Behavioral Science and Poverty
The fastest way to fight poverty is to redirect money from higher-income to lower-income people. In the meantime, behavioral scientists have some tips on how the present system can do a better job of helping the poor.
Last month, the behavioral economics-focused nonprofit Ideas42 released a report that attempts to suggest improvements to our current government methods of poverty-fighting. The group is quick to say that “advocating for a behavioral approach to poverty alleviation is not equivalent to suggesting that people in poverty should simply behave differently... Instead, we contend that the burden of change rests primarily with the individuals and organizations who have the power to design programs and systems in ways that take universal human tendencies into account.” In essence, they are suggesting subtle ways that our current system can be tweaked to make it work better for the people it is supposed to serve, and offering some explanations as to why attempts to escape poverty sometimes break down. For example, some insight into how poverty affects the human mind:
This slowdown is driven by the brain’s tendency to “tunnel” in response to scarcity: whatever is most urgent, whatever unmet need is most pressing, fully “captures” the mind and crowds out all other concerns, questions, or tasks that would otherwise compete for attention. What to have for lunch, what to do this weekend, and what bills are due soon are all issues easily ignored when feeling the effects of scarcity. Temporarily, this laser-like focus can be useful—it’s what enables you to focus when time is scarce and you have a fast-approaching deadline at work, for instance—but nobody can afford to tunnel all the time. Too many important (though not quite imperative) things will inevitably get neglected. As one parent put it, “I just focus on today, [as though] nothing happened in the past and nothing will happen in the future.”
Concrete proposals in the plan include encouraging anti-poverty programs to improve communication; reduce paperwork during the “onboarding” process, in order to avoid discouraging and driving people away; and make sure the programs are both geographically accessible, and have operating hours that make them accessible to working people.
In order to give people in poverty more of a cushion for life’s inevitable setbacks, the report advocates more generous direct cash transfers to poor people, and for finding ways to provide low-income people with access to low-interest loans from reputable institutions, rather than the high-interest loans from bloodsuckers that they are currently stuck with. Reducing “strings attached” grants in favor of simple cash, they argue, ultimately maximizes utility:
Requirements tend to proliferate when service providers and policy-makers presume to know best for the people they serve, or when they attempt to make one size fit all. Often, this takes the form of required classes: in one city we visited, unemployed adults were required to attend daily workforce development sessions in order to remain eligible for TANFm benefits. Though such classes sounded useful in theory, in practice they ended up hindering rather than supporting the economic progress of the parents we spoke with.
The idea of attaching a laundry list of conditions to welfare money is rooted in the politically safe belief that we must make sure poor people are “earning” their benefits; in fact, scholarship has found that giving cash directly to the poor is one of most effective poverty-fighting tools in the world, because poor people—as you would expect—are generally the best judges of what they most need to spend money on.
Until the revolution comes, we might as well make our patchwork safety net as good as it possibly can be.
