After you read Karelis on the behavioral causes of poverty, you’ll probably assume he’s some sort of social conservative. If you have the patience to hear him out, however, you’ll discover that he’s one of a kind; no earlier thinker ever thought what Karelis thinks.
Skeptical? After discussing how the poor make themselves poor, Karelis’ next task is to examine the leading left- and right-wing explanations for persistent poverty. He breaks them into three “dysfuction” theories and three non-dysfunction theories – six in all: (1) apathy, (2) fragmentation of the self (economists might instead say “hyperbolic preferences”), (3) akrasia (non-philosophers would say, “weakness of will”), (4) restricted opportunity, (5) unusual preferences, and (6) perverse policies.
One way to classify these theories is by whether they treat the behaviors in question as stemming from psychological dysfunctions. Can the behaviors be traced to mental conditions that directly harm the possessor? Note that being dysfunctional in this sense is not the same thing as having preferences that happen to be socially disapproved, such as a strong preference for leisure over income—the so-called lack of a work ethic. Preferring leisure is often disparaged as a kind of flaw, but it is not a flaw in the sense that a dysfunction is. Dysfunctions are not preferences, even socially-disapproved ones, but conditions that get in the way of realizing preferences.
The dysfunction approach blames non-work and the other poverty-prolonging/poverty-worsening behaviors on several problems in particular. One is apathy. Others are fragmentation of the self, which leads to short time-horizons, and weakness of the will. Alternatives to dysfunctionalism naturally deny that psychological dysfunctions are key factors in causing these behaviors. Instead, they trace the behaviors to external circumstances such as restricted opportunity and bad public policy. Or they trace them to inner qualities that are not dysfunctions (in the above sense), such as the preference for leisure or a taste for the suspense and excitement of risk-taking.
Karelis then largely dismisses all six stories, insisting that none of them explains more than a tiny part of the puzzle of persistent poverty. His main objections:
(1) The poor do not in fact seem very apathetic.
[T]he apathy theory leads us to expect an affectless style of behavior among those poor people who engage in the poverty-lined conduct, which is by no means universally observed. No doubt some poor people who do not work are victims of serious depression, and some alcohol abuse seems to be self-medication for depression. But having a baby during one’s teens is not necessarily a gloomy affair. Likewise spending like there is no tomorrow is likely to be pretty lively while it lasts.
(2) The poor don’t seem to have “fragmented selves,” if the concept even makes sense:
[I]t leads us to expect that poor people who vary consumption regard their future interests casually, like Aesop’s grasshopper. For supposedly these interests are being viewed as the interests of a quasi-other. But on the contrary, uneven consumption on the part of the poor is often serious and deliberate… A contemporary example from the developing world, noted by Tibor Scitovsky in The Joyless Economy, is poor families’ common practice of deliberately depriving themselves over long periods for the sake of a feast at the end, for instance a wedding feast.
Another problem with the fragmented-self theory is that from a positivist standpoint, at least, the very notion of a “normal preference for income, weakly felt” makes little sense. For what scientifically measurable behavior can possibly differentiate a normally strong preference for income, weakly felt, from a preference for income that is simply weak?
(3) What about weakness of will (“akrasia”)? Karelis doesn’t really refute it (indeed, he defends it against two classic objections); he just tells us that once we hear his theory, there’s no use for akrasia.
The overall problem with all three dysfunction stories, though, is lack of parsimony:
The existence of a few anomalies in a class of phenomena is not itself an anomaly. What critics find too complicated is that dysfunctionalism draws an implausibly deep distinction right down the middle of the class of human behaviors. It makes a big portion goal-directed and a big portion not goal-directed… Critics of the dysfunction theories contend that the postulate of such a deep division right down the middle of the class of human behaviors fails the test of parsimony. A simpler and therefore better theory would find teleological rationality—a striving to maximize one’s overall satisfaction—in almost all human behavior, or almost none.
What about the non-dysfunctional theories? They’re largely wrong, too.
(4) The “restricted opportunities” story is either wrong or overstated to the point of implausibility.
The first of the alternatives says that poor people often engage in the poverty-prolonging and poverty-worsening behaviors because they do not have the opportunities that are available to others. The opportunity restrictions they face make these behaviors either (a) inevitable or (b) satisfaction-maximizing.
