Friday, November 9, 2012

Robbing Peter to Pay Paul...

An interesting article about poverty from the L.A. Times

A helpful reader sent this link to an article which describes a study as to why any of us when placed in a situation of poverty, might make bad choices that compound the problem:

In the next experiment, 68 volunteers played a slingshot-firing game similar to "Angry Birds." Poor players could take only three shots on each level, while rich players got 15 shots. The researchers found that the poor spent more time than their rich counterparts aiming the first shot of each level. The poor were focusing more on that first shot, the researchers said, because they knew they had to use their limited resources wisely.

That deeper engagement paid off — poor players earned more points per shot (2.31, on average) than the rich (1.67). But that advantage disappeared if they were allowed to borrow a shot from a future round. When players had the option of taking an extra shot now and giving up two shots later — essentially, paying an interest rate of 100% — poor players were 12 times more likely than rich players to take that deal, even though it resulted in lower average scores.

I could have told you that.  Borrowed money is funny money, and most of us fail to take it seriously.  So even though it is dear to us, we squander it on jet skis and fancy cars.   When we pay cash, on the other hand, our choices are more astute.

I am not sure, however, that the study's conclusion that poverty-behavior is poverty-based is entirely accurate.  Their contention seems to be that any of us, if placed in the same situation, would behave the same way.

While this may be true at a statistical level, it negates free choice.   And free choice does make all the difference in the world.  Free choice is what brings *some* people out of poverty and into wild riches, or at least a middle-class lifestyle.

Again, I use the example of my friend from South Philadelphia, who left the 'hood and joined the Navy and ended up being a lawyer.  She saw her friends mired in drug use, teenage pregnancy, and perpetual poverty, and said, "Uh, no thanks, I'll pass".

So while statistically, her experience was unlikely, it was not improbable or impossible.   We need to reward choices like that.

But on the other hand, it illustrates why, historically, we have tried to regulate or outlaw the sorts of businesses that exploit the poor - the payday loan places, the check-cashing stores, and the like.  And yes, these are the people who gave tens of millions of dollars, apiece, to political PACs that supported the Romney campaign.

But the article has a point.  Placed in certain circumstances, particularly a lack of caloric intake, our brains do change their behavior.  My next posting has been loitering in "draft" mode for a month now.  This seems like a good time to finish it.