Fascinating research! I wonder where it was conducted and whether or not the result would vary between countries. I think in the United States there's a pervasive belief that the wealthy deserve their wealth because they earned it through hard work and/or personal merit. The counterpoint to this must be that poor people are undeserving because they don't work hard or because they lack merit.
Odd, I've seen a pervasive belief that the wealthy did not gain their wealth through hard work/merit and either somehow stole it or inherited it. And I've also seen pervasive beliefs that the poor are only poor because of things such as: lack of education, evil capitalism, lack of opportunities, hunger, systemic issues, racism, etc.
Perhaps each group has some level of both and we shouldn't generalize to entire strata and population groups too much. Instead maybe we shouldn't be so quick to measure outcomes and just fix the problems. Instead we're using outcomes as a (I would argue) poor measure of how well we're fixing the problems we should be agreeing are problems on their own worth fixing. That's where a lot of the argument/debate gets lost, quibbling over correlations instead of just solving bad things.
Not sure why you're being downvoted for sharing an opinion/observaton, but in my experience, opinions are changing slowly from the parent comment to your comment.
Obviously, all of the following is a generalization, but I think it's fairly accurate...
There is/was a pervasive belief in the US that the wealthy pulled themselves up by their bootstraps and that they provide more value to the world. 1980s Wall St boom, Yuppies, etc. Up until perhaps 30 years ago, this might have even been accurate. It's only recently that economic mobility in the US has started to noticeably lag behind similar western nations.
However, starting with Gen-X and perhaps accelerating with Millenials, public opinion has started to shift. Three decades of failed Neo-liberal government (and GOP and Democratic leadership both largely fall into that category) has left the average person disgruntled and seemingly unable to find any bootstraps at all.
I think it depends on how wealthy we’re talking about. People who make 6 figures are assumed to have earned it. People who make 8 figures or have 9 figures of wealth are assumed to have inherited it or worked the system without having put in the effort to earn it.
SpaceX gets lots of money from governments as incentives to expand their production facilities so should all their spending be subject to such scrutiny as well?
Far more so. Government corporate welfare is a terrible idea. Yes the government can and should contract to private businesses but at that point they are the customer and there should be huge amounts of scrutiny on how the money is spent. This should also apply to infrastructure if the government is spending too much on a contract but keeps using that business that is clear and present corruption.
If SpaceX gets a contract to provide X in exchange for $Y from the government, and delivers on their contract, the government has no further business scrutinizing SpaceX's spending.
If the government gives SpaceX money with no strings attached, just a vague "expand production facilities", then the government would be right to be upset if SpaceX spent it on keggers.
Its useful to know _in general_ how this "free money" is spent. Its less useful to know on an individual basis. There are lots of "free" services that we all use, and very little individual scrutiny is placed on these things. Eg. Roads, airports.
Unfortunately that is only true if you're a low-income family. If you're receiving billions from a Republican administration, then of course oversight is onerous and should be eliminated.
These kinds of comments are a strong signal that we haven't matured enough to actually target the real cause of waste, fraud, and abuse yet, because people are still stuck in R vs. D.
Both corporations have been looting the American taxpayer, and the best we can ever come up with is partisan hackery.
Two people enter the room, one with muddy shoes and the other covered head to toe with mud. The one with mud all over them yells "I'm not dirty! You're dirty!" and then proceeds to defecate on the rug, smear it on the walls, and then grabs a beer from your fridge and crash on the couch. By the time you get around to confronting them, they look at you incredulously and say, "See, look what a disaster this place is! That other guy has got mud on his shoes!"
Technically you're right, they're both part of the problem.
This is just begging the question: why does it become everyone’s business? Once you give someone something, it’s theirs (in the most simplistic sense). If there are social welfare programs that are doling out cash to low income families, we shouldn’t care how that money is spent, but whether or not the money alleviates the issues we are trying to eliminate. How and what that money is spent on is irrelevant as long as the problems are dealt with. Fortunately, we don’t need to know what the money is spent on to measure whether or not the program is working.
Is there an implicit contract between the benefactors of social programs and the beneficiary that requires the latter to use the aid to at least try to pull themselves out of poverty? I definitely lean towards the "yes" side. Maybe it's because I've been privileged, but it makes sense.
The concern isn't what poor people are doing with their money- the concern is what are the people receiving tax dollars doing with their money.
> Fortunately, we don’t need to know what the money is spent on to measure whether or not the program is working.