As version (a) would have it, the opportunity restrictions faced by many poor people are absolute, and their problematic behaviors are therefore unavoidable. Poor non-workers cannot find jobs; poor drop-outs have no chance to finish school; poor non-savers have no way to save; and poor criminals have no honest way to survive. (Alcohol abuse is not unavoidable, obviously. Rather it is usually seen as an indirect consequence of joblessness and low income.) So according to this theory the poor people in question make no decision that can be blamed on dysfunction. But version (a) does not seem to be generally correct for the United States today, however applicable it may be elsewhere. The cause of the problematic conduct may not be dysfunction, but it does not appear to be absolute lack of opportunity either. For instance, sheer inability to find work does not seem to be pervasive or even common. To take just one indication, according to 1996 U.S. Census data covering nonworkers between 20 and 64, only 8.2 percent of those lacking even a high school diploma cited inability to find work as their main reason for not working; and in the group with the hardest time finding work, African-American nonworkers, less than one in seven gave inability to find work as their main reason for not working.
More plausible for the United States today is version (b) of the restricted opportunity theory. This version blames opportunity restrictions that are less than absolute—though more serious than those faced by the non-poor. For instance, it says that while poor non-workers could usually find some job, the jobs available are backbreaking, dangerous, humiliating, badly paid or some combination of these negatives. So much so that self-interested poor people, who generally have typical tastes and tolerances, will naturally refuse to do them. For such people, going without and dependency are an acceptable price to pay for avoiding such work at such wages. Thus unpaid pursuits become for them relatively satisfaction-efficient uses of time and energy. Many middle-class readers have been persuaded of this view by Barbara Ehrenreich’s vivid bestseller Nickel and Dimed...
For brevity’s sake I will not detail this theory’s claims about the remaining poverty-prolonging behaviors. But it will say for instance that the educational opportunities available to the poor are so bad that staying in school past the required age is a worse use of time than going out on one’s own. It will say that poor people’s opportunity to save for a rainy day is restricted by the lack of secure savings vehicles, including the lack of banks in poor neighborhoods. Since the odds of someone’s losing a sum of money when he tries to save it without putting it in a bank are high, the impact on long-run satisfaction from not trying to save at all may actually be positive for poor people on balance. Similarly, the senselessness of regular work for many poor people removes a key deterrent to drinking heavily and pursuing income illegally.
What’s so implausible about the latter toned-down version?
If the restricted opportunity theory correctly explained most of the behavior in question, then restricted opportunity would be a major factor in poverty itself. But consider the opinions of poor people themselves about the causes of poverty. They are in a good position to know the causes, and they would if anything be expected to over-blame opportunity restrictions for their poverty. But there is no consensus among poor people that restricted opportunity is the main cause of their poverty. In fact according to a survey already cited, only 57 percent think the main cause of poverty is any factor lying beyond the control of poor people, whether opportunity restrictions or bad public policies or other. Moreover, only 17 percent of poor people believe that “too many jobs being part time or low-wage” is the most important cause of poverty—fewer than blame drug abuse. And as for saving, 89 percent of poor people said there was a bank convenient to them, hardly less than the 93 percent of respondents with incomes above the poverty line.
(5) The “unusual preferences” story is straightforward, but it’s so heretical you may never have heard a smart person earnestly defend it.
This theory grants that the poverty-prolonging/worsening behaviors often seem to depart from ordinary human behavior by wasting a lot of possible satisfaction. But, says the theory, this is an illusion that arises because we overlook the difference between typical preferences and the preferences of poor people who engage in these behaviors. For instance, poor people who devote most of their time to unpaid pursuits generally do so because they get exceptional satisfaction from some alternative to work, such as staying home and raising their children, or because they suffer exceptional misery from working. This makes poverty the best available option for them…
A similar claim is made about seeming under-allocations of time to education and the work of learning, which are notoriously distasteful to some people. As for seeming over-allocations of money to certain time-slices of the self, i.e. not saving, this might reflect a strong dislike for planning and a preference for living in the present. The life of habitual criminals has often been said to reflect a positive appetite for the forbidden and for the uncertainty of the outcomes. In short, all of the questionable, poverty-prolonging behaviors can be re-seen as benefit-proportional and hence rational allocations if we take into account the atypical preferences of the poor people who act in these ways. Or so this theory holds.
What’s wrong with it? It contradicts survey evidence, and lacks parsimony:
One objection to the atypical preferences view is implicit in survey evidence. This evidence shows that large majorities of poor people and non-poor people alike think poor people have the same “moral values” as other Americans, presumably including the work ethic. Moreover, as already reported, “Ethnographers generally find that the poor endorse the same values as the better-off.” What is more, the meta-principle of parsimony should incline us to seek explanations for the behavior that minimize the variables that have to be postulated. Unusual tastes and preferences, whether located in the individual or in the culture to which the individual conforms, are precisely the sort of variable we should try to omit from our explanation of poverty, absent overwhelming evidence for them.
