How Being Poor Makes You Poor

[n2doc]

September 18, 2013 • By Paul Hieber

Why are the rich rich and the poor poor? It’s a question that gets asked a lot, and a question we should continue asking.
Do the wealthy simply work harder and for longer hours? Are they more willing to take risks and make sacrifices, while the destitute tend to sleep in past 10:00 a.m. and splurge all their cash on Cool Ranch Doritos Tacos from Taco Bell? Or is it more circumstantial—meaning, are the haves forged in homes where education is valued and opportunity abundant, while the have nots come from generation after generation of just scraping by?

According to the BBC, income inequality in the U.S. has grown for nearly three decades, and in 2012 this disparity reached record-breaking proportions when the top one percent of U.S. earners collected 19.3 percent of all household income. For some policymakers and members of the public, this is a problem—and it’s a problem that cannot properly be addressed without examining both the personal and systemic reasons for why some end up so rich while others end up so poor.

New research from a behavioral economist at Harvard and a cognitive psychologist at Princeton might help untangle this ongoing conundrum, if only just a strand or two. In their recently released book, Scarcity: Why Having Too Little Means So Much, Sendhil Mullainathan and Eldar Shafir suggest that those living paycheck to paycheck aren’t as much in their situation because they’re bad financial planners with a history of self-sabotage, but rather that they’re bad financial planners with a history of self-sabotage because of their situation. It’s a subtle yet significant shift.

Relying on data collected from numerous tests and experiments, the co-authors argue that the mental toll of constantly having to deliberate over which credit card should be paid down first or jar of peanut butter placed into the shopping cart depending on the sale both depletes one’s cognitive resources and diminishes the importance of planning for tomorrow, since today’s demands feel just so damn demanding. In other words, when you’re struggling with the necessity of treading water, the ability to calculate which shoreline is closest becomes a luxury.

more
http://www.psmag.com/business-economics/poor-makes-poor-66414/

[Ash_F]

1. Servility. /nt

[Laelth]

2. Interesting. Thanks for posting. k&r n/t

-Laelth

[Snarkoleptic]

3. Another major factor is the fact the system kicks you while you're down.

Those light on cash can't afford economies of scale, such as buying bulk food and other necessities, paying monthly parking pass fees vs. higher daily fees.

Also you don't see a lot of wealthy folks paying late charges on loans, NSF fees, minimum balance bank fees, paying default rates on credit cards after missing a payment, etc.

[AdHocSolver]

5. The reason the rich are getting richer and the rest of the population is getting poorer...

...is because the wealthy bought the government which legalized thievery.

[Doctor_J]

8. And the wealthy bought up the media

so the poor believe that their situation is due to "excessive regulations on the wealthy", and that people like Eric Cantor are the answer to their problems

[Sherman A1]

6. K&RTHANKS

Thanks for posting. I also heard a report on NPR a few years ago, regarding education that I believe relates. The individual mentioned that simple exposure to vocabulary has a big difference in the ability of kids to learn. The more words a child hears t a young age the better chance they have to succeed.

[Igel]

10. Yup.

Old research, repeated a few times.

One problem is that you look at 16-year-olds and they're already making all the same choices that reportedly result from having to struggle to make ends meet and worry about food and shelter.

Except that they're not. Instead they just have inherited all the stress and all the mental anguish and all the emnity (etc.) even though they're not actually in the game yet.

The kids I knew that made it from a working class background had parents who didn't share their troubles and pass along their problems. Those that didn't tended to speak as though their parents problems for the last 30 years had been their own, even though they were only 16 or 17.

[blkmusclmachine]

7. .

.

[phantom power]

9. Them that has, gets.

[raccoon]

15. You beat me to the post. nt

[underpants]

11. Very interesting

thanks

[Wolf Frankula]

12. The Poor Are Poor Because They Didn't Choose the Right Parents.

If they had chosen to be born in rich families, they would be rich. But, noooo! they had to be born in poor families.

Wolf

[Bill USA]

13. Thus the decline of America. Without out actual equal opportunity our society suffers,

first of all economically, as growth and job creation start to suffer. But also as a society, we become less hopeful and more cynical and suspicous. People take on a "grab all you can, before the other guy does" attitude.

[racaulk]

14. K&R!