I could not disagree more- we absolutely do not have adequate measure of how these programs are working. You are trying to solve a problem upstream of a million factors- we aren't anywhere near measuring outcomes of single decisions.
> This is just begging the question: why does it become everyone’s business?
Generally speaking, this assistance doesn't come as a big lump sum payment, they're usually structured as ongoing payments (or other benefits with a cash value).
Because of the nature of this structure, money must be continually appropriated. The appropriation of resources by the government is something that, at least in democracies, the populace expects to have some input on.
Great, then tax breaks for big corporations, subsidies for the fossil fuel industry and the military industrial complex are gonna get a closer look then? Sweet.
I don’t know, the money I spend subsidises quite a few billionaires, bureaucrats, managers, and shareholders. Where do you think companies’ income comes from? It does not give me the right to put my nose in Tim Cook’s spending habits. That’s not even considering tax-funded bailouts, pork and vanity projects.
Also, we don’t “give” money to the poor. We buy social peace by preventing them to get desperate enough. Riots and revolutions is the alternative, which is much costlier.
A corporation is not a person, though. It has no moral right to privacy, and no human rights.
Also, I haven’t counted posts or anything like that, but something along the lines of “that loophole is legal so how dare you criticise them exploiting it?” is quite common.
Of course you have the right to poke your nose wherever you like and complain about whatever you like as well.
I also don't care for the idea that bribing the indigent and poor is what I'm doing. Glad to know that people are decoupling from the idea that welfare helps upward mobility.
My right to be a nuisance stops when it infringes on their right not to be bothered by idiots, though. This can be rightfully seen as harassment.
Helping people who are in a difficult situation is also the right thing to do from a moral point of view. But I am under no illusion that our governments act on morals alone.
I don’t think welfare necessarily helps with upward mobility. On the other hand, it definitely is useful to prevent downward mobility, for example if someone has an accident and can’t do their job anymore, or their employer goes out of business.
Would you please stop taking HN threads further into ideological flamewar? You've been doing this a lot, and it's not what this site is for, because it leads to tedious and angry discussions which are the opposite of curiosity. And we've already had to ask you to stop.
Keep the poor focussed on each other and they won't see the excesses of the rich.
It's why the Tories are so focussed on people who claim benefits: if the public are angry about "scroungers" grabbing the crumbs then they won't be paying attention to the hands which are taking all of the cookies out of the jar.
Working class people have been ingrained with a crabs-in-a-bucket mentality. Meanwhile, we've allowed 1% of Americans to sit on over 50% of the wealth, and people still ask "but how do we pay for it?" when it comes to actually improving the material conditions of the working class.
It seems like you're using one metric to shit on the 1% (net worth) while you're using a different metric to discuss impact on the middle class (material conditions)
It's important to be consistent here. The 1% may have a lot of the wealth financially, but they don't have anywhere near 50% of the things that matter to Americans. Homes, cars, food, healthcare, etc. is much much more evenly distributed.
'Material conditions' and wealth aren't directly correlated.
The point is that would be more and better houses and other things that would benefit more people if some of that net worth were redirected toward building them.
That net worth is already pretty much 100% directed toward building these things. The net worth of the "1%" is paper wealth—capital investments in various companies, for the most part. It belongs to them but they use it to make things to sell to other people and then invest the resulting profits in even more capital.
If you want a more meaningful comparison, try investigating personal consumption expenditures for each income group. I'm sure consumption is higher per-capita among the "1%" but I'd be very surprised if the total were over, say, 10% of all PCEs.
In a sense it already is. The ultra-wealthy own and run the businesses which supply everyone else with all those things, and their wealth is largely just the nominal paper value of a whole bunch of successful attempts to supply society with things. What doesn't and cannot happen is redirecting their wealth in the sense that a lot of the American left imagine, where we can just take their billions and turn them into billions of dollars of healthcare or housing or anything else that would benefit the less wealthy.
The reason this isn't possible is that their wealth doesn't represent actual resources they're claiming. When we say that someone like Jeff Bezos is worth $150 billion dollars, that doesn't mean they're personally using $150 billion dollars worth of land, materials, equipment, people's time, etc that can be redirected into houses or healthcare, whereas someone who buys a $200 TV is making use of something like that amount of actual resources that cannot be used for anything else. Houses and healthcare need land, materials, and lots of workers' time, which then cannot be used for other things, and it fundamentally has to be the people who'd have those other things who ultimately pay for this.