(6) Karelis denies that perverse policies explain much. Why? Above all, because we see similar patterns throughout history and around the world, whether or not the welfare state exists:
Once again, the survey data do not support this theory. For example, in the survey already cited, poor people themselves ranked the welfare system dead last among ten major causes of poverty. Perhaps this is to be expected, given their interests, but there is another problem too. Non-work, school quitting, and other poverty-linked conduct are both perennial and common today in societies that lack robust systems of public assistance, such as those studied by Oscar Lewis. Must supporters of the perverse incentives theory say that the problematic behavior has different causes in different times and places? It is possible, but the principle of parsimony creates a presumption in favor of global and perennial explanations for global and perennial phenomena.
Readers will no doubt find at least one of Karelis’ counter-arguments perfunctory. The more you read him, however, the more you realize that he’s several moves ahead of you. He just thinks that his own theory is so compelling that reasonable people will no longer even want to defend the alternatives. What in the world could this theory be? Stay tuned.
READER COMMENTS
robc
Aug 6 2019 at 10:21am
Is there a reason to trust survey data in these cases?
Isn’t revealed preference a better measure than stated preference?
Dylan
Aug 6 2019 at 10:38am
This is what I thought as well, but I think then you run into trouble trying to distinguish between actual revealed preferences, and what Karelis lumps into the dysfunctional bucket, as “conditions that get in the way of realizing preferences.”
robc
Aug 6 2019 at 11:56am
Bryan says Karelis is a few steps ahead, but I don’t see how to trust the survey data over the revealed preferences as to the actual preference. If the “conditions” are one of the 6 categories, then you can’t use that condition getting in the way to show that those conditions aren’t the cause.
Dylan
Aug 6 2019 at 2:02pm
That’s fair, however I think when you add up all the evidence, of which survey data is only part, it seems weird for those to be actual preferences and not dysfunction. Revealed preferences too often feels like the easy way out as opposed to a helpful explanation. I know that I should work out more. For the most part I feel better, both emotionally and physically immediately after a work out, and even during it a lot of the time…and that’s before we get to any of the long term benefits of regular exercise. Yet, I still end up sitting at the computer or just staring at the wall more often than not when I could take the opportunity to go to the gym or do a bike ride. We could resort to revealed preferences and say I honestly just enjoy staring at the wall more than I like riding my bike…but it certainly doesn’t feel that way to me. I could be lying, and really I just love staring at the wall, or I really hate exercise and don’t want to tell you that, but you’re just a stranger on the internet and I don’t have a lot of incentive to lie. Or I could be lying to myself about my true preferences, but that doesn’t feel quite right either.
I feel like for the revealed preferences to hold much explaining power, we need to assume that poor people have a bunch of preferences that are weird compared to most other people, that they are lying or unaware that they have these preferences, and that they pass along these preferences either culturally or genetically. We also have to ignore all of our personal experiences where it seems like we would prefer to do one thing, but do something else instead for no obvious explanation.
In the case of the poor, we have to
Dylan
Aug 6 2019 at 2:04pm
Those last few words were out of view when I posted. Leftover from a previous edit.
robc
Aug 6 2019 at 2:47pm
I am similar with regard to working out. I think my revealed preference is inertia. Once a start working out, I am not going to stop to stare at a computer. But switching from the computer to the workout is hard.
My revealed preference is for whatever I am already doing.
robc
Aug 6 2019 at 2:48pm
Instead of putting it in terms of physics (inertia), I could try economics: The transaction costs are too damn high.
Dylan
Aug 6 2019 at 4:04pm
I think we’ve got the same preferences then.
swami
Aug 6 2019 at 2:17pm
William Kelso studied and wrote about the issue in his book Poverty and the Underclass. He notes that poverty was dropping consistently until Johnson’s war on poverty perversely began to promote and institutionalize it. His take on the issue of long term poverty (to be distinguished from short term conditional poverty) is that the issue is anomie and the lack of values of responsibility, industriousness and the decay of family values.
Surveys of the long term poors’ extended family show that the number one reason they give for the person’s poverty is “laziness”. He recommends reducing harmful effects of transfer payments (perhaps replacing it with workfare) and promoting better values in schools and media.
Roger McKinney
Aug 6 2019 at 4:41pm
Karelis’ explanation of poverty verges on silliness. Here’s a good review: https://www.hudson.org/research/5289-poverty-of-ideas-book-review-of-the-persistence-of-poverty-by-chales-karelis.
