Study Shows What Leads To Poverty And How We Can Defeat It

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Some poor people often tend to perpetuate their misery by making poor decisions. Looking at the data, one can see that the poor borrow more, save less, smoke more, drink more, exercise less, and eat less healthfully.

But why? Is that some personality defect? No, and you'll be surprised to learn the real reason.

And is there anything that we can do to end poverty and all its consequences? Of course, and a precedent on how to do that has already been established – incredibly the evidence has been buried for 100 years!

In his TED Talk Poverty isn’t a lack of character, it’s a lack of cash, historian Rutger Bregman shares a radical solution and a forgotten contemporary experiment where it worked - guaranteed basic income.

As Rutger tells his audience: “It was only a few years ago that I discovered that everything I thought I knew about poverty was wrong. It all started when I accidentally stumbled upon a paper by a few American psychologists. They had traveled 8,000 miles, all the way to India, for a fascinating study.”

It was an experiment with sugarcane farmers that get about 60% of their annual income all at once, after the harvest. This means that they are relatively poor for one part of the year and rich for the other. The researchers let the farmers do one IQ test before the harvest and one after it.

What they subsequently found was shocking: The farmers scored much worse on the test that took place before the harvest. The effects of living in poverty, as it turns out, correspond to losing fourteen points of IQ.

Several months later, Rutger had the chance to meet Eldar Shafir, a professor at Princeton University and one of the authors of the study to talk about the revolutionary theory of poverty which Shafir had developed: scarcity mentality. “It turns out that people behave differently when they perceive a thing to be scarce. And what that thing is doesn't much matter - whether it's not enough time, money or food”.

That plays out in all of our lives.

As Rutger explains: “You all know this feeling when you've got too much to do, or when you've put off breaking for lunch and your blood sugar takes a dive. This narrows your focus to your immediate lack - to the sandwich you've got to have now, the meeting that's starting in five minutes or the bills that have to be paid tomorrow. So the long-term perspective goes out the window”.

The poor deal with the same issue. They aren't making dumb decisions because they're dumb, but because they are living in a context in which anybody would make dumb decisions.

As Rutger reminds his audience, George Orwell experienced poverty firsthand in the 1920s. Here's what the great writer said about poverty:

“The essence of poverty is that it annihilates the future.”

So, people who live with chronic poverty aren't able to think or plan long term. That's pretty understandable, but what if at least some of their immediate, urgent needs could be taken care of? How would that change the situation?

Also, what would happen if we could afford everybody on earth a basic income guarantee? A monthly grant, enough to pay for basic needs: food, shelter, education, unconditional with no stigma attached - a right, not a favor.

In 1974 in the small town Dauphin in Canada everyone was guaranteed a basic income, ensuring that no one fell below the poverty line. For 4 years, all went well. However, then a new government was voted into power, and the new Canadian cabinet saw little point to the expensive experiment, and it was abandoned along with all the research data. 25 years later, a Canadian professor discovered the records, analyzed them and realized the experiment had been a great success.

“The people in Dauphin had not only become richer but also smarter and healthier. The school performance of kids improved substantially. The hospitalization rate decreased by as much as 8.5 percent. Domestic violence incidents were down, as were mental health complaints.”

“Similar results have since been found in countless other experiments around the globe, from the US to India.”

Basic income is a complete rethink of what work is, and it won't only free the poor but also the rest of us, according to Rutger.

Millions of people feel that their jobs have little meaning or importance. How will we be able to afford a future so that the value of our work is not determined by the size of our paycheck; so that an existence without poverty isn't a privilege but a right we all deserve?

Reference: Ideapod