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Friday, January 23, 2015

Changing the way we think about poverty

A common misperception about poverty is that bad choices create poverty. But what if the exact opposite is true? What if bad choices are the result of poverty, not the cause?

In recent weeks, we’ve looked at the difficult choices poverty imposes on impoverished families. We’ve seen how hunger and malnutrition can damage both the body and mind. Most recently, we learned about how poverty affects decision-making, motivation, and hope.

In this final post on poverty and choices, we delve a little bit deeper into the relationship between poverty and decision-making.

A recent study, published in the journal Science by Mani et al., found that poverty impedes people’s ability to think.

The study revealed that poverty doesn’t necessarily make people less intelligent. But it does negatively impact their ability to think effectively. In other words, when people are consumed by challenges brought about by poverty, they are left with fewer mental resources to make good choices and this, in turn, leads to bad choices.

So how does this knowledge influence how we view and help the global poor? As author Matthew Yglesias succinctly puts it, “one of the best way to help the poor help themselves… is to simply make them less poor”. This is precisely the approach HOPE International Development Agency takes throughout the world. What we’ve found to be true in our work with families trapped in poverty is supported by sound research.

Gaining access to capital – even just a little – can be truly life changing. A joint-study, done by Columbia University, the German Institute for Economic Research, and the Inter-American Development Bank found that simply increasing the poor’s financial resources led to better decision-making, greater skills acquisition, and increased savings over the long term.

Strikingly, the study also found that once the poor accessed more income they actually worked more hours (nearly 20% more), not less, debunking another common misperception about the causes of poverty – that the poor are poor because they are unmotivated to work.

Indeed, money itself is the gateway to better economic opportunity. This is why HOPE International Development Agency is committed to improving economic opportunities for the world’s most vulnerable people in some of the most remote parts of the world.

As we see it, the poorest of the poor are deserving of the opportunity to improve themselves, and each person trapped in poverty deserves to have hope.