The best explanation for poverty’s persistence I have read is Helmut Schoeck’s in his book “Envy: A Theory of Social Behavior.” He shows that fear of being envied by friends and family keep people trapped in a culture of poverty.
Weir
Aug 7 2019 at 2:05am
If the fear of being envied keeps people trapped in poverty, can we flip that logic around? Is it the desire to be envied that prods people into escaping poverty and becoming rich instead?
The desire to take a photo of yourself in front of the Eiffel Tower is quite common. You could throw together a hundred of these photos and make it the cover of a book: On The Advantage and Disadvantage of Envy for Life.
On the other hand, who can’t afford a flight to France? This is Joel Schwartz in the article you link to: “A typical poor person’s home is a three-bedroom house, with one-and-a-half baths, a garage, and a porch or patio.” So the uses of envy are not what they used to be.
At least if you’re poor. The rich are different. If you’re rich and flabby you can envy the rich and thin. You can seek to inspire envy among your un-toned and un-slim friends. You can walk the 704 steps of the Eiffel Tower three minutes faster than any of your friends.
nobody.really
Aug 6 2019 at 4:51pm
1: Should we take people’s reports about their values at face value? Eh.
Realize that people often have motives to espouse views that seem counter to their self-interest. Machiavelli observed that peasants who have sacrificed the most for their lords exhibit the highest regard for them. People who undergo hazing rituals as part of an initiation seem to exhibit a higher regard for the group. People given the opportunity to take $1000 to quit their Zappos job subsequently express greater enthusiasm for their jobs. Perhaps they all feel the need to rationalize their sacrifice?
Meanwhile, people in the American Southeast express the most conservative religious views, while also having the highest rates of violent crime, divorce, out-of-wedlock births, etc. Perhaps people surrounded by social decay have the greater need to believe that they can influence events through their virtuous behavior–or at least through professions of virtue?
And, famously, female jurors are less likely to vote to convict a defendant accused of rape. Perhaps the act of voting to convict requires women to acknowledge their own vulnerability, whereas denial provides a more comforting worldview?
In short, sometimes when people appear to be espousing their views, they aren’t talking to you; they may be talking to themselves.
2: In Tally’s Corner (1967), sociologist Elliot Liebow argued that poor people do, in fact, share the values of the dominant culture. But the dominant culture values success. Poor people, being perpetually thwarted in achieving success, begin to espouse “shadow values”—that is, alternative values which enable them to claim success.
This is not so different than competitive student-athletes who profess a passion for Lacrosse—and vehemently deny that their passion has anything to do with their lack of skill at football and basketball.
3: Tally’s Corner also addressed the challenge of savings—which has NOTHING to do with a lack of financial institutions. Rather, the challenge goes to the heart of struggle between capitalism and tribalism.
Few of us live atomistic lives—but poor people have their noses rubbed in this fact on a regular basis. They often must call upon a network of family and friends just to get through the day. And this includes relying on this network in order to raise cash to fix the car or get your son out on bail. In short, if you are a member of the tribe, you get to call upon the tribe’s assets. But the corollary is that the tribe gets to call upon your assets, too.
Thus, if you have cash on hand, you can choose to spend it on yourself—but only if you do it quickly. If you suddenly learn that your sister’s kid needs dental care, there goes the money.
And if you get a reputation for having money but not sharing it—they you get kicked out of the tribe. There goes your safety net.
This collection of expectations creates a strong incentive to consume assets while you have them. It is this dynamic, not a lack of banks, that complicates saving.
Heroic capitalism arises as the Horatio Alger story of the plucky young person who works hard, consumes little, amasses wealth, and SAVES IT FOR HIMSELF. He moves into a nice house in a nice neighborhood, surrounded by people with similar disposable income as himself, and presents himself as atomistic and autonomous. But his friends and family—the people who regularly bailed him out when he was in trouble, but now find that he does not reciprocate—look upon this story as a breach of trust, a rupture in the social fabric that leaves a hole in the safety net.
The middle class, looking in from the outside, regard the Horatio Alger story as one of progress, and regard the bitterness expressed by the family and friends as mere manifestations of envy.
John Alcorn
Aug 6 2019 at 6:32pm
Karelis holds that five nonbehaviors largely explain persistence of poverty: “not working, not finishing school, not saving for a rainy day, not moderating alcohol consumption, and not living within the law.”
Although Karelis construes these five nonbehaviors as “global and perennial” factors in persistence of poverty, one of them—not finishing school—surely hasn’t been a perennial factor. School for the general populace is a recent historical phenomenon, part of modern nation-building. Previously, especially in agrarian life, there was scarcely opportunity or expectation of schooling for children from poverty.
