A Case For Giving Money To Those Who Are Bad With Money
This is a short lesson, but one I return to again and again — a lesson I learned from Rutger Bregman in his book Utopia for Realists.
The Assumption
It’s easy to believe that poor people are poor because they make bad decisions.
Firstly, this assumption helps us make sense of why poverty exists, because we know from experience that bad decisions lead to bad outcomes. It gets us off the hook for living happily alongside poverty, after all, we are where we are in life because we have made better decisions than those who are not doing as well…
“Poverty is a personality defect.” — Margaret Thatcher
Secondly, we see evidence of poor people making bad decisions. We see homeless people being unproductive, we see poor teenagers dropping out of high school at a higher rate, and we see crime and anti-social behavior accruing in low socio-economic regions. However, as discussed in Saving Lives Reduces Over-Population, correlation isn’t causation, and sometimes a counter-intuitive cause is at play.
The (counter-intuitive) Reality
But, while bad decisions can lead to poverty, it turns out people in poverty might also make worse decisions because they are poor.
This post continues at nonzerosum.games with interactive elements that can’t be replicated here on LW, please visit the site for the full experience.
Do you believe the result about priming people with a $1500 bill and a $150 bill? That pattern matches perfectly to an infinite list of priming research that failed to replicate, so by default I would assume it is probably wrong.
The one about people scoring better after harvest makes a lot more sense since, like, it’s a real difference and not some priming thing, so I am not as skeptical about that.
I’d be interested in reading up on the replication problems with priming if you have any links. I wasn’t on guard for this sort of research, so it seemed plausible to me. All of this goes against our general intuitions that people need to feel their poverty to get motivated for working, so I’m more likely to accept scientific research than assume it’s wrong and that my intuitions are correct.
I suspect the causality is never that simple. There is likely a correlation between bad money-related decisions and many types of poverty, but there’s too much variation to be able to say that one causes the other, and CERTAINLY not that changing the money will change the behaviors.
Some of the obvious behavioral problems correlated with extreme poverty in an otherwise-rich society are drug use or personality/mental-health issues that prevent holding a job. In many cases, this isn’t severe enough to CAUSE poverty, but it’s contributory, and prevents ESCAPE from poverty if other circumstances cause it.
There are likely other categories of poor decision-making which could be improved by alleviation of poverty.
Wait, are you trying to tell me that drug addiction and mental illness contribute to poverty? That seems like a stretch… (jokes)
I feel like that’s is a given, the factors that perpetuate poverty are manifold. The article focuses on this finding because it reveals a counter-intuitive and therefore easily overlooked contributory factor (and a significant one at that).
I didn’t mean at all to suggest that this finding was the only contributory factor, or that it could be solved with any one solution (which is why the title of the last section reads “a” solution, not “the” solution).
Thanks for reading and responding :)
What are the interactive elements? I didn’t see any, so I’m curious what the “full experience” was supposed to be.
Oh, sorry, that was largely boiler-plate, while this post did have some hover-over info which didn’t translate to LW (which was actually kind of important, as it provided some disclaimers and caveats to points made) it’s probably not what you’d call a “full experience”. Some other posts on the site have simulations.
Though I do think the overall aesthetic of the posts on the site is subtly important for the tone of my writing (generally a not too serious tone).
How do you know one effect is bigger than the other?
I don’t mean to assert that one effect is bigger than the other, more that together they create a vicious cycle. No one disputes that bad decisions can lead to poverty, that’s common sense, or that other factors influence it, but if poverty itself is a multiplier it stands to reason that that needs to be addressed as part of any potential solution. The next post (dropping Saturday) is about how, in such coordination problems, multiple factors must align in order for any one solution to be effective.