Bryan Caplan  

Bill Dickens on Me on Poverty

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The noble Bill Dickens responded on Facebook to my recent posts on poverty.  Reprinted with his permission.  My rejoinder is coming shortly.

@Bryan

Before you get too heavily into this new book, what happens in countries with more generous social welfare systems? Is there more or less self-destructive behavior? My sense is that there is much less and if I'm right this does suggest that there is a causal link from desperation and poverty to self-destructive behavior. Also, the white working class in the US wasn't pathological when there were jobs they could do that would support a family. If the causality is all running from bad behavior to poverty why did working class America suddenly start behaving badly? I can point to structural forces that changed the income distribution (and would have whether people used drugs or not).

Note that if all you want to say is that bad behavior is bad for you I don't think anyone will disagree. If you want to say that curing bad behavior is the way to cure poverty then can you show us how to cure bad behavior? If I'm right that economic security greatly reduces the extent of self-destructive behavior then all you will be doing with your book is giving people an excuse to ignore the plight of those currently being victimized by a system that has taken away their livelihoods and their ability to provide for a family in the way they have been accustomed to.

And with specific respect to your argument, let's reflect on what behavioral economics teaches us about the sorts of decisions involved in choosing between pleasure now and pain in the future. We know that people are very very bad about making trade-offs between the present and the future in a rational way and that they get worse (become more shortsighted) the more threatened or insecure they feel in the present. Look beyond blaming the victim and you will see that if an economic change makes people lives more tenuous there are good reasons that they will make more bad decisions that will hurt them in the long run. Fix their circumstances and they are less likely to make bad decisions. At least I strongly suspect that is true.



COMMENTS (22 to date)
Alex Nowrasteh writes:

Bill Dickens might be very shocked by the observations in Theodore Dalrymple's LIFE AT THE BOTTOM.

Milos writes:

Um, I thought Bryan's argument was that both poverty and bad behavior needed to be explained in terms of more fundamental underlying factors.

Right? "Bad behavior makes no (rational) sense if one is poor" is what I took to be the key point - suggesting that both phenomena are manifestations of some underlying denominator(s).

Maybe I misunderstood.

stephen writes:

I have always felt causality goes in both directions. Poverty cause bad behavior and bad behavior causes poverty. But there it isn't just poverty per se, but low status poverty (i.e. not working), which the welfare state can't fix. Look at the chav culture in Britain, or the underclass in France.

There is also the fact that time horizons, personality types, and tenancy towards addiction are partially heritable. So at the margin you would expect bad behavior types to be unemployed first.

It seems that because of upward inter generational class mobility, the working class whites today are not the same as the ones half a century ago. For lack of a more sophisticated way of putting it, the working class whites today are more prole. They have a higher tenancy towards bad behavior, and are more susceptible when demand for low skilled labor is weak.

Last, it is not obvious to me that behavioral economics adds any non obvious predictive power.

stephen writes:

Also, a nice natural experiment to test the effect of bad behavior on financial outcomes is looking at what happens when financially stressed people win the lottery. In short, they do more drugs, buy more crap, and go broke anyway,

MichaelJohn writes:

"looking at what happens when financially stressed people win the lottery" would be a poor natural experiment. Winning the lottery has no affect on one's social status and its affect on self-esteem.

Seems to me we have a few natural experiments to choose from; the hypocrisy of Victorian England was probably beneficial to the lower classes there. As well, the hypocrisy of pre-1960s 'white bread' America kept the unwed motherhood rate low, and that was beneficial.

A lot of the 'inequality of income' is just changed demographics; the median household is different than it was 40 years ago.

Matt C writes:

If you can set up a steel cage death match between Dickens and Charles Murray I'll buy a ticket.

I see that the discussion seems to be zeroing in on the behavior of the screwed-up poor. I wish there was a standard way of saying "the screwed-up poor". Poverty in the U.S., absent pathological behavior, is not so terrible and doesn't need a lot of hand wringing.

Helping the screwed up poor is another question, but if there's general agreement that screwed up behavior is the actual problem, that's actually quite a bit of progress.

stephen writes:

MichaelJohn,

That is precisely why the lottery "experiment" is such a good one. It only changes one variable, so we learn more about the effect of that one variable.

