Poor People Make Bad Choices Not Because...

[ExiledInIllinois]

...They are stupid but, because they are just overwhelmed. Commence fireworks!

 

http://inplainsight.nbcnews.com/_news/2013/08/29/20247880-poor-people-arent-stupid-bad-decisions-are-from-being-overwhelmed-study-finds?lite

 

Good thing I am loaded. Well, not that loaded. ;-) ;-)

 

"They’ve done a series of tests that show when people are flush with cash, they can stop worrying and make better decisions. But having financial woes takes up so much attention, they often make poor decisions."

 

Answer: So give people more choice! :-O

 

"The team’s been trying to figure out why people who are poor seem to exist in a vicious cycle of poverty. Much of it seems to boil down to what is taking up their attention, the international team of researchers found.

 

"Imagine you're sitting in front of a computer, and it's just incredibly slow," says Harvard economist Sendhil Mullainathan, who worked on the study.

 

"But then you realize that it's working in the background to play a huge video that's downloading. It's not that the computer is slow, it's that it's doing something else, so it seems slow to you. I think that's the heart of what we're trying to say.""

Edited August 30, 2013 by ExiledInIllinois

[/dev/null]

But they still smell bad

 

To bathe or not to bathe, quite difficult dillema

[BuffaloBill]

This is a topic that has been on my mind as here in Chicago you see extremes of wealth and poverty. There is significant public discussion about the strength of the downtown core of Chicago. Yet a few short miles away there is extreme violence and poverty. An interesting comment I heard from an older guy one day was that we are not losing the middle class we have lost the working class. He was pointing to the fact that for many people a good factory job was important because they wanted to earn a good living but to do so in a balance of life's activities.

 

I am a firm believer in the American dream but do see where this concept is losing ground in a hyper competitive global economy.

[The Poojer]

there is a lot of merit in this...i have dealt with my financial struggles in the not to distant past, and it can be crippling at times trying to figure out what you have to pay, what you can pay and what you are left with afterwards...it can get so tense at times and often times you find yourself not doing anything out of fear and that just gets you in deeper.

[PromoTheRobot]

This is a topic that has been on my mind as here in Chicago you see extremes of wealth and poverty. There is significant public discussion about the strength of the downtown core of Chicago. Yet a few short miles away there is extreme violence and poverty. An interesting comment I heard from an older guy one day was that we are not losing the middle class we have lost the working class. He was pointing to the fact that for many people a good factory job was important because they wanted to earn a good living but to do so in a balance of life's activities.

 

I am a firm believer in the American dream but do see where this concept is losing ground in a hyper competitive global economy.

Great point. America has been eating the economic "seed corn" since Regan. The big economic boom was not fueled by growth but by liquidation of our assets.

 

PTR

[GOBILLS78]

there is a lot of merit in this...i have dealt with my financial struggles in the not to distant past, and it can be crippling at times trying to figure out what you have to pay, what you can pay and what you are left with afterwards...it can get so tense at times and often times you find yourself not doing anything out of fear and that just gets you in deeper.

 

Pooj, you know the answer is always beer and toilet paper.

[NoSaint]

there is a lot of merit in this...i have dealt with my financial struggles in the not to distant past, and it can be crippling at times trying to figure out what you have to pay, what you can pay and what you are left with afterwards...it can get so tense at times and often times you find yourself not doing anything out of fear and that just gets you in deeper.

 

theres been recent studies into weight loss and obesity - that i do take with a grain of salt and havent really looked at beyond a paragraph primer - but they talk about how people only come with a limited supply of willpower and rational decision making in a day and as it presses on and you use that up it becomes harder and harder to make choices that delay gratification. this seems right up that alley. if you are less stable financially you have to make a lot more major financial decisions every day, and that has to create some sort of fatigue. thats not to excuse the bad choices but conceptually it makes some sense to me.

[Chef Jim]

And then there is the argument which is probably more the case than them being stupid. People are poor because they make bad choices.