1. Whoever pays the bill calls the tune. Meaning if someone wants charity, the giver is going to want to know that the recipient is going to spend it wisely, otherwise would be disinclined to give.
2. People in financial difficulty often consult with a planner to see how they can adjust their spending habits so they are more effective.
Several scenarios described in the article made no mention of someone else paying the bill or providing funding to the person but the results showed the same scrutiny of their purchasing decisions.
And I would have thought this goes without saying but a person generally cannot financial-plan their way out of poverty. Poverty isn’t from lacking financial discipline it’s from lacking financial resources and opportunities. It’s impossible to fund a savings account when your income is just barely enough to keep a roof over your head and food on the table.
For starters, discipline is about choices and if you have no choices you can’t have discipline. Secondly, in the rare instance you do have a chance to make a choice, you lack both the requisite knowledge and the practical skill. Thirdly, in that rare instance that your physical needs are met, you’re still struggling with a lot of unmet mental needs which either make rational financial discipline difficult or in which the rational choice is to “splurge” to maintain your sanity. Fourth, even if you do make the “correct” choice and say, open a savings account, there’s a fair chance you’ll be raiding that savings account the following month to meet your needs anyway, which not only defeats the purpose but makes financial discipline seem pointless; which it would be.
> Several scenarios described in the article made no mention of someone else paying the bill or providing funding to the person
"These last findings have worrying implications when it comes to thinking about charitable donations or how resources are distributed to the less fortunate, write the authors."
> Poverty isn’t from lacking financial discipline it’s from lacking financial resources and opportunities.
My father (Air Force) once told me that the AF had difficulties with the privates living on the base, in that half of them couldn't pay their bills. He was ordered to investigate and fix it. He said the problems were due to how they spent money - they'd spend their paycheck as soon as they got it on steak and booze, then would have to beg, borrow, etc., towards the end if the pay period.
The guy who taught the accounting class I took used to be a used car salesman. He said poorer people invariably took the worst (most expensive) financing option. He'd explain to them over and over why it was bad, and they'd just accuse him of trying to cheat them.
Frontline (I think it was Frontline) ran an episode a few years ago about a company that offered a 401K plan to all its employees, from the janitor to the CEO. They found that the investment percentage returns for the employees varied by their salary - the higher income people got better results from the company plan. This is despite everyone got the same plan, some were better at investment choices.
A colleague of mine at work years ago complained bitterly that the company had him over a barrel, salary-wise, because he could not afford to change jobs because of his bills. He was wearing expensive clothes, had a new car, a new house, etc. His chains were of his own making.
And lastly, the primary buyers of lottery tickets are poor people. Lottery tickets are probably the worst investment out there. (They'd do much better buying fractional shares from a discount broker.)
It's a tragedy that the public school system teaches nothing about accounting, budgeting, how to run a simple business, etc.
Not to disagree with anything else you've said, but regarding:
> It's a tragedy that the public school system teaches nothing about accounting, budgeting, how to run a simple business, etc.
At least some do. The curriculum at my public high school included an economics course which covered (personal) accounting and budgeting in some detail—both theory and practice. IIRC we also did some simulated investing and spent some time on the basics of running a business.
The lottery is indeed pretty terrible as an investment, but I expect most people who participate see it more as a form of entertainment. It's not my thing, but a certain amount of money budgeted for entertainment and/or hobbies is perfectly reasonable and I'm not going to criticize how that money is spent so long as it makes the spender happy and all the critical expenses are paid.
Well, I find the stock market entertaining, too, even though I make very, very few trades. There really isn't much of anything happening in the lottery business (it rarely makes the news), so I can't see much entertainment in it. With stocks you can watch your net worth gyrate around minute by minute :-)
There are many opportunities to volunteer helping low-income people with budgeting and finances. I would encourage you to sign up as a volunteer for one of those programs. I’ve done work with the IRS VITA program to counsel low-income families on tax planning and budgeting how to “best” spend their EITC. You might need a legal and/or tax background to volunteer solo with VITA but there are lots of opportunities to sit in on client intake and budget planning/coaching. You’ll see first hand that poor people aren’t stupid when it comes to how they spend their money and they aren’t making irrational financial choices.
It’s comforting for those of us who are financially secure to think that we’d be able to use our superior knowledge and business acumen to get out of poverty but I can assure you that comforting thought isn’t based in reality.
