Breaking News: Money Helps the Poor!


It's official! A new paper by the National Bureau of Economic Research shows that even a small quantity of extra money substantially improves the well being of children in poverty. That study is in line with others that show that small financial interventions have beneficial effects on the people in poverty, and larger ones still more so.

The publication of this paper, along with previous ones on the same subject, raises a couple of questions. First, why should people spend time and effort researching something so blindingly obvious to anyone with a modicum of common sense? Money helps poor people -- really? Next, breaking news: lack of liquids will make you thirsty.

It's tempting to view this study in light of a whole host of scientific research that we greet with an eye-roll because it tends to confirm what we already know. Hard science, however, is different to social science; the scientific method demands constant experimentation with data to confirm a hypothesis. And what seems obvious today -- the earth revolves around the sun, smoking causes cancer, carbon dioxide contributes to climate change -- was much less evident before a raft of data made it so.

But the social sciences, perhaps because they aspire to the rigor of the name we've bestowed upon them, can sometimes fall into the trap of being too "sciency" for their own good. So we end up with paper after paper demonstrating conclusions that you probably didn't need a regression analysis to arrive at. Yes, [(9^3 - √529)/117.66] + (527.46/-263.73) = 4. But so does 2+2.

In the context of studying poverty, this all raises the second, more interesting question: why on earth would we ever suspect that money wouldn't alleviate it?

Poverty, by definition, means a lack of money. "A rich man is just a poor man with money," as W.C. Fields quipped.

The problem is that Americans have convinced themselves that this is not the case; we've developed a whole myth about a pathology of poverty. The poor aren't poor just because they lack financial means, goes the story, but because there's something fundamentally different about them from the rest of us. They lack the grit, the guts, or the gumption to make a decent living. You can throw money at them, but because of their fundamental defects, that will never work. Thus goes the toxic narrative.

It's true that the American poor are more likely to be black, elderly, or young children. But these are not character flaws -- unless you're commenting on the character of American society as a whole.

It's also true (as shown in, yes, studies) that the poor tend to suffer more stress, more depression, and poorer health than their middle class and wealthy counterparts. But those are symptoms, not causes, of poverty.

The pernicious notion that has taken hold in many circles of American discourse reverses this cause-and-effect dynamic. It effectively suggests that the poor will remain poor, no matter what you try to do to alleviate their condition.

With that piece of logical Jujitsu, opponents of anti-poverty programs can justify all manner of policies that defy a more commonsensical approach to tackling inequality. So, want to improve the economy? Forget recent reports showing that reducing the gap between rich and poor will help. Focus instead on cutting marginal tax rates for the wealthiest (newsflash: the top marginal rate is under 40% today; it was 91% in the supposedly Golden Age of American economic dominance in the 1950s.)

These increasingly entrenched prejudices against the poor also, unsurprisingly, lack any statistical foundation. Contrary to the idea that the poor are inherently incapable of hard work, most poor people have jobs. Indeed, fully 10% of all working Americans are poor. Four out of five Americans will experience poverty or near-poverty at some point in their lives.

Poverty, therefore, is a fluid condition which millions of Americans experience from year to year. Many fall into it, many climb out of it; some persist in it. The idea that there's nothing we can do to put a real dent in poverty is as ridiculous as it is dangerous. All it takes is a willingness to devote resources to address it. Even cash.