Charles Karelis, author of The Persistence of Poverty, is happy to answer your questions. Please write them in the comments, and he’ll respond in a regular post.
To get things started, here are a few questions from me.
1. Your theory seems to imply that when people temporarily have many personal problems, they will start doing painful things with long-run benefits. Example: If you’re already (temporarily) miserable, why not go on a diet and start exercising, so when your problems end, you’re thin and fit? But as far as I know, almost no one does this. Please comment.
2. Children notoriously engage in much short-sighted behavior – not doing their homework, staying up too late, fighting with siblings, stealing candy, etc. The standard explanation is that kids have poor impulse control. Do you think the logic of increasing marginal utility combined with pleasers/relievers provides a better explanation? Why or why not?
3. If you were a life coach for the poor – able to dispense advice but not material help – would you really tell them to “stay the course”? If not, why not?
4. You say that single parenthood is not a “global and perennial” feature of poverty. I suggested that we generalize this to, “not refraining from having children you are not ready to support.” I add: “In First World countries, this usually takes the form of single motherhood; in the less-developed world and in earlier times, this instead simply took the form of having too many children too early in life.” Would you accept my amendment?
READER COMMENTS
John Alcorn
Aug 21 2019 at 11:32am
Prof. Karelis,
Thank you for your kind willingness to field questions about your stimulating book!
1. You propose a “global and perennial” theory of persistence of poverty. Wasn’t poverty inescapable for most people in premodern (roughly zero-sum) economies before the agricultural and industrial revolutions? Note: People in at least some premodern societies discussed widespread poverty in their midst.
2. You propose a “parsimonious” theory (situational marginal utility) to explain why many poor persons don’t finish school, don’t work for pay, don’t save for a rainy day, don’t moderate mood drug use, and don’t obey the law, even though these nonbehaviors predictably will keep them poor. However, a poor person in, say, the USA who engages in strategic, long-term choice-bundling (finishing school, working for pay, saving for a rainy day, etc.) can very reasonably expect to escape poverty. Why don’t more poor persons engage in strategic, long-term choice bundling? Are the following, alternative psychological explanations of self-defeating nonbehaviors conceptually relevant and empirically important?
• Mental illness (cf. Scott Alexander’s critique of Bryan Caplan)
• Social norms in poor communities (cf. Robin Hanson, Charles Murray)
• Hedonic adaptation (cf. Bryan Caplan on happiness research)
• Self-sorting in open, meritocratic, competitive societies (cf. Matthis Görgens’ book club comment on August 13.)
• Cognitive dissonance reduction (motivated belief-formation). Because long-term strategic choice-bundling is daunting, many poor people mistakenly (and unconsciously) persuade themselves that escape from poverty is improbable or impossible. Pessimism is then self-fulfilling.
I fleshed out these alternative mechanisms in various comments, day by day during the book club.
John Alcorn
Aug 21 2019 at 3:50pm
PS: I should clarify that I understand your point, that a person who has multiple problems (a) might reason that the mountain is too high to climb, and (b) might cope by targeting a stream of intermittent local maxima (the 0-2-0-2 pattern). Unlike Bryan Caplan, I think your point has some empirical bite, especially where the person has already dug a deeper hole by engaging in some of the imprudent nonbehaviors. But I think you much overstate the point’s explanatory power. And I think people in poor communities (i) observe firsthand where imprudent nonbehaviors will lead, (ii) hear various authority figures credibly explain how to improve oneself and escape poverty (by finishing school, working conscientiously for pay, saving for a rainy day, etc.), and (iii) observe persons who succeed by bootstrapping. This is why I ask whether alternative psychological explanations of imprudent nonbehaviors might pick up the slack.
robc
Aug 21 2019 at 11:45am
Q: How do sports stars and lottery winners fit into your theory? It seems to suggest when they get their big paycheck, they will switch from reliever regime to pleaser regime and should start behaving in ways similar to other rich people. But a large percentage of them end up bankrupt, they don’t change their behavior, they just continue it with more money available.
Francisco
Aug 21 2019 at 2:51pm
Question 1.
Your whole theory is based on the idea that some goods exhibit increasing, rather than decreasing marginal utility. Although simple introspection seems to support the existence of such good, it still a very hard sell for some people, particularly economists.
You could formulate the issue saying that both “goods” and “bads” (i.e. beers and bee stings) have a decreasing marginal effect on utility, i.e. the utility of the extra beer is decreasing in the same way that the disutility of the extra bee sting is decreasing. Relievers, then are the things the prevent/remove/alleviate “bads”. Since the marginal bee sting disutility is decreasing, the marginal utility of alleviating a bee sting in increasing. Increasing marginal utility of relievers is just the the others side of the coin of decreasing marginal disutility of “bads”.
Do you think this formulation is equivalent to yours?
Trevor Adcock
Aug 23 2019 at 2:57am
Standard econ theory says that there is decreasing marginal utility and increasing marginal disutility.
This just what is called duality in optimization theory. Under the assumption of convexity they are the same problem.
Karelis is assuming there are non-convexities. If there are non-convexities, then there can be decreasing disutility, just as there can be increasing utility.
So, yes, you are correct the theories are equivalent.
Floccina
Aug 21 2019 at 3:27pm
What role does resentment of being bossed play in male unemployment? That would include baring the humiliation of being corrected, maybe in front of others.
Floccina
Aug 21 2019 at 3:34pm
You’ve fingered relative poverty as a cause of unproductive behaviors, do you think segregating the lowest income people from others would help them to adopt more productive life styles?
Phil H
Aug 21 2019 at 9:46pm
As described in these posts, it seems like your theory relies not so much on increasing marginal returns, but on a level below which many kinds of effort have effectively zero marginal return. I think you acknowledge that where that level lies could be an entirely subjective, psychological question. Are there any instruments that can measure what the level is for an individual? Are there certain mindsets (e.g. poor immigrant) for which this level is effectively zero? What are the characteristics of those mindsets?
(I live in China, where I’m watching the change from “poor rural-urban immigrant” to “relatively entitled city dweller” happen – but it’s very much mixed up with perennial complaints about how the youth of today are soft and weak, and I haven’t worked out how to disentangle the real changes from the imagined intergenerational decline.)
Michael W
Aug 22 2019 at 3:06am
(1) Does your theory imply a poverty trap? If so, how do people escape poverty?
(2) How does your theory explain growth miracles like Singapore or Korea?
Thaomas
Aug 23 2019 at 3:46pm
Which is the better prescription according to your analysis, a UBI or a higher EITC?
Comments are closed.