
in the West don't work anymore at those margins, because people have to pay
enormous interest rates, shops can't really buy stock etc.

[http://www.pooreconomics.com/](http://www.pooreconomics.com/) and
[http://www.amazon.com/Poor-Economics-Radical-Rethinking-
Pove...](http://www.amazon.com/Poor-Economics-Radical-Rethinking-
Poverty/dp/1610390938)

------
SubiculumCode
Being poor is hard. There is no flexibility to be nimble around hardships or
mistakes.

Its easy to make money if you have money. But try to start a business with no
backup funds.or credit line? The first time your vehicle breaks down can put
your business in a death cycle.

~~~
yardie
Forget the breakdowns as an impediment to business. Most businesses have high
startup costs just from taxes and fees alone. I'm trying to start a small
hobby business and just getting the ball rolling I've forked over $500 in
filing fees. I imagine it must be nigh on impossible if you are poor and want
to start a small business. And I know people do it but they borrow heavily
from friends and family.

------
chadlavi
The trick is, how do you get anyone who doesn't already think UBI is a good
idea to read this line of thinking and agree with it? The 'bootstrapping'
mentality is crazy-strong in the US. Too many people say "I did it, so you
should be able to, also, and if not, that's your problem," without
understanding the underlying reasons behind how they overcame poverty and how
others get trapped in it.

------
noonespecial
"The poor are poor because all of their choices in life suck."

There are 2 ways to interpret that. Which one you choose has radical
implications for the methods you might use to remedy poverty.

------
joesmo
"Granted, it would take a big program to eradicate poverty in the U.S.
According to economist Matt Bruenig’s calculations, it would cost $175
billion."

Is that a correct figure? It's hardly that large and there's no excuse for us
not spending it to end poverty if it is.

~~~
AnimalMuppet
Agreed, except that it would have to be spent by Congress. That makes me...
let's say somewhat less optimistic about it being doable.

Could Congress allocate $175 billion? Sure. Could they sell it to the public
that it was worth it? Maybe. Could they do it in a way that actually
eradicated poverty, rather than throwing big chunks of it down the sewer? I'm
not optimistic.

If they could actually do it instead of larding it down with pork, though, I'm
all for it.

------
peterwwillis
In my city, the poor school children in 8th grade are at a 3rd grade reading
level. They also frequently go without food, have parents addicted to drugs,
and are in or have friends who are in gangs. There are also no jobs in their
neighborhoods and no transportation to areas that have jobs, that they can't
get anyway, because they're in 8th grade at a 3rd grade reading level. And
miraculously passing their exams every year.

Poor people do dumb things because they live in shitty situations and are
trying to survive, not thrive.

You don't mainline heroin because it's a great idea. You do it because your
drug addiction has progressed to the point where this is the only thing you
can do. You are addicted to drugs because it's the only thing you can do to
escape endless depression from how shitty your life is. And you were born into
this life, so "pulling yourself up by your bootstraps" seems less likely than
winning the lottery (hence why poor people play the lottery).

------
lhnz
The stress-caused-by-poverty narrative feels plausible to me but I'd like to
see more evidence.

Scott Alexander recently posted this study [0] that seems to show that stress
is not linked to poverty:

    
    
      > socioeconomic status has no relationship to hair cortisol level
      > which complicates theories about how many body systems are
      > affected by “the stress of poverty” since we might expect hair cortisol
      > level to be an indicator of biological stress levels.
    

On the other hand, a couple of years ago I lost access to my bank accounts for
2 months, and I will say it was a fairly stressful experience, and did force
me into situations where I made what I would generally consider bad economic
choices.

[0]
[http://biorxiv.org/content/early/2016/05/24/055244](http://biorxiv.org/content/early/2016/05/24/055244)

------
DavidTNcl
Because poor decision makers become poor.

~~~
st3v3r
Most executives of failing companies say hi.

------
PoorBloke123
A better question might be, why do poor US born Americans make poor decisions
while poor legal immigrants (regardless of race or color) arrive with nothing
and make wiser decisions. These first generation immigrant often escapes
poverty within 15-20 years (albeit with very hard work). Their children are
more successful then they were and far more successful financially than the US
born American's children.

Knowing some of these people immigrant and US born poor the answer is quite
obvious to me. No study needs to be conducted, only casual observation. Here
are the key differences.

The influence of the US culture is obvious in the US born American. He expects
more for less effort (entitlement), he is more easily discouraged when facing
adversity, he expects someone to care for him and hand him all the tools and
opportunity, his expectations are polar opposite of the immigrant (who expects
nothing but what he has earned with his bare hands). He is disillusioned
easily and when discouraged, drinks or abuses drugs to forget his problems. He
supports liberal or socialist ideals because he feels that they will put cash
into his pocket and bring down the wealthy people who "oppress" him. The US
born minority (non white) thinks the cards are stacked against him, the
minority immigrant sees other minority immigrants who have created wealth and
aspires to replicate their success despite it's challenges.

The culture of the US born poor person comes from the media (not just news -
all media) they consume and the media saturated people surrounding them. Plain
and simple that is the most corrosive thing. Secondarily, the idea that these
people must be helped out, they don't have to fight through adversity to
succeed. This is the worst thing you can do to a man. A man must be a man and
have a fighting will to survive and flourish. If you make him a dependent, you
are extinguishing this flame... perhaps forever.

Some of the immigrants I know come from socialist countries and they are
coming partly to escape from them. They respect the opportunity to work hard
and succeed whereas the US born man does not. Americans have been given too
much, they watch too many TV shows and other media which slants their view of
reality and what life really is like. They have been over medicated and
indoctrinated with views that are unproven and those which claim they are
proven "cannot be replicated" (psychological studies).

America needs to look back to see what has worked for us when we were great,
take some good things we have now that have worked and put some other things
back to the way they once were.

The most revealing thing when looking at immigrants is how by the third
generation, they hardly stick out from the lazy culture that their
grandparents were so different from.

TLDR: America is too liberal, has too much cheap crap from China (materialism)
and watches too much Garbage TV and other media and is too medicated. We are
lazy. An immigrant of any color comes over here and works his ass off,
escaping poverty.

~~~
AstralStorm
Cannot find a more bigoted version of it elsewhere of the Internet.

You do know said immigrants tend to work illegally or for subhuman wages,
pooling their wealth and network in local societies? They also tend to
immigrate not to rural our crime-laden parts of the US.

On the other hand, US poor are nuclear and in places with few perspectives.
They might be saddled with debt, a problem which the immigrants do not have.
(Medical, educational or housing.) Therefore helping them establish local
communities might be the first step, but it is not enough most of the time.
There have to be actual opportunities to be had.

It is easier to start with nothing in a good place, than with less than
nothing in squalor.

~~~
PoorBloke123
The people you describe are not the people I am describing. What debt do poor
Americans have? they can't even get credit. These immigrants I describe live
in ghettos along with the US born poor but guess which ones move out and into
a nicer neighborhood in ten years? Trust me, debt means nothing. We have this
thing called bankruptcy. I know plenty of people who were in debt, declared
bankruptcy and started over with a clean slate, they built themselves back up.
You have no idea what you are talking about.

------
paulddraper
Or, asked another way, "Why are people who make poor decisions poor?"

~~~
projectramo
If you read the article, it is about someone's attempt to tease apart which is
the cause and which is the effect.

In other words, the article is about debunking exactly this restatement.

------
SubiculumCode
BASIC INCOME

------
executive
TL;DR

Because they are poor.

