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The Almighty Buck Science

Why Poor People Make Poor Decisions (thecorrespondent.com) 197

An anonymous reader shares a report: [...] The most significant improvement was in how the money helped parents, well, to parent. Before the casino opened its doors, parents worked hard through the summer but were often jobless and stressed in the winter. The new income enabled Cherokee families to put money aside and to pay bills in advance. Parents who were lifted out of poverty now reported having more time for their children. They weren't working any less though, Costello discovered. Mothers and fathers alike were putting in just as many hours as before the casino opened.

More than anything, said tribe member Vickie L Bradley, the money helped ease the pressure on families, so the energy they'd spent worrying about money was now freed up for their children. And as Bradley put it, that "helps parents be better parents." What, then, is the cause of mental health problems among poorer people? Nature or culture? Costello's conclusion was both: the stress of poverty puts people genetically predisposed to develop an illness or disorder at an elevated risk. But there's a more important takeaway from this study.

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Why Poor People Make Poor Decisions

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  • not new (Score:2, Insightful)

    by Anonymous Coward

    this has been known for a long time, this is not news (allthough the neocons want to bury this)

  • Summary? (Score:5, Insightful)

    by enriquevagu ( 1026480 ) on Thursday February 13, 2020 @03:14PM (#59725206)

    Title: Why Poor People Make Poor Decisions
    Summary: [...] (Something related to money and mental health, but unrelated to making decisions) [...]
    Me: ???

    • Re:Summary? (Score:4, Insightful)

      by Pascoea ( 968200 ) on Thursday February 13, 2020 @03:24PM (#59725256)
      I usually don't have expectations for the "editors" around here, but this one is really "WTF" inducing.
    • by Ichijo ( 607641 )

      According to TFA:

      ...in the districts of Vilupuram and Tiruvannamalai in rural India...the area's sugarcane farmers collect 60% of their annual income all at once right after the harvest. This means they are flush one part of the year and poor the other.

      At the time when they were comparatively poor, they scored substantially worse on the cognitive tests. Not because they had become less intelligent people somehow--they were still the same Indian sugarcane farmers, after all--but purely and simply because the

      • I'll bet if you told someone that their spouse or child was in an accident and then asked them to take a cognitive test they'd perform just as poorly as those in this study, even if they were wealthy such that you could control for money concerns. People who are preoccupied in such a way can't fully devote their faculties to some other task. Early man that could sit down to ponder the meaning of life while being chased by a tiger likely didn't live to pass on their genes as frequently as other members of th
    • You forgot the final line:

      But there's a more important takeaway from this study.

      So if I pay you, I presume you'll tell me what it is? Let me guess: Don't buy things if you don't care about them.

      Conversely, don't spend Baby's Shoe Money at the craps table or roulette wheel.

      • Conversely, don't spend Baby's Shoe Money at the craps table or roulette wheel.

        If you gamble once, you might never have that choice again. And you won't know if you're a person who reacts that way unless you've tried it. And even if you're not, each time you do it, you might have become forever altered in your thinking, and suffer from it the rest of your life.

        A better idea might be, if your life includes an envelope marked "Baby's Shoe Money," don't gamble at all. Don't engage in risky, stupid behavior in the first place.

        You can't tell poor people not to do stupid, risky stuff; they

    • Re: (Score:3, Insightful)

      by sinij ( 911942 )

      Summary: [...] (Something related to money and mental health, but unrelated to making decisions)

      Stating the truth, that poor people are poor because of a pattern of making bad decisions, has a career-ending potential for any journalist or sociologist. This can be seen in lottery-winners, where poor lottery winners end up poor again despite benefiting from a windfall.

      • Bad decisions lead to bad finances, and bad finances lead to bad decisions. It's a vicious cycle.
      • by jythie ( 914043 )
        Well, yeah. Write about ideologically driven BS that sells well to racial identity politics but isn't really supported by, well, anything, generally will hurt your career. Same as if you start writing about flat earth.
    • by Keick ( 252453 )

      Yeah the slashdot summary sucks, but if you read the article it makes a hell of a lot of since.

      The article makes it clear that poorer people are using so much brain activity dealing with today, they can't plan for the future and make dumb financial decisions as a result. But when those poor folks received money, their cognitive skills improved across the board.