[KD in CA]

theres been recent studies into weight loss and obesity - that i do take with a grain of salt and havent really looked at beyond a paragraph primer - but they talk about how people only come with a limited supply of willpower and rational decision making in a day and as it presses on and you use that up it becomes harder and harder to make choices that delay gratification. this seems right up that alley. if you are less stable financially you have to make a lot more major financial decisions every day, and that has to create some sort of fatigue. thats not to excuse the bad choices but conceptually it makes some sense to me.

 

As Biggie said, "Mo money, mo problems". I would suggest that people with more money make a lot more finanical decisions and have a lot of stress over making the correct or incorrect ones. Also, people earning more money generally have jobs in which they have to make decisions that have consequences; that burns up a lot of that rational decision making capacity, right? People who just go through the motions at work all day should have plenty left to manage their life.

 

Not to suggest being poor is a walk in the park, but this 'study' sure feels a lot like people trying to justify a pre-conceived notion.

 

Throwing money at poor people doesn't suddenly make them better decision makers. Take a look at 90% of lotto winners and pro athletes. Or politicians.

[NoSaint]

 

 

As Biggie said, "Mo money, mo problems". I would suggest that people with more money make a lot more finanical decisions and have a lot of stress over making the correct or incorrect ones. Also, people earning more money generally have jobs in which they have to make decisions that have consequences; that burns up a lot of that rational decision making capacity, right? People who just go through the motions at work all day should have plenty left to manage their life.

 

Not to suggest being poor is a walk in the park, but this 'study' sure feels a lot like people trying to justify a pre-conceived notion.

 

Throwing money at poor people doesn't suddenly make them better decision makers. Take a look at 90% of lotto winners and pro athletes. Or politicians.

 

definitely, and i get that side of it too. i was just saying when "which bill do i pay" or "what can i afford to eat after i pay my rent" is a pretty heavy level of stress day to day that middle class "should i put 6 or 8% in my retirement account" doesnt come with. as chef and you each point out, obviously bad decision making skills regardless of means is often the problem.

[BuffaloBill]

 

 

As Biggie said, "Mo money, mo problems". I would suggest that people with more money make a lot more finanical decisions and have a lot of stress over making the correct or incorrect ones. Also, people earning more money generally have jobs in which they have to make decisions that have consequences; that burns up a lot of that rational decision making capacity, right? People who just go through the motions at work all day should have plenty left to manage their life.

 

Not to suggest being poor is a walk in the park, but this 'study' sure feels a lot like people trying to justify a pre-conceived notion.

 

Throwing money at poor people doesn't suddenly make them better decision makers. Take a look at 90% of lotto winners and pro athletes. Or politicians.

 

Nobody said throw money at them. I think the core of the issue is whether there is opportunity available to them. Jobs that pay a sustainable income are the bedrock that the economy has to be built on. The problem seems to be in numbers. Jobs that pay enough for people to live some version of the American dream are less plentiful. Statistics clearly show that what was described as the middle class is shrinking. Economic forces are causing a bifurcation in economic outcomes.

 

There is also a perception issue. Look at the examples they use for the "American Dream" in the article - people who went from poverty to excessive wealth and in Oprah's case societies new standard for success - fame. What happened to the idea that the American Dream also included the notion of earning a decent living, being able to manage a reasonable expense base and experiencing some joy in life. Sadly to many the new ideal is categorized by being uber wealthy and famous.

[Captain Hindsight]

there is a lot of merit in this...i have dealt with my financial struggles in the not to distant past, and it can be crippling at times trying to figure out what you have to pay, what you can pay and what you are left with afterwards...it can get so tense at times and often times you find yourself not doing anything out of fear and that just gets you in deeper.

Yup. Last year I was an intern and every penny counted. You really prioritized things and sacrificed a ton to make ends meet. its not fun at all. I learned a lot, but I wouldn't want to stay there long

 

And then there is the argument which is probably more the case than them being stupid. People are poor because they make bad choices.

Plenty of truth here too

 

Nobody said throw money at them. I think the core of the issue is whether there is opportunity available to them. Jobs that pay a sustainable income are the bedrock that the economy has to be built on. The problem seems to be in numbers. Jobs that pay enough for people to live some version of the American dream are less plentiful. Statistics clearly show that what was described as the middle class is shrinking. Economic forces are causing a bifurcation in economic outcomes.

