When You’re Poor, Bad Decisions Are Rational

There are many reasons for poverty; among them are bad luck, bad times, bad economic policy, bad health, and for some, these are all exacerbated by bad decisions. A post by Linda Tirado on bad decisions that poor people make has sparked conversation around the internet. Alec Liu looks at some of the science behind those decisions.

It’s yet another indictment of the overly simplistic interpretation of the famed Stanford marshmallow test, in which children are offered a marshmallow, but also the promise that, if they don’t eat their treat immediately, they’ll be offered even more later. Those who couldn’t help themselves were deemed impatient. Tracking those children into adulthood, the ability to delay gratification directly correlated toward success in the real world: better grades, healthier lifestyles, and higher-paying careers.

A recent re-interpretation of that classic test may be more apt. Celeste Kidd, a cognitive science graduate student at the University of Rochester, added a dimension of trust. The setup was the same, except with half the kids, the researchers broke their promise. Instead of providing a treat for their patient fortitude, they were offered an apology.

When the researchers re-tried the experiment, nine out of the 14 kids who had received their initial treat as promised stayed patient. The contrast in the other group was stark. Only one was willing to risk being disappointed again. The others ate their marshmallow almost immediately.

Read more about the updated marshmallow study here. We intuitively know that the lack of trust and hope for a better tomorrow does bad things to our children. When disappointment is a way of life, it can do bad things to your future. The decision to treat yourself today to a $5 burger or pack of cigarettes or a joint to make life seem a little better instead of saving it for job training that may never pay off or a retirement that may never happen is the rational decision to those who have been there. -via Digg

(Image credit: Flickr user Eric__I_E/)

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I wonder how much of it is a self-selective criteria. Basically this: poor people continue to be poor because they constantly make the same bad decisions, so when you look at a large pool of poor people, you find a high preponderance of bad decision-makings. They've self-selected.
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Here's another scenario. Children growing up in a home with several siblings and cousins learn very early that there isn't enough food to satisfy everyone. You have to eat as much as you can at every meal, as fast as you can, because there won't be any leftovers. It's a rational strategy when you're five or six, but then you keep those habits into adulthood, which leads to the inability to know when you've had enough, and then obesity, and an overall "live for today" mindset.
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That's not the only scenario. You get a Earned Income Tax Credit in the spring, a bonus from the government for "working while poor." It could be several thousand dollars if you have children. But three weeks later, the state social worker wants a list of your assets to determine your continuing eligibility for food stamps, medicaid, etc. They want to know how much cash you have. If you have any, you could lose benefits for an entire year. So, while keeping back a few hundred just in case your car breaks down is a good idea on paper, it could cost you big time ...if you're poor.
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