And in the exceedingly unlikely event that you are as skilled financially as you believe yourself to be then you should be sharing your knowledge far and wide with those in need.
> You’ll see first hand that poor people aren’t stupid when it comes to how they spend their money and they aren’t making irrational financial choices.
My father would work with the insolvent privates making a budget for them to get them on a sound basis. They rejected his help 100%.
My accounting teacher would explain how compound interest worked to the car buyers, and they accused him of trying to cheat them.
The Frontline episode shows they were making poor investment decisions.
And lastly, buying lottery tickets doesn't auger financial judgement.
> in the exceedingly unlikely event that you are as skilled financially as you believe yourself to be
At least I've never bought a lottery ticket, only lost pocket change in Vegas, and only buy cars I can pay cash for, so there's that :-)
> you should be sharing your knowledge far and wide with those in need
There are plenty of excellent books on the topic, nothing I can add to that. "The Millionaire Next Door" is a good one if you're interested.
> And when deciding whether to gift a low-income individual either a $100 grocery voucher or a $200 electronics voucher, only a quarter of participants went for the latter, even though it was worth twice as much. More than half said they would give a high-income individual the electronics voucher, however. “Paradoxically, the result was that participants effectively allocated more money to higher-income people than lower-income people,” the authors note.
This is a ridiculous contrived situation. $100 for a lower Maslow-level need or $200 for a higher level need? Why was giving $200 for the lower level need not an option? Maybe I'm missing the point here, but all this proves is that people are aware of Maslow's hierarchy.
When you create such strange scenarios, expect strange results. If a person struggling financially is servicing their higher level needs before their lower level needs are met, they deserve scrutiny.
It just says the person has a low paying job, it doesn't say they are struggling financially. People know that food is more important, but if you already have enough for food the $100 grocery gift card just becomes a $100 you can spend on "luxury" goods.
Interesting article.
If a country has some kind is social net for low income folks, (most developed countries do, even the US) then the assumption is that the whole society is helping them, and some of your own money is going towards that help via taxes.
If a low income person is spending money on things that are not necessities it might feel like their are miss-using the help they get.
I think it is almost a tribal/low level human reaction to that. It might make you feel like you are being taken advantage of, and the feeling of unfairness might come out.
It that person is low income, but not receiving any support, then another feeling is just sheer jealousy or inadequacy, where this person is dressing better/and has better phone/car than you.
I've heard that this is one of the reasons that obesity is a much bigger problem in the US vs. Europe.
The way it read was that European countries have much more homogenized cultures where people are more openly shamed for having an unhealthy lifestyle; due to the fact that the healthcare costs are more visibly distributed to everyone.
In my limited experience, there is no such shaming going on in Germany. Perhaps people move around more, and drive around less? Perhaps it's related to how food is regulated?
Thereis probably some of this butthis would not be the first thing which comes to mind.
At least in France, children are faced with healthy food since primary shool. Sodas distributors are forbidden up to and including high school.
They are also given the opportuinty to do sports (my children, 14 and 16, routinely go to play football with their friends in an open field - in the subrbs of Paris)
Then there is not much tolerence for fat people. Surprisingly, this equals fatness to having a disease.
The company restaurants are very affordable and usually healthy.
One of the things which also help a lot that it is traditional to drink water at meals. This is also what you get at school (and nothing else), and at the office (some would buy something else but this is unusual.
This isn’t just about a safety net it’s about public spending in general.
In the U.K. median households are not net contributors, the U.K. tax base is exceedingly small the vast majority of people get much more than they put in.
The average public spending in the UK is around £10,000 most households don’t pay that in income tax and NIC. Even if you take VAT into accounts it’s not enough because the primary expenses such as housing and food and transportation are VAT exempt and other common expenses like utilities have a reduced VAT of 5%.
> In the U.K. median households are not net contributors
It seems inherent to a progressive taxation scheme?
The only way I see median households being net contributors is if the taxation and redistribution made money flow from the poorest 50% to the richest 50% (either as cash or as services).
I think a better indicator of how narrow the tax base is would be the percentage of households that are net fiscal contributors.
> Now a new study in PNAS provides some clues as to the origins of this bias. Across a series of 11 studies involving more than 4,000 participants, Serena Hagerty and Kate Barasz from Harvard Business School find that we tend to believe lower-income people need less than those on higher incomes,
This phrasing of “need” does not seem accurate here, it’s more about priorities
If you don’t have enough to buy food, pay the rent or emergency savings then securing these are the top priorities, doesn’t matter if you are rich or poor
...that it's a utopian ideology, a false idea which can ultimately never be fulfilled, but which develops a "false consciousness in people about the world, how it works, and their place in it".