 

There is also a perception issue. Look at the examples they use for the "American Dream" in the article - people who went from poverty to excessive wealth and in Oprah's case societies new standard for success - fame. What happened to the idea that the American Dream also included the notion of earning a decent living, being able to manage a reasonable expense base and experiencing some joy in life. Sadly to many the new ideal is categorized by being uber wealthy and famous.

A big problem I don't think is dicussed often enough is the amount of people in the world. Maybe we don't have enough jobs for people, because there are simply too many people

[BuffaloBill]

 

A big problem I don't think is dicussed often enough is the amount of people in the world. Maybe we don't have enough jobs for people, because there are simply too many people

 

I always think back to an Econ prof who said that poverty is a necessary driver in any functioning economy. His point, perhaps not understood, was that people needed to be motivated to either emerge out of poverty or to not fall back into it.

 

Another point of information to understand in the picture is multi generational poverty. In these circumstances there does appear to be more hopelessness on top of what may be bad choices. I tend to think these are the ingredients that cause people to turn to drugs, crime and violence.

 

People have to have the hope and belief that they can emerge out of difficult circumstances and this is maybe the power of the middle class. It is hard to see how one can rise from poverty to the examples of extreme wealth bounced about. It is much easier to see moving from poverty into a more stable situation that is closer to where you are today.

 

 

[boyst]

Alright. So poor people are what? Annual income of under how much? Hourly wage under what? Boards opinion?

[The Poojer]

I consider people to be poor if they haven't had the pleasure of knowing me

 

Alright. So poor people are what? Annual income of under how much? Hourly wage under what? Boards opinion?

[BuffaloBill]

Alright. So poor people are what? Annual income of under how much? Hourly wage under what? Boards opinion?

 

There is a meaningful variables that comes into play ... Mainly where you are living and how big your family is. If you are trying to raise two kids in Wichita you are in a very different set of circumstances than trying to raise four in metropolitan NYC.

 

There are plenty of studies that suggest for a family of four living in an average cost of living situation that an income of $40,000 is sufficient to live on. Therefore, using this same family I would guess that an income that was $1000 less per month or $28,000 puts them in poverty and very difficult circumstances.

 

I think a part of this also has to do with how well you can absorb inevitable financial shocks. So my $12,000 difference above is that cushion and without it I can only guess that life would be exceptionally difficult. Even at the $ 40,000 number it would not be hard to slip into a pretty difficult set of circumstances due to a sudden and unexpected financial hit.

 

Finally, health insurance or the lack of it is also very meaningful. The family of four is likely to have some experience through an accident or illness with the healthcare system. Whatever savings they have could be wiped out very quickly due to healthcare costs.

[Jauronimo]

I always think back to an Econ prof who said that poverty is a necessary driver in any functioning economy. His point, perhaps not understood, was that people needed to be motivated to either emerge out of poverty or to not fall back into it.

 

Another point of information to understand in the picture is multi generational poverty. In these circumstances there does appear to be more hopelessness on top of what may be bad choices. I tend to think these are the ingredients that cause people to turn to drugs, crime and violence.

 

People have to have the hope and belief that they can emerge out of difficult circumstances and this is maybe the power of the middle class. It is hard to see how one can rise from poverty to the examples of extreme wealth bounced about. It is much easier to see moving from poverty into a more stable situation that is closer to where you are today.

Very true. Capitalism guarantees that there will be winners and losers. Poverty is the ultimate dis-incentive for poor behavior, and extreme wealth the ultimate incentive for hard work and innovation. Some people cannot handle that truth.

 

While it seems cruel at first glance, I don't shed too many tears for the poorer classes of Americans since our system has substantially increased their standard of living as well. Americans struggling to make ends meet often own homes, drive the same (or often better) car that I do, have the same phone, and the same TV. Where would you rather be poor than right here right now?!?!

