The Price of Poverty

Psychology and the Cycle of Need

Refugees who fled the conflict in Sudan's Darfur region to eastern Chad gather water at a well as a dust storm approaches, June 2008. Finbarr O'Reilly / Courtesy Reuters

Poverty is powerful. For those within its grasp, it alters every aspect of existence. People who happen to be born poor consume less than those born rich. They have worse access to education and healthcare and frequent exposure to corruption, extortion, and violence. An average person born in a place like Sub-Saharan Africa lives in a very different world than an average American.

But does poverty affect the way people feel, think, and act? This seems like an obvious question, and indeed, it is neither new nor mine: over the centuries, scientists, policymakers, and writers have asked whether poverty has psychological and behavioral consequences. Yet for many years, the question has been difficult to study because asking it has often been confused with blaming the poor for their poverty or attributing to them deficiencies that caused it. One prominent example is a 1965 report by Daniel Patrick Moynihan, who was assistant secretary of labor at the time, entitled “The Negro Family: The Case for National Action.” In the paper, Moynihan argued that many poor black families in the United States were caught in a “tangle of pathology” -- a combination of absent parents, low educational attainment, unemployment, and delinquency -- and urged Washington to step in. Although Moynihan’s aim was to describe external circumstances that made it difficult to escape poverty, not inherent deficiencies within poor families themselves, he was widely perceived as blaming the victims. As a result, his analysis was broadly panned.

In recent years, scholars and the public have become more willing to examine the nuances of the link between poverty and mental well-being. One reason for that is a change in the focus of such studies. Whereas Moynihan wrote about race, today’s scholars write about poverty, which is less socially charged. Meanwhile, the emergence of behavioral economics has made it possible to systematically examine the ways in which decision-making can -- and does -- depart from the standard neoclassical model of economic behavior. Such research has

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