> As an example, in Medieval Europe, religion was used as an ideology to support the structure of society. Serfs were told that the people in charge were put there by God and that the way the world worked was the only divinely ordained way it could work. No wonder people who were essentially slaves didn't rise up; they were told God wanted them at the bottom.
> According to Marx, other ideologies like capitalism or liberalism work the same way. They are created, work to help sustain a particular social structure, and ultimately fall out of favor when a new idea comes to force. When this happens, the whole structure of society can change in a hurry as a new ideology fills the void.
>In the first couple of studies, participants read about Joe, who was described as having either a low- or high-paying job. They learned that Joe had won a $200 gift card which he spent on a flat screen TV. They then rated five statements which measured how “permissible” they thought his purchase was (e.g. “He made a responsible purchasing decision” and “He deserves to buy what he did”). Those who read that Joe had a low income rated his purchase as less permissible than those who read that he had a high income, or who were given no information about his income.
I have no right to make a value judgement on how Joe spends his money in this example. However that is what the study asked participants to do. claiming that people scrutinized low income families based on that part of the study is incorrect. They simply tended to look differently on a spending decision to buy a luxury item based on income. Something the study required them to do.
That said if a friend asked me for on advice on how to spend $200 my answer would depend on their financial position. If they had plenty to spend it doesn't really matter how they spend it. If they have very little I might recommend they spend it on a necessity rather than a luxury. That is not a judgement. It is simply the wiser choice. I suspect this could have been why people answered the way they did.
I got the impression the researchers already had a conclusion in mind, and structured their experiments around it. That's why they forced the "necessary" phrasing as the only way to express purchasing priorities, and then were shocked, shocked, to find the study participants rated what they would have saved money on as less necessary.
I think people judge because there is an implicit assumption that the poor in the question is poor enough that they might be getting some sort of assistance. If that’s the case, a luxury purchase is essentially being subsidized by tax payers. And THAT now brings a lot of expectations in (i.e. don’t waste what others sacrificed to give you).
If you read the original study, participants were only asked about one version of Joe, not asked to compare. In another version of the study where an additional third framing, where Joe's income was not mentioned, rich Joe and neutral Joe were rated the same, and poor Joe more harshly.
They also did another version of the study where the thing being bought was a backup camera for a used car, and the study was 2x2: along with the income framing, there was also a framing of convenience vs safety (backup cameras are now required on all new cars since 2018 because they significantly increase safety, especially for pedestrians). Participants still rated the permissibility of a safety feature higher for a rich person than for a poor person, and rated the "convenient" camera for a rich person just as permissible as a safety camera for a poor person.
I'm disappointed that the article doesn't take into account opportunity cost. One of the questions was "He made a responsible purchasing decision" when buying expensive or luxury goods. That's clearly going to have a different answer for low or high income people
In most countries with a welfare state, "low income" means using government money. Joe spending $200 on a TV means the state kicked in an extra $200 for rent/food that he didn't truly need.
I have been on a low income, had a wife and child when my wife was unable to work and we saved as much money as possible. We had a cheap phone and internet package, made do with a second hand a TV set and microwave. When we had enough money to get a car, we bought a low end car seat and I got my first iPod when I won it in a competition.
Now we have a lot more money, so we can afford better goods. When we were less well of, a better internet package, child car seat, electronic goods were less necessary COMPARED TO OTHER FINANCIAL PRIORITIES. We had other things to use that money for, like saving up for a deposit on our first house. if you’re not saying necessary compared to what, you’re not evaluating necessity.
I think it's often appropriate. People need to understand-- financial skills are acquired skills, and they have everything to do with your own fiscal fitness.
It's not how much money you earn-- it's the delta between what you have coming in and what you spend. There are countless stories of low-to-middle income savers who grow to be wealthy through the power of safe, slow investing and compound interest. There are likewise countless stories of high-income individuals who spend all they make and more, ending up broke.
The world needs more clarity. More education. These are bedrock, basic skills, but they are woefully underpresented.
Surely the just-world fallacy is at play at here. We tend to attribute fault to those unfortunate in order to preserve a belief that the world is just; we get what we deserve. Of course that’s ridiculous, but we think it anyway.