[BuffaloBill]

 

While it seems cruel at first glance, I don't shed too many tears for the poorer classes of Americans since our system has substantially increased their standard of living as well. Americans struggling to make ends meet often own homes, drive the same (or often better) car that I do, have the same phone, and the same TV.

 

The problem with this sentiment is that people need to have the belief that there is an opportunity to rise above their current circumstances. I think for many this belief is evaporating and that is scary from a societal standpoint. I truly believe the strength of America comes from this belief tied to a love of freedom.

 

The poor of other countries came here by the thousands because of these ideals. For a long time those thousands did mostly live in an experience of improved economic mobility. What are we left with if this is lost?

 

 

[ExiledInIllinois]

 

 

Nobody said throw money at them. I think the core of the issue is whether there is opportunity available to them. Jobs that pay a sustainable income are the bedrock that the economy has to be built on. The problem seems to be in numbers. Jobs that pay enough for people to live some version of the American dream are less plentiful. Statistics clearly show that what was described as the middle class is shrinking. Economic forces are causing a bifurcation in economic outcomes.

 

There is also a perception issue. Look at the examples they use for the "American Dream" in the article - people who went from poverty to excessive wealth and in Oprah's case societies new standard for success - fame. What happened to the idea that the American Dream also included the notion of earning a decent living, being able to manage a reasonable expense base and experiencing some joy in life. Sadly to many the new ideal is categorized by being uber wealthy and famous.

 

BINGO!

 

IMO, same w/pensioners. Pensions years ago were to provide simple security. Simple security. Yet, as the study finds out, simple security leads to better choices. Now it seems most want that pension to secure a lavish and dream lifestyle! :-O

 

"OMG! I have to retire and sail around the world! Spend winters down south and summers up north!" Huh?

 

Anyway, this study is what many have suspected for a long time. For me, living a working class existence, it is like saying water is still wet. I totally agree w/what Pooj mentioned above. Again, throwing money @ the problem is NOT the answer. BUT, giving people more (even complicated) choice is not helping either. Of course, people will never be free of "want." IMO, growing up in a working class home, it was a bit "easier" for my parents and in-laws years ago. The choice was just not there to screw up as much. What I mean is, it was harder for any disposable income to burn a hole in one's pocket... IMO and from what I have lived through. Maybe that is my perception but, it just seemed easier back then. That I think is the crux of the: "Mo money, mo problems" line. Yet, today there are more protections place... BUT just as the article mentions, a lot are complicated to figure out. And if one is taxed cognitively, how the hell do you think they are gonna make the right choices? Vicious cirlce, IMO. The study hinted on how to help the problem.

 

 

There is always two sides to an equation.

[DC Tom]

...They are stupid but, because they are just overwhelmed. Commence fireworks!

 

http://inplainsight....tudy-finds?lite

 

Good thing I am loaded. Well, not that loaded. ;-) ;-)

 

"They've done a series of tests that show when people are flush with cash, they can stop worrying and make better decisions. But having financial woes takes up so much attention, they often make poor decisions."

 

Answer: So give people more choice! :-O

 

"The team's been trying to figure out why people who are poor seem to exist in a vicious cycle of poverty. Much of it seems to boil down to what is taking up their attention, the international team of researchers found.

 

"Imagine you're sitting in front of a computer, and it's just incredibly slow," says Harvard economist Sendhil Mullainathan, who worked on the study.

 

"But then you realize that it's working in the background to play a huge video that's downloading. It's not that the computer is slow, it's that it's doing something else, so it seems slow to you. I think that's the heart of what we're trying to say.""

 

Did they do the test where a poor person wins the lottery, and six year later is dirt poor again?

 

Like Chef said - people are poor because they make bad decisions. And while people are usually taught to make bad decisions by living in poverty (my wife grew up poor - literally without shoes. She still can't handle money worth a damn, because when you're poor you learn to spend everything you have when you have it), a sudden influx of cash isn't going to change that decision-making paradigm. Being poor may teach bad judgement...but bad judgement perpetuates poverty, and eliminating poverty won't eliminate bad judgement.