Paying the scarcity tax in poverty


I’ve written in the past that it’s best understood that poor people are poor because they don’t have enough money, but the total cost of such isn’t limited to that simple monetary picture. As Matt Bruenig recently wrote about the reality of children at the socioeconomic bottom, “it is probably better understood as a toxic poison that causes physical, permanent damage to kids’ bodies.” This was in reference to a New York Times piece by Moises Velasquez-Manoff on the overall regressive nature of negative physical outcomes due to living in poverty:

Those on the bottom are more than three times as likely to die prematurely as those at the top. They’re also more likely to suffer from depression, heart disease and diabetes. Perhaps most devastating, the stress of poverty early in life can have consequences that last into adulthood.

Velasquez-Manoff goes on to cite the well-developed literature on poverty’s health effects. Yet if you think this is only an issue facing under-developed countries, I highly recommend Monica Potts’ recent in-depth reporting on “What’s Killing Poor White Women.” She cites a recent Health Affairs study which shows that over the past 18 years the average life expectancy of uneducated white women in America has actually decreased by five years — yes, the ‘world’s richest country’ has a sizable portion of it’s citizens who are on a path to die earlier than the previous generation.

Why? Perhaps it is, as Potts goes on to write, that shifts “in society increasingly isolate those who don’t finish high school from good jobs, marriageable partners, and healthier communities.” Or, as other researchers note in the piece, that having a job with a livable wage confers substantial social and psychological benefits that can lead to better outcomes. Thus economic security opens up opportunities as well as promotes a healthier mental well-being derived from having a sense of purpose. These are, at once, invisible counter-factuals and intangible qualities that would be increasingly difficult to acquire in a country with burgeoning inequality.

However, like a cruel parody of those infomercials, that’s not all! It isn’t enough to be subjected to the physical, emotional, and socially deleterious effects of living in poverty. There are also implications for basic decision-making. Research in the journal Scientific shows that the poor experience intense stress from attempting to manage insufficient resources, and this has negative consequences for cognitive functions. As Matt Yglesias reports (my emphasis in bold):

These findings complement the already extensive literature of the negative physical impacts of low socioeconomic status, reinforcing the point that the harms of poverty extend beyond the direct consequences of material deprivation.

But the impact on cognitive skills is especially noteworthy for how it should influence our understanding of poverty. Poor people—like all people—make some bad choices. There is some evidence that poor people make more of these bad choices than the average person. This evidence can easily lead to the blithe conclusion that bad choices, rather than economic conditions, are the cause of poverty. The new research shows that this is—at least to some extent—exactly backward. It’s poverty itself (perhaps mediated by the unusually severe forms of decision fatigue than can affect the poor) that undermines judgment and leads to poor decision-making.

Writing about the same study Emily Badger notes that the constraints from dealing with limited means isn’t, of course, just about a dearth of money. Nor is it only a problem that the poor face. Rather, as the research authors contend, a “hypothesis on the idea that all kinds of scarcity are accompanied by a common psychology.” This ubiquitous problem means having a limited amount of anything forces us to focus on what we do have. Yet as Badger goes on to say, “that focus comes at a cost,” and this is where being poor entails paying a particular high tax for such scarcity (again, my emphasis in bold):

A key point of Mullainathan and Shafir’s work is that we may all experience different kinds of scarcity, accompanied by the same hyper-narrow focus and costs in lost attention elsewhere. But those costs of scarcity – the “bandwidth tax,” they call it – are the highest for the poor. They have no room for error. They have more opportunity to fail. They pay more dearly for their mistakes. The bandwidth tax is much, much higher, with the cruel irony that scarcity often produces more scarcity.

Some people scoff at the notion that living in poverty is anything other than the result of making bad choices. They imagine that our options in life occur within a vacuum, something along the lines of Dworkin’s auction — without the crucial insurance component necessary to make such a just distribution possible. This belief in the inferiority of self-governance is supported by our cultural habit of only recognizing the adversity of poverty within the context of meritocratic success. We celebrate folks who achieve in spite of poverty’s numerous obstacles, but then pretend it’s irrelevant for people who under-perform our ideals. But those living in poverty aren’t under-achieving some moral litmus test. They are living exactly as one would expect according to the psychological and sociological research. The road to a better life at the bottom isn’t paved with motivational posters and the kind of agency that simply doesn’t exist. It should, at the very least, begin with a little verstehen for those left behind.


7 responses to “Paying the scarcity tax in poverty

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