By contrast, not finishing school (i.e. dropping out of high school) is a major factor in persistence of poverty in the USA today. (See Bryan Caplan’s work on educational signaling.)
Who was mired in poverty before the agricultural and industrial revolutions? Perhaps the bulk of the populace, simply because productivity was generally low? Or perhaps a much smaller subset, marked mainly by idleness, incontinence, and lawlessness? Does Karelis’ definition of poverty provide a clear answer about the scope of poverty in premodern societies? Here is his definition: “having insufficient resources to meet what are typically seen as basic needs in that place and time.” (p. 9) It seems that the poor are those who are labelled poor.
However that may be, Karelis’ quest for a parsimonious, universal explanation of persistence of poverty seems to neglect a crucial factor in pre-modern societies: unfreedom; for example, slavery and serfdom.
John Alcorn
Aug 6 2019 at 8:10pm
Karelis’ critique of six standard stories misunderstands explanation by mechanisms.
Here the effects to be explained are nonbehaviors: “not working, not finishing school, not saving for a rainy day, not moderating alcohol consumption, and not living within the law.”
The hypothetical causes of these nonbehaviors are apathy, hyperbolic discounting, weakness of will, lack of opportunity, peculiar preferences, and counterproductive policies.
Karelis invokes the principle of parsimony:
However, the social sciences are more like chemistry than physics. A variety of nonbehaviors cause poverty; and, in turn, a variety of mechanisms cause those nonbehaviors. In one context, a social transfer payment, willy nilly, might be a powerful cause of not working. For example, this was Charles Murray’s thesis in Losing Ground. In another context, lack of opportunity might be a cause. For example, Thomas Sowell has argued that minimum wage laws restricted opportunities for unskilled young African Americans to enter the labor market after WWII, until inflation eroded the minimum wage. And who can doubt that some persons don’t work (and then remain poor) because they absolutely cannot abide having a boss (an unusual preference)?
A specific mechanism can have explanatory power, even if the nechanism is neither necessary nor sufficient to cause to cause the effect. A mechanism has explanatory power if it substantially increases the probability of the effect. Multiple mechanisms can cluster, interact, and jointly make an effect very probable.
It is reasonable to believe that the nonbehaviors, which contribute much to persistence of poverty, have a variety of causes, depending on historical context.
JFA
Aug 7 2019 at 1:02pm
“The “unusual preferences” story is straightforward, but it’s so heretical you may never have heard a smart person earnestly defend it.”
I dunno… I think I might have read one or two articles by a particular smart person who (in another context) defends viewing some unproductive actions as results of unusual preferences.
Art Carden
Aug 7 2019 at 2:05pm
My copy arrived the other day, and I look forward to reading it. As heavily-regulated and screwed up as the labor market is, there are big pockets of the nonprofit sector where we allow people to work for $0/hour or even negative wages by volunteering. Volunteering is a way to accumulate human capital, make important connections, and send strong signals about your punctuality, conscientiousness, etc. Why don’t we see a lot more volunteering? Even in the roughest parts of Birmingham, for example, you can find lots of churches, missions, libraries, schools, and other places that, I think, would be all too happy to have more volunteers.
It’s a puzzle. I look forward to reading the book and exploring further.
JFA
Aug 7 2019 at 3:11pm
Your question: “Why don’t we see a lot more volunteering?”
Your answer: “we allow people to work for $0/hour or even negative wages by volunteering”
The poor can get all the benefits you listed for volunteering plus a positive wage by working an actual job.
Dylan
Aug 7 2019 at 5:45pm
As someone who has been on both sides of this, applying for volunteer positions and hiring for them, it isn’t always that easy. When I was looking for volunteer work in NYC, I was surprised that a lot of the organizations I was interested in, I didn’t have the skills they were looking for. Lots of calls for attorneys and accountants and other jobs with skills, a lot less for people with my background, and still less for people with no employment history at all.
On the other side, I’ve been interviewing people for an unpaid internship for a non-profit recently, and we’ve got to be pretty careful in who we hire, because we don’t have enough resources in time or money to handle someone who needs much in the way of hand holding. Plus, the people that have been applying for the position are paying for the privilege of working 40+ hours a week for no pay, since most of the qualified applicants are international students who will pay to come to New York and live for 3 or 4 months without pay, which has to be more expensive than a semester of school in their home countries. Which is unfortunate, because that means we’re unintentionally selecting for the relatively well off that are able to afford to do this.
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