A better critique would have been possible selection bias.

MichaelJohn writes:

Stephen,

My point is that you picked the wrong variable. Income alone is not a good measure of "economic security," and thus your experiment wont teach us much.

stephen writes:

MichaelJohn,

Given that this discussion is about income in one form or another (jobs, welfare, whatever) I would say that income is more than relevant.

2nd, why income would be a poor measure of "economic security", I will admit, is beyond me, given that about 100% of us need some form of income to be "economically secure".

Mike W writes:

If I'm right that economic security greatly reduces the extent of self-destructive behavior then all you will be doing with your book is giving people an excuse to ignore the plight of those currently being victimized by a system that has taken away their livelihoods and their ability to provide for a family in the way they have been accustomed to.

But economic security can never be guaranteed. Those whose jobs went away because of globalization, technology and the shift to a service economy did not have their livelihoods "taken away" and they are not victims of "a system". Change happens, and there really is no way to cushion it. European government guarantees of income security are showing to be unsustainable and as a result those societies will need to go through a change.

It would seem that the ability to successfully adapt to change is the feature in the individual that society should seek to develop. And that ability to adapt is a function of an individual's capability to learn, his ambition, his impulse control and his ability to defer gratification. "Bad behavior" interferes with the good behaviors necessary for an individual to adapt and overcome a low economic condition.

Kevin Dick writes:

As I've commented before on Bryan's poverty posts, I think the key factor here is "ego depletion" (see http://www.psychwiki.com/wiki/Ego_Depletion).

"Willpower", which must be some aspect of "conscientiousness", appears to be a generalized depletable resource. So Bryan's typical argument that some particular behavior responds to incentives is moot unless we simultaneously observe what happens to other behaviors that also require this resource. The incentive response could simply be a reallocation with no net positive effect on total outcome.

Maybe poor people naturally have lower reserves of willpower, which means they are also less able to resist temptation in general. Or perhaps being poor requires more willpower just to survive so they are less able to resist temptation due to being poor itself.

The latter explanation is consistent with what Dickens proposes. I'm definitely curious how Bryan will respond without resorting to evidence that relies only on a single dimension of conscientious behavior.

Seth writes:
Before you get too heavily into this new book, what happens in countries with more generous social welfare systems? Is there more or less self-destructive behavior? My sense is that there is much less

Examples?

stephen writes:

Kevin

Don't forget the third option, that causality goes both ways (double wammy). Given that there is a lot of independent evidence supporting both hypotheses my money is on the third option. Like you, I would like to hear what Bryan says. Although I am sure he already has, I am too lazy to search for it...

Floccina writes:

The poor do seem more self destructive in the developed countries:

For here in this multi-deprived inner city area, the average life expectancy of a male is just 53.9 years. In Iraq, after 10 years of sanctions, a war and a continuing conflict, suicide bombs and insurgency, the average man has a good chance of making it into his 60s; the life expectancy of a male there is 67.49. In Iran it is 69.96, in North Korea, 71.37 and in the Gaza Strip it is 70.5.

http://www.guardian.co.uk/society/2006/jan/21/health.politics


In response to MichaelJohn about self esteem:

Recently, however, some psychologists have begun debunking the notion that a poor self-image is the malady behind most of society's complaints -- and bolstering self-esteem its cure.

''D'' students, it turns out, think as highly of themselves as valedictorians, and serial rapists are no more likely to ooze with insecurities than doctors or bank managers.

At the same time, high self-esteem, studies show, offers no immunity against bad behavior. Research by Dr. Brad J. Bushman of Iowa State University and Dr. Roy F. Baumeister of Case Western Reserve University finds that some people with high self-regard are actually more likely to lash out aggressively when criticized than those with low-self esteem. The list of groups -- neo-Nazis, street toughs, school bullies -- who combine preening self-satisfaction with violence belies the power of one to ameliorate the other.

http://www.nytimes.com/2002/10/01/health/deflating-self-esteem-s-role-in-society-s-ills.html?pagewanted=all&src=pm

MingoV writes:
... if an economic change makes people lives more tenuous there are good reasons that they will make more bad decisions that will hurt them in the long run. Fix their circumstances and they are less likely to make bad decisions."

