Sunday, September 22, 2013

Stress as poverty trap

Recent weeks have seen a growing spotlight placed on a novel explanation for why so many of the poor stay poor: mental stress. Quite simply, the argument is that poverty places a mental strain on people which leads to a poor decision-making and thus a reduced ability to break free of their condition. Drawing on a new book released by Sendhil Mullainathan, a Harvard economics professor, and Eldar Shafir, a cognitive psychologist at Princeton (both of whom also collaborated with two other social scientists on this recent paper on the subject published by Science), Paul Hiebert of the Pacific Standard says that their research "shows how poverty can often be a self-perpetuating trap."

Slate's Matt Yglesias has also seized on their work, using it to argue against those who want to pare back the generosity of welfare state while calling money-related worries "a substantial barrier to the smart decision-making that people in tough circumstances need to succeed." Mullainathan, meanwhile, was given a guest-column in today's New York Times to further explain his theory. 

While it is not difficult to imagine that poverty is stressful, I'm not as credulous as Yglesias or Hiebert as to the explanatory power of this theory regarding the cycle of poverty. If the mental stress placed by poverty was so significant, shouldn't most Americans still be trapped in this condition? After all, it is not difficult to imagine that a majority of American families -- in one generation or another -- have found themselves in dire financial straits. 

How many families, for example, immigrated to the US in well-off or wealthy circumstances? How many weathered the Great Depression without severe financial strain and its accompanying stress? Yet it would seem that a majority of those who experienced such trying times did not then become forever trapped in vicious cycle of mental stress leading to further poverty. Thinking about this, I posed the following question to Yglesias on Twitter:


As the wikipedia article I pointed out to Yglesias notes:
Vietnamese Americans have come to America primarily as refugees, with little or no money. While (on a collective basis) not as academically or financially accomplished as their East Asian counterparts, (who generally have been in the US longer, and did not come as war or political refugees but for economic reasons), census shows that Vietnamese Americans are an upwardly mobile group. Although clear challenges remain for the community, their economic status improved dramatically between 1989 and 1999. In 1989, 34 percent of Vietnamese Americans lived under the poverty line, but this number was reduced to 16 percent in 1999, compared with just over 12 percent of the U.S. population overall.
Let's further consider that not only did these refugees arrive with "little or no money" nor were as well educated as other East Asian immigrants, but that they also typically did not speak English and came from a country that had been at an almost constant state of war since World War II. Between a lack of money, education, knowledge of English and war, if anyone had a right to complain about stress it was the Vietnamese! Yet by 1989, less than 15 years after the fall of Saigon, only one-third of Vietnamese immigrants were in poverty while another ten years later that number had been cut in half.

After initially providing me with an answer that wasn't really germane to my point, and then denying that he had called the mental stress associated with poverty a barrier to getting ahead, he then conceded that the issue was probably worthy of further attention:

It's a point Mullainathan and Shafir should probably address before anyone further cites their theory as an explanation for why so many Americans remain mired in long-term poverty. 
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