      • Re:Summary? (Score:4, Insightful)

        by barc0001 ( 173002 ) on Thursday February 13, 2020 @05:09PM (#59725770)

        And as a corollary to that, poor people sometimes HAVE to make objectively dumb financial decisions because they simply do not have the resources to do otherwise at that moment. Payday loan companies, banks with their usurious NSF fees - and some banks strategically ordering transactions to maximize the number of NSF hits on your account for that matter - high fee and rate car loans, etc. All are examples of businesses taking advantage of poor people and their lack of options. Nobody WANTS to get a payday loan at an effective 500% APR, but when the bank NSF'd your last $30 to your name because you forgot about a $15 transaction and your bank also doesn't think you're stable enough to extend overdraft protection to, and there's no food in the pantry till payday in 6 days, and the car needs gas, you hump on down to that payday loan place and experience yet again the high cost of being poor.

        Being poor also causes you to pass on ways to get ahead. One vivid story I recall was a friend of mine worked for a startup during the .com bust, and everyone at the suddenly dead .com had no last paycheck from the place, and many were just out of school and living paycheck to paycheck, including my friend. He got a hold of one of the financiers for the dead .com to see if there was something that could be done about the last check because rent was due in a week. The guy didn't have a lot of liquid cash at the moment either but said he felt really bad for my friend and offered to cut him in on another deal he was working on with another startup that was going to be doing an IPO in the next 6 months. He'd let my friend buy in to a bunch of shares that were on private offer, roughly $1000 worth, and then he could cash out when the IPO was done and the exclusion period ended. For the record, if he'd bought that $1000 worth of stock he would have been able to sell it for almost $8000 - 12 months later. But that was the rub - my friend didn't HAVE $1000 and he needed rent money next week so even if he came up with that $1000 it sure as hell wasn't going to sit on some private shares for a year. But if he DID have the money he would have made out handsomely - and while tone-deaf as hell to the immediate problem, it really *was* a generous offer that the guy didn't have to extend.

  • Beginning of Richest Man in Babylon is eye opening. You all make different amounts of money, have different homes, different ages, different circumstances. But y'all the same kind of broke. How can that be?
  • by lionchild ( 581331 ) on Thursday February 13, 2020 @03:16PM (#59725210) Journal

    This work has been done more than a decade ago, it simply hasn't been embraced. We've known all these things for more than a decade in public education. The better thing to ask here is: Why aren't we doing anything about it still?

    • by alvinrod ( 889928 ) on Thursday February 13, 2020 @04:04PM (#59725486)

      Why aren't we doing anything about it still?

      Because there also exist people who no matter how much money you give them will continue to make poor life choices. No one likes having their charity abused.

      People will over/under-estimate the number of such people who actually exist based on which side of the argument they happen to fall on and will try to pretend that the other side has no good points.

      • Well, at let's face it.

        The world is filled with stupid people too.....and no amount of money or time will help.

        I think it was Ron White that said it best.."...You Can't FIX Stupid..."

    • by ErichTheRed ( 39327 ) on Thursday February 13, 2020 @04:51PM (#59725668)

      "The better thing to ask here is: Why aren't we doing anything about it still?"

      I think the main reason is that people who made it across the chasm and are in good shape are too busy patting themselves on the back for what a great job they did. There's a feeling that anyone who's still poor is just not working hard enough, or they're dumb and can't make good choices because of that. This is espoused by tons of successful, type-A entrepreneurs who just can't believe everyone else isn't like them.

      Not everyone is capable of doing the whole pulling-up-by-the-bootstraps thing. Your success in life depends a lot on where you start. If you are unlucky and have horrible parents, you're going to be at a huge disadvantage. Contrast that with a wealthy family's kids, who can afford to feed them right, pay for expensive private education, and pay to get them into an Ivy League school so they can get a lucrative i-banking/consulting position or become a doctor and live on Easy Street forever. Those kids just have to check all the right standardized test boxes and they're set for life compared to the rare success stories from lower classes.

      It's also harder to get a foothold now than it was in the 50s/60s. Manufacturing jobs allowed the less-educated to have a very comfortable middle-class life where they were largely without dire money concerns. That's toast now...either you're a full stack developer/data scientist/doctor, or you're an Uber driver or similar minimum wage job...and it's only going to get worse.

