Why Do the Poor Make Such Poor Decisions? It May Surprise You

Our efforts to combat poverty are often based on a misconception: that the poor must pull themselves up out of the mire. But a…

Source: Why Do the Poor Make Such Poor Decisions? — Utopia for Realists — Medium

An incredibly fascinating explanation regarding several studies showing that when poor, bad decisions are made because there is a lack of ‘mental bandwidth’ not because of character. The studies show that it takes so much mental capacity to deal with the issues of ‘finding the next meal’ for instance that it’s much more difficult to make proper long term decisions that ultimately get a person out of their poverty hole.

It was shown that in the case of the North Carolina Eastern Band Cherokee tribe, when they opened the Harrah’s Cherokee Casino and each tribe family shared in the profits which quickly mounted to $6,000 by 2001 that amazing improvements happened. Behavioral problems among children went down 40%, crime rates went down dramatically [22% by age 16] as did drug and alcohol use. School scores improved markedly and the Cherokee kids were now on a par with the study’s non-tribal kids. Mental health was better and an additional year of educational attainment was garnered by age 21. The money even helped parents be better parents because the energy used worrying about money was now freed up for their children.

The study goes on to say that “the stress of poverty puts people genetically predisposed to develop an illness or disorder at an elevated risk” and that “Scarcity narrows your focus to your immediate lack, to the meeting that’s starting in five minutes or the bills that need to be paid tomorrow. The long-term perspective goes out the window. Scarcity consumes you… You’re less able to focus on other things that are also important to you.”

The writer ends the discussion by showing that fighting poverty also reduces costs:
 “And that’s precisely what happened south of the Great Smoky Mountains. Randall Akee, an economist at the University of Los Angeles, calculated that the casino cash distributed to Cherokee kids ultimately cut expenditures. According to his conservative estimates, eliminating poverty actually generated more money than the total of all casino payments through reductions in crime, use of care facilities, and repetition of school grades.”

An enlightening take on the discussion for universal basic income.

Originally published at www.keithenloe.com on June 6, 2016.