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Why Do People Stay Poor? [pdf]

sticerd.lse.ac.uk

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Re: Why Do People Stay Poor? [pdf]

#161

Post by frogpelt »

Studies like this boil down a hugely complex issue into variables they can control for. There are a lot more theories as to why people stay poor than the two they offer at the beginning.

Why don't we study all of the people who have definitely risen from the ranks of the poor to a higher class and see what they have in common?

Sure, it's not the norm. But it happens all the time. There is enough data to form an opinion.

I'm guessing the way people rise from the poverty is much the same as people who are average becoming wealthy. They are willing to take risks (i.e., leave your neighborhood, buck the trends in your family tree) and they work on being prepared and available for opportunities that may present themselves.

We also know there are certain behaviors that absolutely correlate to and probably perpetuate generational poverty (children out of wedlock, crime, quitting school). The people I know who have risen out of inner city poverty in the U.S. (not the same as Bangladesh I know) distanced themselves from these behaviors and from the people who considered them okay.

Re: Why Do People Stay Poor? [pdf]

#162

Post by bbeekley »

benibela wrote: post #157
starclerk wrote: post #144

Earlier quoted context omitted.

I semi-regularly plug numbers into this Buy v Rent calculator by NYT [1]. They're pretty equivalent in the 10-30 year range and match housing prices I've seen. It's hard to beat the SP500's >8% average return [2]. [1] (paywalled) https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal... [2] https://www.investopedia.com/ask/answers/042415/what-average...

That can change depending on the area Then, I live in Germany. There is a 28% tax on stock market returns, but selling your home is tax free

Absolutely. I think one of the fun things about that calculator is that you can mess around with the numbers to try different situations. Perhaps there's a way to account for that tax (e.g. by using ~5.8% returns as the after-tax rate).

Re: Why Do People Stay Poor? [pdf]

#163

Post by nitrogen »

ghufran_syed wrote: post #121

I’m not qualified to judge the technical merits of the paper, but their conclusion seems plausible. They concluded that in an illiterate rural population, there did seem to be a threshold effect in asset levels above which it seemed much easier to progress economically. But it’s unclear to me how applicable this is to the poor in the US or other developed economies, particularly when we’re talking about a population…

almost everyone can read and write

Maybe most can read and write at the most basic level, but there are enough who cannot do so at a high enough level to function as a productive adult.

Re: Why Do People Stay Poor? [pdf]

#164

Post by corpMaverick »

refurb wrote: post #104
corpMaverick wrote: post #93

Earlier quoted context omitted.

As fortunate as I am, being a software engineer in the US. I rather live in place with a good safety net. I feel we all are one sickness away from being broke. In any case, you can't really enjoy life when everybody else living day by day.

Have you applied for jobs in those countries? Looked into immigrating?

I immigrated to the US. But when I came here I didn't considered other aspects like having a good social net and a society that cares more about the community. Now it may be too late for me. But I worry about my kids.

Re: Why Do People Stay Poor? [pdf]

#165

Post by redorb »

jfrunyon wrote: post #143

Easy answer: because expenses are higher for poor people. Instead of buying a home, the lower class rent their whole life. Instead of their daddy giving them a home, the middle class pay interest on a mortgage most of their life. Instead of buying a 20-pack of $necessary_product that costs $20 and will last for months, the lower class buy a 2-pack that costs $5 and lasts a couple weeks because they need the $15 to pa…

This is a great definition of what I consider to be the 'poor tax'..

Not to mention if they ever get un-poor they don't have the knowledge to 'build wealth' until they start slowly learning it or from a mentor.

We would better off teaching 'home finances, interest and banking' classes instead of Algebra 3 or geometry 2 (for 99% of people)

Re: Why Do People Stay Poor? [pdf]

#166

Post by SilasX »

jfrunyon wrote: post #143

Easy answer: because expenses are higher for poor people. Instead of buying a home, the lower class rent their whole life. Instead of their daddy giving them a home, the middle class pay interest on a mortgage most of their life. Instead of buying a 20-pack of $necessary_product that costs $20 and will last for months, the lower class buy a 2-pack that costs $5 and lasts a couple weeks because they need the $15 to pa…

If so, turn it into a perpetually profitable self-funding charity that fronts the poor the money to get the cheaper option in return for a cut of the savings.

It's probably not possible because there are factors other than what you described.

Re: Why Do People Stay Poor? [pdf]

#167

Post by kergonath »

theodric wrote: post #86

I also know some people who have a poor mentality. That is, they consistently refuse to seek out better-paying opportunities despite abundant mental ability in the name of "happiness," complain that their series of low-paying roles deserve more money, and advocate for hard socialism to enable redistribution to make that possible. The problem, you see, is all the other people.

Them, and those straw men.

Re: Why Do People Stay Poor? [pdf]

#168

Post by wayanon »

When you’re stressed you don’t make good decisions. You choose the fatty food, TV, booze because you want to cheer yourself up. Making ‘good decisions’ is so much easier when you have an income and you’re not avoiding creditors calls. I’ve lived through it. It was exhausting.

Re: Why Do People Stay Poor? [pdf]

#169

Post by drbojingle »

woodandsteel wrote: post #105
drbojingle wrote: post #83

off the top of my head I think it depends on the type of poor you are. Some people are poor because of their situation and some situations are more difficult to escape than others. Some people are poor because of their habits and inclinations and they just don't change those habits (for one reason or another), so they stay poor.

>Some people are poor because of their habits and inclinations and they just don't change those habits (for one reason or another), so they stay poor. That's true. But often the reason they have those bad habits is they were taught them by the environment that, through no choice of their own, they were born in.

Sure, but you can learn bad habits regardless of the environment you were born into and you can fix those habits too, if you're so inclined to reflect and practice.

This is very different than having your father die while you're young and promising to be the woman of the house and take care of your sick mom and baby sister.

Re: Why Do People Stay Poor? [pdf]

#170

Post by Guest42 »

SilasX wrote: post #166
jfrunyon wrote: post #143

Easy answer: because expenses are higher for poor people. Instead of buying a home, the lower class rent their whole life. Instead of their daddy giving them a home, the middle class pay interest on a mortgage most of their life. Instead of buying a 20-pack of $necessary_product that costs $20 and will last for months, the lower class buy a 2-pack that costs $5 and lasts a couple weeks because they need the $15 to pa…

If so, turn it into a perpetually profitable self-funding charity that fronts the poor the money to get the cheaper option in return for a cut of the savings. It's probably not possible because there are factors other than what you described.

Are there specific issues that you have with the comment and deeper insights than those described? If so, what are they, and what data do you have to support them?
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