What Really Causes Poverty?

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What causes someone to remain consistently poor? Is it luck? Is it some inherent lack of ability to earn more? Or, is it having the wrong mindset?

In a recent opinion article in The New York Times, columnist Emily Badger takes Ben Carson, the head of the federal Department of Housing and Urban Development, to task for comments he made about the relationship between mindset, wealth and poverty.

According to the Washington Post article Badger cites, Carson said,

I think poverty to a large extent is also a state of mind. You take somebody that has the right mindset, you can take everything from them and put them on the street, and I guarantee in a little while they’ll be right back up there.

He then goes on,

And you take somebody with the wrong mindset, you can give them everything in the world, they’ll work their way right back down to the bottom.

Badger asserts, “Poverty, Mr. Carson is saying, is in part a state of mind.” She assumes that Carson is arguing that poverty is caused by a bad mindset. The point of her op-ed is to refute that view by instead arguing that poverty causes a bad mindset. In other words, she believes Carson has it backward.

It’s worth pointing out that Badger misrepresents Carson’s statement. In the interview on SiriusXM, Carson simply states that people with the right perspective will be more likely to succeed in changing their situation. In his longer comments, he actually agrees with Badger’s point that the attitudes acquired in one’s early years have long-term impact on economic prospects.

Another problem with this sort of asynchronous discussion is that it is not clear how the various parties define poverty. There is a level of poverty that can only be solved with external aid, which is why nearly everyone supports famine relief and aid after natural disasters. In addition, few would argue that those in abject poverty (which is well below the federal poverty level) do not need direct assistance. An agreement on definitions would have helped the “debate.”

Also, because of the mix of qualifications and absolutes Carson uses, it would be unfair to make any concrete assertions about his position on the causes of poverty and wealth.

However, the idea Badger ascribes to Carson — that attitude is the key ingredient to one’s economic status — is common enough that it bears further examination. Is it true that your mindset is a key ingredient to your economic status?

Resources can drive mindset, but mindset can influence how someone uses resources.

Mindset, Resources or Both?

From the outset, we should all agree that someone’s state of mind cannot be the only determiner of economic status. Natural disasters induce poverty for pessimists and optimists. Deleterious health can sap the vitality and resources of the most able and aggressive entrepreneur. And many people with good instincts and knowledge make a worthy attempt at business, but fall short for a number of reasons independent from their mindset or level of effort.

And in many cases, systemic issues do contribute to chronic poverty. Often, systemic issues like racial biases, insufficient educational opportunities or perverse incentives from a safety net can thwart someone’s best attempts to escape poverty.

At the same time, people’s attitudes do affect their choices, which can affect their economic status. As Badger notes in her column, excessive worry about resources can distract a person so that they neglect other areas of their life, which may prevent them from choosing alternatives that lead to wealth. Also, people who do not believe they can ever get ahead are unlikely to take the steps (assuming they understand the necessary steps) to actually get ahead. Instead, the mindset of the person will cause them to choose short term pleasure over long term investment.

A recent, detailed study of the financial lives of over 250 lower income families shows that financial instability (both of earnings and expenses) has a significant impact on stress levels and perpetuates unhelpful economic behaviors. The authors of The Financial Diaries clearly show the problems that follow from instability. Their proposed solutions include increasing government involvement to minimize instability.

This approach to poverty alleviation generally assumes that an improved mindset inevitably follows resources. So, they argue, if you give people enough resources, their mindset will change. However, that is not always the case.

Research shows that resources alone do not prevent bad destructive financial habits. As Thomas Stanley and William Danko show in the classic book, The Millionaire Next Door, even among very higher earners, financial security is more dependent upon lifestyle choices than cash flow. Some of the individuals they studied were as close to financial ruin on their six-figure salaries as some of the lower income households in The Financial Diaries. One medical emergency or a loss of employment could have sent some people with amazing salaries into poverty within a few short months. Even with ample resources, their mindset was still impoverished.

Resources can drive mindset, but mindset can influence how someone uses resources. In other words, there is truth in the position offered by both Carson and Badger. The strong reaction to Carson’s brief comments on the radio contain more sound and fury than substance.

The more significant question is what sort of aid structures are best at meeting resource needs for those in true poverty while encouraging a change in mindset so that chronic poverty can be reduced. That is the conversation our nation needs to have, and it’s one that Christians should pursue with vigor.

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  • politics
  • poverty alleviation strategies
  • wealth and poverty
Andrew J. Spencer

Andrew J. Spencer holds a PhD from Southeastern Baptist Theological Seminary. He is a member of CrossPointe Church in Monroe, MI. Spencer writes often at www.EthicsAndCulture.com and recently published 'The Christian Mind of C. S. Lewis.'

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