      • Such people also seem to forget that in order to make money initially you usually have to get a job working for someone else and that requires being hireable and that requires experience and/or a degree in a relevant field and a likeable enough appearance and personality as well. Not everyone has all of those things even if they do have a very high IQ.

        I know some people magically get experience when applying for their first job, but I've never been able to figure out how to do that. I think a lot of rich pe

    • by jythie ( 914043 )
      Because telling people with moderate amounts of power and influence that they are genetically better than the browner people below them on the economic ladder is really good for getting elected or selling junk to consumers.
    • The gall of of the pracariat for not saving instead of doing stupid things like paying for rent, food, etc.. In a gig/contract worker economy where full time, permanent full time work is rare they must save exactly like they did 30+ years ago. The fact that post-secondary education and mortgages and car payments are exponentially higher, even after adjustment for inflation, is no excuse. Ingrates all! They get what they deserve! Flog them where ever you see them! That will teach the sheeple!
    • This work has been done more than a decade ago...Why aren't we doing anything about it still?

      The "s" word. Conservatives go absolutely bonkers over it (unless it's disguised as farm subsidies, corporate bailouts, or military hiring).

  • Ah, Cherokee...nice touch. Change that poor person to white and watch the vicious punching down start. We've all seen enough of it to know what it is. Going after the big guy, punching up, is an act of nobility. Going after the little guy, punching down, is an act of bullying.
    • If you weren't being a racist prick at the same time the part of your argument about bullying might have been pretty good.

  • Next up: you can see stars in the sky.
  • Hans Rosling [wikipedia.org] figured this out a long time ago.

    Ah, fuck, I didn't know he had died. Stupid cancer.

  • RIch Dad, Poor Dad - a book that's 20 years old.. just like the topic.
    https://en.wikipedia.org/wiki/... [wikipedia.org]
  • Poor decisions lead to poor people. You can be very rich (inherited or earned) or win the lottery (or casino games) and be very poor in a very short order of time. It also depends on what you consider 'rich'. Compared to Africa, making minimum wage is stinking rich!

    • The article is about a study that suggests otherwise. Do you have a better evidence?

      • Both are true. If you're worried about anything your decision making capabilities are impaired and you'll tend to make choices that you might not have made if you weren't so preoccupied. Financial uncertainty is certainly something that can lead to this, but so could an illness in your family even if you're wealthy. But there are plenty of examples of wealthy individuals who squander a fortune and find themselves poor or people who win a large amount of money that they fritter away. I don't think this is a
    • stinking rich!

      Stinking Kevin?

    • B.S. (Score:3, Informative)

      by Martin S. ( 98249 )

      The study proves exact the opposite of what you claim.

      It is already well documented that work stress reduces cognitive performance and work. Burnout in Geek language. Why do you think that same impediment doesn't apply to financial stress caused by poverty?

      It is a feedback loop, but you have it upside down, stress leads to poor decisions, poor decisions lead to more stress, financial in this case.

  • With a stable minimum.

  • There isn't even a single thread of a worn rope connecting this article to technical issues.

    LESS OF THIS SORT OF ARTICLE PLEASE.

    • by ahodgson ( 74077 )

      If you see msmash or BeauHD posting something, just skip it.

    • by skam240 ( 789197 )

      Welcome to the social sciences! I've been reading Slashdot since '99 and while part of this website's posts cover tech news this website has always included a wide range of science based posts including those pertaining to the social sciences. It has never been exclusively a tech site.

      LESS OF THIS SORT OF ARTICLE PLEASE.

      Not all of us have your narrow interest range. You obviously have a log-in, use your account to filter out articles like this rather than complain, It would probably take the same amount of time and you would actually get mean

      • by malkavian ( 9512 )

        There have always been social interest articles. They didn't used to have the current level of agenda though.

        • by skam240 ( 789197 )

          For starters, completely different subject than what either of us were talking about.

          After that, by agenda do you mean anything that disagrees with your own personal political views?

  • by fahrbot-bot ( 874524 ) on Thursday February 13, 2020 @03:33PM (#59725316)

    ... more options and more opportunities to make better decisions. True, people *with* money often make bad decisions, but often people w/o money have no (or fewer) other choices. There are numerous studies about how cheap food is often not very good for you, but if you're poor, buying better/more expensive food isn't really an option. Same for health/dental care. People w/o money often can't afford preventative care. Child daycare, even crappy care, is usually expensive -- sometimes more expensive than what a second spouse can earn rather than staying home.