I judge low income families in my circles for two reasons:
- they complain
- they tend to be jealous of others and judge them. Even sometimes of people who don't even spend as much as themselves
Honestly, most low income families I know of make poor money choices (cigarettes and alcohol being the poorest). I actually believe a big part of poor people are poor because they make bad choices, even though it's a somewhat unpopular opinion.
Uh, because there is endless discuss by do gooders on how to help the poor and endless comments by the poor that they’re poor and can’t make ends meet.
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[ 3.5 ms ] story [ 141 ms ] threadPerhaps each group has some level of both and we shouldn't generalize to entire strata and population groups too much. Instead maybe we shouldn't be so quick to measure outcomes and just fix the problems. Instead we're using outcomes as a (I would argue) poor measure of how well we're fixing the problems we should be agreeing are problems on their own worth fixing. That's where a lot of the argument/debate gets lost, quibbling over correlations instead of just solving bad things.
Obviously, all of the following is a generalization, but I think it's fairly accurate...
There is/was a pervasive belief in the US that the wealthy pulled themselves up by their bootstraps and that they provide more value to the world. 1980s Wall St boom, Yuppies, etc. Up until perhaps 30 years ago, this might have even been accurate. It's only recently that economic mobility in the US has started to noticeably lag behind similar western nations.
However, starting with Gen-X and perhaps accelerating with Millenials, public opinion has started to shift. Three decades of failed Neo-liberal government (and GOP and Democratic leadership both largely fall into that category) has left the average person disgruntled and seemingly unable to find any bootstraps at all.
If the government gives SpaceX money with no strings attached, just a vague "expand production facilities", then the government would be right to be upset if SpaceX spent it on keggers.
See: https://www.politico.com/news/2020/04/07/trump-removes-indep...
Both corporations have been looting the American taxpayer, and the best we can ever come up with is partisan hackery.
This will never get resolved.
Technically you're right, they're both part of the problem.
> Fortunately, we don’t need to know what the money is spent on to measure whether or not the program is working.
I could not disagree more- we absolutely do not have adequate measure of how these programs are working. You are trying to solve a problem upstream of a million factors- we aren't anywhere near measuring outcomes of single decisions.
Which would we be more profitable monitoring and enforcing: who we’re paying out to, or who’s supposed to be paying us?
Generally speaking, this assistance doesn't come as a big lump sum payment, they're usually structured as ongoing payments (or other benefits with a cash value).
Because of the nature of this structure, money must be continually appropriated. The appropriation of resources by the government is something that, at least in democracies, the populace expects to have some input on.
Also, we don’t “give” money to the poor. We buy social peace by preventing them to get desperate enough. Riots and revolutions is the alternative, which is much costlier.
Also, I haven’t counted posts or anything like that, but something along the lines of “that loophole is legal so how dare you criticise them exploiting it?” is quite common.
I also don't care for the idea that bribing the indigent and poor is what I'm doing. Glad to know that people are decoupling from the idea that welfare helps upward mobility.
Helping people who are in a difficult situation is also the right thing to do from a moral point of view. But I am under no illusion that our governments act on morals alone.
I don’t think welfare necessarily helps with upward mobility. On the other hand, it definitely is useful to prevent downward mobility, for example if someone has an accident and can’t do their job anymore, or their employer goes out of business.
https://news.ycombinator.com/newsguidelines.html
It's why the Tories are so focussed on people who claim benefits: if the public are angry about "scroungers" grabbing the crumbs then they won't be paying attention to the hands which are taking all of the cookies out of the jar.
It's important to be consistent here. The 1% may have a lot of the wealth financially, but they don't have anywhere near 50% of the things that matter to Americans. Homes, cars, food, healthcare, etc. is much much more evenly distributed.
'Material conditions' and wealth aren't directly correlated.
If you want a more meaningful comparison, try investigating personal consumption expenditures for each income group. I'm sure consumption is higher per-capita among the "1%" but I'd be very surprised if the total were over, say, 10% of all PCEs.
The reason this isn't possible is that their wealth doesn't represent actual resources they're claiming. When we say that someone like Jeff Bezos is worth $150 billion dollars, that doesn't mean they're personally using $150 billion dollars worth of land, materials, equipment, people's time, etc that can be redirected into houses or healthcare, whereas someone who buys a $200 TV is making use of something like that amount of actual resources that cannot be used for anything else. Houses and healthcare need land, materials, and lots of workers' time, which then cannot be used for other things, and it fundamentally has to be the people who'd have those other things who ultimately pay for this.
