The Poverty Trap

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3 responses to “The Poverty Trap”

1. 

   Naum

   November 12, 2009

   Mankiw’s textbook is riddled with ridiculous assumptions and the unrealistic or simply false simplistic models… …all predicated on humans “rational” actors with no regard to psychology, social sciences, game theory, etc.…
   Some better economic studies:
   Microeconomics by Samuel Bowles
   A Farewell to Alms by Gregory Clark

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2. 

   Travis Greene

   November 13, 2009

   I’ve never bought this argument. Nobody says “Oh, why get a job that pays $30,000 a year? I’ll just collect food stamps and live in section 8 housing, because it’s awesome. In fact, I’ll commit a crime and go to prison, so my food and housing are totally free, and I’ll get to wear a sweet jumpsuit. It’ll be great.”

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3. 

   Michael W. Kruse

   November 13, 2009

   The challenge is that if you have the skills to earn $20,000, it will likely require sacrificing for a time to go to school and will likely require you to develop better work habits to get a $35,000. A year job. But as the chart shows, you are no better off.
   People who grow up in poverty have shorter time horizons (thus don’t do well with delayed gratification) than middle class and often have a great sense of futility about upward mobility.
   Thus, when you know others who do the work to get the $35,000 job and they don’t do better than you do at $20,000 it does dampen initiative. It is a very real phenomenon. Whether there perception is right, more than once I’ve heard teens living in poverty make this very case as the pointlessness for completing high school are getting more education.

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