    Not sure how this is news, or new news.

    • Or: Money gives freedom.
    • It really is that simple because I made that choice and profited financially and in terms of personal freedom. While I chose not to breed for a variety of reasons including hereditary back problems I'd never be vain enough to inflict on another person, keeping more of my money was a factor.

      Children are not a necessity and most poor make them early by mistake. I've a wide variety of friends and the poor sort tend to have kids they can't afford because to put it bluntly, they fuck with zero thought to contrac

  • Mental Defect (Score:5, Interesting)

    by Retired ICS ( 6159680 ) on Thursday February 13, 2020 @03:35PM (#59725322)

    "so the energy they'd spent worrying about money was now freed up"
    "is the cause of mental health problems among poorer people"

    Poor people are no more mentally defective than not poor people.

    Worrying is a Mental Defect (a mental illness). If you "worry" about anything you should see a mental health professional immediately because "worrying" about A will not change A in the slightest -- it is a useless endeavour with no rational purpose nor use -- and the sooner you are able to overcome this obsessive-compulsive disorder the better off you will be.

    If you you offend yourself ("feel offended" at any time, ever) you should see a mental health professional immediately to get help with the problem of you causing offense to yourself when externalities over which you have no control cause you to have thoughts you do not like, and your inappropriate response to those thoughts.

    These are the two most prevalent mental defects (illnesses) in the world today and the ones that should receive priority treatment.

    The former is usually treated by self-medication without professional supervision, and the latter is, unfortunately, generally left to fester untreated in any way.

    • Worrying is a Mental Defect (a mental illness). If you "worry" about anything you should see a mental health professional immediately because "worrying" about A will not change A in the slightest -- it is a useless endeavour with no rational purpose nor use -- and the sooner you are able to overcome this obsessive-compulsive disorder the better off you will be.

      I'd just like to address this -- it's not quite true. If taken to excess, you're correct, but a big part of most people's 'worrying' is, essentially, contingency planning. If something happens, what will I do to compensate/survive? Who do I know who can help me out, what can I pawn to get some extra cash, what bills can I fob off this month, etc.

      Once you've exhausted the thinking you can do on that, then, yes, further worrying starts to become an illness. But before that point, it's advantageous.

    • by fgouget ( 925644 )

      Worrying is a Mental Defect (a mental illness). If you "worry" about anything you should see a mental health professional immediately because "worrying" about A will not change A in the slightest

      You're confusing this type of worry with General Anxiety Disorder [nih.gov]. The latter is "feeling extremely worried or nervous about [...]things — even when there is little or no reason to worry about them". But in this case they probably have good reason to worry about being unable to make rent at the end of the month (for instance), and on whether skipping yet another meal would be safer (which may not be if it causes them to faint and injure themselves). Either way the consequences could be pretty dire. A

  • by Martin S. ( 98249 )

    This is common sense to anybody from a disadvantaged background who know that poverty puts extra stress on families; perhaps now this is backed by real evidence some conservatives might have a rethink. /probably not.

  • Very often people are poor because they make bad decisions

    • Bad decisions like popping out of the wrong vagina or being shot out of the wrong testicle.

      • Bad decisions like popping out of the wrong vagina or being shot out of the wrong testicle.

        Of course. Kids are often poor because their parents make bad decisions, including the bad decision to have kids they are unprepared to raise.

        • And of course, because those kids grew up poor, they learned the habits to stay poor. Fortunately, in order to prevent all those poor people from continuing to consume welfare money, the Republicans all increased funding to education to keep from having new people added to the welfare lists. /sarcasm
  • It may come as a shock to those who have more money than they could ever spend...but money issues cause stress and that stress can lead to people not making good choices. This is true regardless of whether you're extremely poor or in OK shape but just short of money.

    I make decent money in IT, and my wife does as well in another field. However, that doesn't mean there isn't a background level of money stress that prevents us from relaxing completely. Neither of us are at the point where we don't constantly w

  • by timholman ( 71886 ) on Thursday February 13, 2020 @04:40PM (#59725624)

    The article is an interesting read. The author makes some good points about how being poor consumes mental bandwidth, and makes it hard to focus on long-term goals. But then he proclaims:

    "... the traditional ways governments try to tackle poverty don't help either because they usually focus on helping a person overcome a lack of something, through education, financial guidance, or job programmes. But poverty and poor decisions aren't a lack of anything except money."