1. Whoever pays the bill calls the tune. Meaning if someone wants charity, the giver is going to want to know that the recipient is going to spend it wisely, otherwise would be disinclined to give.
2. People in financial difficulty often consult with a planner to see how they can adjust their spending habits so they are more effective.
And I would have thought this goes without saying but a person generally cannot financial-plan their way out of poverty. Poverty isn’t from lacking financial discipline it’s from lacking financial resources and opportunities. It’s impossible to fund a savings account when your income is just barely enough to keep a roof over your head and food on the table.
¿Por qué no los dos?
"These last findings have worrying implications when it comes to thinking about charitable donations or how resources are distributed to the less fortunate, write the authors."
> Poverty isn’t from lacking financial discipline it’s from lacking financial resources and opportunities.
My father (Air Force) once told me that the AF had difficulties with the privates living on the base, in that half of them couldn't pay their bills. He was ordered to investigate and fix it. He said the problems were due to how they spent money - they'd spend their paycheck as soon as they got it on steak and booze, then would have to beg, borrow, etc., towards the end if the pay period.
The guy who taught the accounting class I took used to be a used car salesman. He said poorer people invariably took the worst (most expensive) financing option. He'd explain to them over and over why it was bad, and they'd just accuse him of trying to cheat them.
Frontline (I think it was Frontline) ran an episode a few years ago about a company that offered a 401K plan to all its employees, from the janitor to the CEO. They found that the investment percentage returns for the employees varied by their salary - the higher income people got better results from the company plan. This is despite everyone got the same plan, some were better at investment choices.
A colleague of mine at work years ago complained bitterly that the company had him over a barrel, salary-wise, because he could not afford to change jobs because of his bills. He was wearing expensive clothes, had a new car, a new house, etc. His chains were of his own making.
And lastly, the primary buyers of lottery tickets are poor people. Lottery tickets are probably the worst investment out there. (They'd do much better buying fractional shares from a discount broker.)
It's a tragedy that the public school system teaches nothing about accounting, budgeting, how to run a simple business, etc.
> It's a tragedy that the public school system teaches nothing about accounting, budgeting, how to run a simple business, etc.
At least some do. The curriculum at my public high school included an economics course which covered (personal) accounting and budgeting in some detail—both theory and practice. IIRC we also did some simulated investing and spent some time on the basics of running a business.
The lottery is indeed pretty terrible as an investment, but I expect most people who participate see it more as a form of entertainment. It's not my thing, but a certain amount of money budgeted for entertainment and/or hobbies is perfectly reasonable and I'm not going to criticize how that money is spent so long as it makes the spender happy and all the critical expenses are paid.
It’s comforting for those of us who are financially secure to think that we’d be able to use our superior knowledge and business acumen to get out of poverty but I can assure you that comforting thought isn’t based in reality.
And in the exceedingly unlikely event that you are as skilled financially as you believe yourself to be then you should be sharing your knowledge far and wide with those in need.
My father would work with the insolvent privates making a budget for them to get them on a sound basis. They rejected his help 100%.
My accounting teacher would explain how compound interest worked to the car buyers, and they accused him of trying to cheat them.
The Frontline episode shows they were making poor investment decisions.
And lastly, buying lottery tickets doesn't auger financial judgement.
> in the exceedingly unlikely event that you are as skilled financially as you believe yourself to be
At least I've never bought a lottery ticket, only lost pocket change in Vegas, and only buy cars I can pay cash for, so there's that :-)
> you should be sharing your knowledge far and wide with those in need
There are plenty of excellent books on the topic, nothing I can add to that. "The Millionaire Next Door" is a good one if you're interested.
This is a ridiculous contrived situation. $100 for a lower Maslow-level need or $200 for a higher level need? Why was giving $200 for the lower level need not an option? Maybe I'm missing the point here, but all this proves is that people are aware of Maslow's hierarchy.
When you create such strange scenarios, expect strange results. If a person struggling financially is servicing their higher level needs before their lower level needs are met, they deserve scrutiny.
If a low income person is spending money on things that are not necessities it might feel like their are miss-using the help they get.
I think it is almost a tribal/low level human reaction to that. It might make you feel like you are being taken advantage of, and the feeling of unfairness might come out.
It that person is low income, but not receiving any support, then another feeling is just sheer jealousy or inadequacy, where this person is dressing better/and has better phone/car than you.