Changing economic circumstances do not provide "good reasons" to make bad decisions. Changing circumstances are opportunities to make better decisions. For example, this recession resulted in more people reducing their indebtedness and increasing their savings (despite the artificially low interest rates). Poor people whose circumstances are "fixed" by Medicaid and SNAPS are less likely to make good decisions such as moving to an area with a better chance of employment. However, those with "fixed" circumstances continue to make "bad" decisions such as buying expensive prepared foods with their SNAPS cards, abusing alcohol or recreational drugs, smoking, failing to supervise their children, etc. Upgrading the government safety net (that already has been upgraded to a plush, king-size mattress) will not reduce bad decisions, it will enable more of them.

Jim Glass writes:

"If I'm right that economic security greatly reduces the extent of self-destructive behavior then..."

I once saw the late great Sen Pat Moynihan be asked the question, "How come Social Security as a transfer program has been a great success while welfare as transfer program has been such a failure?"

His answer was: To earn Social Security transfers one has to spend decades in the working world learning the behaviors of responsibility such as showing up at work on time, behaving honestly, balancing a checkbook, how to ration your income and savings, etc. Welfare transfers go to people who have never learned these behaviors and insulate them from the need to learn them.

See the behavior of those lottery winners.

(BTW, How is winning an annuity worth millions of dollars not a measure of income security?)

As to self esteem, I thought all that business was debunked ages ago with observations such as that in international educational studies the best performing students had low self-esteem ("I have to work harder!") and the worst had high self esteem ("What, me worry?") ... and that in poor neighborhoods the kings of self-esteem are the drug dealers.

Jason Malloy writes:

Sports Illustrated on what happens when poor people become rich:

"• By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.

• Within five years of retirement, an estimated 60% of former NBA players are broke."

Meanwhile Warren Buffett eats at Dairy Queen every day and lives in the same modest home he bought in 1957, and Mark Zuckerberg is shamed by the press for getting his wife a relatively inexpensive ruby wedding ring.

One might get the crazy idea that "richness" and "poorness", like happiness itself, are portable traits, rather than something that happens to people through circumstantial lottery.

Bryan Willman writes:

My principal complaint is that this whole discussion seems to assume there are one or two or perhaps three fundamental issues that interact to explain "poverty".

We are talking about many millions of people.

Some number of them will have been driven into both social and economic poverty by changes in the world they could not cope with.

Others have kept away from examples, console, and education on how to live a reasonable life.

Still others are mentally ill.

There are surely many other broad classes, and many threads of explanation.

Ken writes:

I agree Bryan. This issue clearly has high causal density.

With all the differences between us an European countries, the European comparison is unwarranted, but if a person wants to make that comparison how can they leave out European pay? I don't believe most of us would want European wages.

yet another david writes:
what happens in countries with more generous social welfare systems? Is there more or less self-destructive behavior? My sense is that there is much less and if I'm right this does suggest that there is a causal link from desperation and poverty to self-destructive behavior. Also, the white working class in the US wasn't pathological when there were jobs they could do that would support a family.

One stands in awe of the potential for self-delusion. See Dalrymple, Thomas Sowell, etc.

Thomas Sewell writes:
what happens in countries with more generous social welfare systems? Is there more or less self-destructive behavior?

I'll join the couple of people in the thread who have said, "There is more."

Is there really someone out there that thinks a more generous social welfare system encourages less self-destructive behavior? I mean, I can see where you could make an argument for an affect like that on specific individuals in certain circumstances, but for the whole range of people who live on government welfare?

Also, the white working class in the US wasn't pathological when there were jobs they could do that would support a family.

Apparently he doesn't see the connection between the increase in welfare in the U.S. and the decrease in personal responsibility among those receiving it.

Perhaps a review of the direction of social trends and key indicators over the decades before the "war on poverty" and then afterwards would be of benefit here?

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