    Saying, "poverty is due to a lack of money" is like saying, "homelessness is due to a lack of homes". If poverty and homelessness could be solved by handing out more money and building more homes, we would have solved them long ago.

    Oprah Winfrey learned it the hard way with her "Families for a Better Life" program 25 years ago. Even when the program provided poor families with significant resources to break the cycle of poverty, the family members keep making bad choices. As soon as the money was spent, they were right back where they started. Finally the program was abandoned after spending millions of dollars with almost zero effect.

    As a friend of mine once put it, "poverty isn't a lack of money; it's a state of mind" (at least in first-world countries), a state that is created and reinforced by a multitude of factors that money alone can't fix. You can hand out every dime you have to the poor and temporarily alleviate the symptoms of poverty, but unless those factors are addressed, most of them will be "poor" again the moment the money runs out.

    To some extent, this article seems to be advocating for the idea of a UBI to "fix" poverty; just give people money and eventually things will get better. If you're an advocate for universal basic income, you'll probably agree with the author's conclusions. As someone who has lived long enough to become extremely skeptical of the "throw money at it to fix it" approach, I have to respectfully disagree.

    • Saying, "poverty is due to a lack of money" is like saying, "homelessness is due to a lack of homes". If poverty and homelessness could be solved by handing out more money and building more homes, we would have solved them long ago.

      Considering we never actually tried handing out money, and handing out homes has actually worked pretty well (in the form of rent-free apartments), I'm rather skeptical that we'd have "solved this long ago".

      That being said, the best combo would probably be cash and a social worker.

    • It is fair to be skeptical of universal basic income, but you are misleading in your characterization of the failure of "Families for a Better Life".

      Even when the program provided poor families with significant resources to break the cycle of poverty, the family members keep making bad choices. As soon as the money was spent, they were right back where they started. Finally the program was abandoned after spending millions of dollars with almost zero effect.

      The program spent almost all the money on administration, especially screening (and arguably overscreening) candidates until it got down to a sample size of merely N=19. Many dropped out, including one due to moving out to attend college.

      Other, later, UBI experiments have had much bigger sample sizes and (importantly) control groups, and more rigorous studies

  • If you're poor and you make a poor choice, you could end up completely screwed.

    If you're not poor and you make a poor choice, it's not going to matter as much, since you have the means to correct your poor choice, and/or just say "oh well, that sucked".

    Isn't that just common sense?

    • That's a big part of the feedback loop. -Every- decision can be high stakes. You can wind up fucked over by the decision, earlier in the month, to spend $15 to go to the movies, if an unexpected expense comes along. And, I think, eventually people just can't take the stress any more and stop worrying, and let the chips fall as they may.

  • If so I'd give msmash a -1, offtopic. Seriously, what on earth does the title have to do with the summary?
  • Yeah this makes a lot of sense. When people are backed into a corner for long enough, they start to make desperate decisions that may or may not work out for them. Make enough bad decisions long enough and the stress itself is going to cause a lot of physical and mental health issues, but that's with anything in life. Now to play devils advocate: aren't poorer people generally happier and spend more time with their family? Maybe these are people that prioritize happiness over financial security? How come s
    • Re: (Score:2, Troll)

      by Tailhook ( 98486 )

      Rich or Poor? What does that even mean to us?

      Excellent question. Several types of "poor" confound any such discussion. Establishment group-think recognizes at least two important types of poor; poor whites and poor everyone else. The former are poor because they engage in "poor decision making" and are, therefore, worthy of only contempt. The latter are instinctually excused for whatever poor decisions they might make and are afforded every benefit of the doubt at all times.

      The truth is almost none of the "poor" are really poor. They all eat.

  • Imposed (ethical) discipline instills discipline. Self-mastery is power.
    My Silent Generation parents are examples. My mother was so poor (they were born in 1925 and 1926) she didn't get glasses until her teens. Both grew up disadvantaged, but their parents instilled ethical discipline and it worked. They were thrifty, EFFICIENT spenders and retired comfortably.
    I've a wide mix of friends and the poor stay poor because they lack self-discipline. Some refuse to make good choices even when warned in detail, lik

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