Why Do People Stay Poor? [pdf]

> Structural estimation of an occupational choice model reveals that almost all beneficiaries are misallocated at baseline and that the gains arising from eliminating misallocation would far exceed the costs. Our findings imply that large one-off transfers that enable people to take on more productive occupations can help alleviate persistent poverty.

Balboni, C, Bandiera, O, Burgess, R, Ghatak, M and Heil, A. 2020. 'Why do people stay poor?'. London, Centre for Economic Policy Research.

https://cepr.org/active/publications/discussion_papers/dp.ph...

To anyone interested in the topic, I recommend reading Duflo & Banerjee's 2011 book "Poor Economics". They pioneered the approach of using RCTs to test interventions in fighting poverty (for which they received the Nobel Memorial Prize together with Michael Kremer). They go into a lot of factors as to why poor people get certain economic outcomes, including but not limited to the poverty trap theory, and take a refreshingly "humane" / respectful view towards the people they are dealing with.

I'm not going to comment about the article without reading it carefully; but just in case there are any aspiring data analysts online there is a chart that is interesting even without knowing anything about the data...

On page 64 (65 as the PDF numbers it), chart (b) "Distribution of savings rate" has an awkward little peak on the left hand side of the chart. It is very difficult to tell from inspection whether that is a real feature of the underlying data or if it is an artefact naive kernel density estimation.

If you ever see that pattern in your graphs, do consider trying logKDE [0] rather than ordinary Kernel Density Estimation a la geom_density() in ggplot. It also isn't perfect but the result is usually a bit better for things that approximate an exponential distribution.

[0] https://cran.r-project.org/web/packages/logKDE/vignettes/log...

TLDR;

"We have shown that poverty traps exist. People are poor because of a lack of opportunity. It is not their intrinsic characteristics that trap people in poverty but rather their circumstances. Poverty is not an innate condition. This has implications for how we think of development policy and for the value of eliminating global poverty."

Without making the jump from washing plates/factory work to software I don't know how I would have escaped(still haven't) considering my pay increased 4 times. Just brutal when you trade hours for money directly at a low rate, I was doing 70hrs washing plates before and it was nothing ha.

Edit: there is the thought of living within your means, personally with a roommate I could live on $10-$20K a year which you can make doing labor jobs but not a lot saving. I'm lucky being single/having no direct responsibility eg. children.

It is my opinion though that if you want to/have internet/time then you can alter your life for the better, but yeah can't just say "learn to code". But other options available. I see the point about opportunity because I had a friend to crash on his couch when I was technically homeless that is helpful/bare min opportunity.

My jump was not fast, it took at least 2 years not including the 3 years before that of self-study/personal interest. I freelanced on the side while working as a dishwasher before first in office/full time job.