The way it read was that European countries have much more homogenized cultures where people are more openly shamed for having an unhealthy lifestyle; due to the fact that the healthcare costs are more visibly distributed to everyone.
In my limited experience, there is no such shaming going on in Germany. Perhaps people move around more, and drive around less? Perhaps it's related to how food is regulated?
At least in France, children are faced with healthy food since primary shool. Sodas distributors are forbidden up to and including high school. They are also given the opportuinty to do sports (my children, 14 and 16, routinely go to play football with their friends in an open field - in the subrbs of Paris)
Then there is not much tolerence for fat people. Surprisingly, this equals fatness to having a disease.
The company restaurants are very affordable and usually healthy.
One of the things which also help a lot that it is traditional to drink water at meals. This is also what you get at school (and nothing else), and at the office (some would buy something else but this is unusual.
In the U.K. median households are not net contributors, the U.K. tax base is exceedingly small the vast majority of people get much more than they put in.
The average public spending in the UK is around £10,000 most households don’t pay that in income tax and NIC. Even if you take VAT into accounts it’s not enough because the primary expenses such as housing and food and transportation are VAT exempt and other common expenses like utilities have a reduced VAT of 5%.
It seems inherent to a progressive taxation scheme?
The only way I see median households being net contributors is if the taxation and redistribution made money flow from the poorest 50% to the richest 50% (either as cash or as services).
I think a better indicator of how narrow the tax base is would be the percentage of households that are net fiscal contributors.
This phrasing of “need” does not seem accurate here, it’s more about priorities
If you don’t have enough to buy food, pay the rent or emergency savings then securing these are the top priorities, doesn’t matter if you are rich or poor
> As an example, in Medieval Europe, religion was used as an ideology to support the structure of society. Serfs were told that the people in charge were put there by God and that the way the world worked was the only divinely ordained way it could work. No wonder people who were essentially slaves didn't rise up; they were told God wanted them at the bottom.
> According to Marx, other ideologies like capitalism or liberalism work the same way. They are created, work to help sustain a particular social structure, and ultimately fall out of favor when a new idea comes to force. When this happens, the whole structure of society can change in a hurry as a new ideology fills the void.
Source: https://bigthink.com/culture-religion/slavoj-zizek-ideology
https://en.wikipedia.org/wiki/Social_dominance_orientation
I have no right to make a value judgement on how Joe spends his money in this example. However that is what the study asked participants to do. claiming that people scrutinized low income families based on that part of the study is incorrect. They simply tended to look differently on a spending decision to buy a luxury item based on income. Something the study required them to do.
That said if a friend asked me for on advice on how to spend $200 my answer would depend on their financial position. If they had plenty to spend it doesn't really matter how they spend it. If they have very little I might recommend they spend it on a necessity rather than a luxury. That is not a judgement. It is simply the wiser choice. I suspect this could have been why people answered the way they did.
They also did another version of the study where the thing being bought was a backup camera for a used car, and the study was 2x2: along with the income framing, there was also a framing of convenience vs safety (backup cameras are now required on all new cars since 2018 because they significantly increase safety, especially for pedestrians). Participants still rated the permissibility of a safety feature higher for a rich person than for a poor person, and rated the "convenient" camera for a rich person just as permissible as a safety camera for a poor person.
https://sci-hub.tw/downloads-ii/2020-06-09/9a/10.1073@pnas.2...
Now we have a lot more money, so we can afford better goods. When we were less well of, a better internet package, child car seat, electronic goods were less necessary COMPARED TO OTHER FINANCIAL PRIORITIES. We had other things to use that money for, like saving up for a deposit on our first house. if you’re not saying necessary compared to what, you’re not evaluating necessity.
It's not how much money you earn-- it's the delta between what you have coming in and what you spend. There are countless stories of low-to-middle income savers who grow to be wealthy through the power of safe, slow investing and compound interest. There are likewise countless stories of high-income individuals who spend all they make and more, ending up broke.
The world needs more clarity. More education. These are bedrock, basic skills, but they are woefully underpresented.
https://en.m.wikipedia.org/wiki/Just-world_hypothesis
- they complain
- they tend to be jealous of others and judge them. Even sometimes of people who don't even spend as much as themselves
Honestly, most low income families I know of make poor money choices (cigarettes and alcohol being the poorest). I actually believe a big part of poor people are poor because they make bad choices, even though it's a somewhat unpopular opinion.