Do the poor make bad choices?

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We, in Singapore, are firm converts to the religion of meritocracy; and it appears to have served us well – we get the best people for the best jobs. That’s good right? Meritocracy is intoxicating because it is so simple to understand: work-and-reward are directly linked. The harder you work, the better you are, the greater your reward. Of course, the unspoken and perhaps unintended flip side, would be a logical conclusion that those who are poor were therefore less hardworking, or less good at making choices in life.

Meritocracy’s dark underbelly is the notion that the poor placed themselves in the situation that they are in. It might be due to their low abilities or skill levels, or it might their poor choices which lead to their plight. This is a problematic assumption; but Singapore is not alone – many countries’ welfare systems are built upon this assumption that the poor are poor because they made bad choices. Therefore, the way welfare schemes are designed often display a fundamental mistrust of the poor. In the UK, help for the poor comes in the form of food banks, which specifically dispenses food (so there is no risk of the poor spending on non-essentials), while welfare handouts are premised upon demonstrating a willingness to find work, or attempts to at least perform a few hours of part time work a week. The idea is to use welfare to try to steer people in the right direction. In Singapore, for example, the school pocket money fund disburses canteen vouchers instead of money to students.

So are the poor in their situation because they are prone to making bad choices? Do the poor make poor choices?

We need to distinguish the factors that contribute to poverty. There will always be elements of personal responsibility – a bad choice here and there. However, there will also be other aggravating factors, such as the difference in ability to weather bad choices. Simply speaking, if you have more financial and social capital at your disposal, you will be more likely survive a bad decision and ‘bounce back’.

The problem with the assumption that the poor makes bad decisions is in the way we conceive of the chain-of-causation. Meritocracy has trained us to think that people make bad choices, therefore they end up poor.

I am proposing that we rethink our attitudes towards the poor. I argue that the people do not end up poor because of bad choices. On the contrary, the people make bad choices because they are poor. While this might sound counter-intuitive, there is actually a surprising amount of evidence to support this idea. Here we look at two.

First, the way we make decisions change when we are faced with low resources. Psychologists calls this the ‘scarcity mentality’, which implies that when faced with a shortage of a resource (such as money in this case), the likelihood of someone making bad choices goes up. A study by a team from Princeton demonstrated this mentality through various social experiments:

  1. They asked low-income households to contemplate the need to spend US$1,500 on a car repair (which they could not afford), and in a controlled test, this financial tension contributed to an approximately 14 points drop in IQ. 14 is significant – that is the difference between being rested, and being sleep-deprived for a night. Meanwhile, the richer test group demonstrated no change in their IQ levels. [1]
  2. Another study of sugarcane farmers in India demonstrates the same. As sugarcane is harvested once a year, farmers basically are poorest right before the harvest and richest right after the harvest. The difference in IQ levels before and after the harvest season stands at 10 points – the same people, same village, same social setting. The only major difference was the amount of money at their disposal. [2]

What this strongly suggests is that having a lack of resource impairs our ability to make good decisions. So the poor are not always people who make bad decisions – but rather being poor increases your likelihood of making bad choices.

Remember that one time when you were in an exam hall, when time was running out and you still had many unanswered questions? Your ‘exam strategy’ goes out the window, and you start to panic and answering every possible question hastily; maybe even writing down your multiple choice answers at random. That is effectively a smaller scale version of the ‘scarcity mentality’.

One might say this is not conclusive enough because it is merely IQ tests on controlled sets of people; it is not a real world scenario, some might argue. We are fortunate enough to have a second piece of research – because one town was crazy enough to implement a universal basic income. Between 1974 and 1979, Manitoba (Canada) became the only place to attempt universal basic income (everyone gets a sum of money from the government, no questions asked).

With this income, the poorest families no longer face the extreme scarcity they used to face. What happened? The decisions they made started improving. Let’s start from the obvious – more teenagers from low-income backgrounds started graduating from high school, rather than dropping out, and youth crime declined as well. Perhaps less obviously, the number of accidents and emergencies dropped by 8.5% during the duration of minimum income as well. People were taking better care of themselves. Finally, contrary to what might expect, people did not work less. [3]

If the poorest were indeed prone to making bad decisions as we like to assume, then even with all the free cash handouts, their young would still have been likely to quit schools and involve themselves in crime. They would have still been as likely to not look after their health and would be as lazy as before (or lazier, since now there’s the means to not work completely). However, the data showed the opposite – with the cash handouts, people no longer suffered from the pressures of scarcity and started making better decisions – decisions that are in-line with the rest of the middle income population.

By mentioning these two examples, I am not trying to point the finger at circumstance and absolve all individuals of all personal responsibilities. The causes for social problems are immensely complicated and to consider how scarcity affects the way people make decisions is one step towards a more holistic understanding of the problems that Singapore faces.

Also, neither am I advocating for a universal basic income (that’s a different discussion). However, I believe that by looking at these studies, there is one big lesson for us Singaporeans – the poor are not poor because they make bad choices. They make bad choices because they are poor.

Perhaps it is high time that we go against our gut-feeling; go against the narrative of work-and-reward that has been drilled into us all these years, and begin see those suffering in poverty not as people who deserve their lot in life, but as people who are no different from us in essence; only different in circumstance.

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Notes:

[1] Mani, A., Mullainathan, S., Shafir, E., & Zhao, J. (2013). Poverty impedes cognitive function. Science, 341, 976–980.

[2] Shah, A., Mullainathan, S., & Shafir, E. (2012). Some consequences of having too little. Science, 338, 682–685.

[3] David Calnitsky, Jonathan P. Latner. (2017) Basic Income in a Small Town: Understanding the Elusive Effects on Work. Social Problems. 64(3), 373–397

[4] Forget, Evelyn L. (2011). The Town with No Poverty. University of Minatoba.

Photo credit: The Straits Times

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