economics
Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services.
Economics focuses on the behaviour and intera ...
poverty
Poverty is the state of having few material possessions or little income. Poverty can have diverse social, economic, and political causes and effects. When evaluating poverty in ...
, once it exists, to persist unless there is outside intervention. It can persist across generations, and when applied to developing countries, is also known as a development trap.
Families trapped in the cycle of poverty have few to no resources. There are many self-reinforcingdisadvantages that make it virtually impossible for individuals to break the cycle. This occurs when poor people do not have the resources necessary to escape poverty, such as
financial capital
Financial capital (also simply known as capital or equity in finance, accounting and economics) is any economic resource measured in terms of money used by entrepreneurs and businesses to buy what they need to make their products or to provide ...
,
education
Education is a purposeful activity directed at achieving certain aims, such as transmitting knowledge or fostering skills and character traits. These aims may include the development of understanding, rationality, kindness, and honesty. Va ...
, or connections. Impoverished individuals do not have access to economic and social resources as a result of their poverty. This lack may increase their poverty. This could mean that the poor remain poor throughout their lives.Hutchinson Encyclopedia Cycle of poverty
Controversial educational psychologist Ruby K. Payne, author of ''A Framework for Understanding Poverty'', distinguishes between situational poverty, which can generally be traced to a specific incident within the lifetimes of the person or family members in poverty, and generational poverty, which is a cycle that passes from generation to generation, and goes on to argue that generational poverty has its own distinct culture and belief patterns.
Measures of
social mobility
Social mobility is the movement of individuals, families, households or other categories of people within or between social strata in a society. It is a change in social status relative to one's current social location within a given society ...
examine how frequently poor people become wealthier, and how often children are wealthier or achieve higher income than their parents.
Causes of the cycle
Chronic general poverty
Poverty can be created or sustained for large numbers of people through general economic conditions, which tend to be self-sustaining. Metrics for these conditions include:
* Low
gross domestic product
Gross domestic product (GDP) is a money, monetary Measurement in economics, measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjec ...
or overall low
productivity
Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proces ...
, failing to produce enough wealth for the population as a whole to escape poverty
* High unemployment, creating poverty for the unemployed and putting downward pressure on wages
* A lack of
education
Education is a purposeful activity directed at achieving certain aims, such as transmitting knowledge or fostering skills and character traits. These aims may include the development of understanding, rationality, kindness, and honesty. Va ...
, which prevents people from getting high income jobs.
* Low
social mobility
Social mobility is the movement of individuals, families, households or other categories of people within or between social strata in a society. It is a change in social status relative to one's current social location within a given society ...
, perpetuating poverty for a given person or family
There are also various poverty metrics that directly indicate its extent, generally involving income, wealth, or both. It can be measured on an absolute scale (which might put almost an entire country's population below the
poverty line
The poverty threshold, poverty limit, poverty line or breadline is the minimum level of income deemed adequate in a particular country. The poverty line is usually calculated by estimating the total cost of one year's worth of necessities for t ...
) or in a relative way, identifying people who are poor compared to others in the same country.
Countries with chronically low levels of
economic development
In the economics study of the public sector, economic and social development is the process by which the economic well-being and quality of life of a nation, region, local community, or an individual are improved according to targeted goals and o ...
fail to provide opportunities for many individuals to leave poverty. These may be caused by:
* Problems with the
means of production
The means of production is a term which describes land, labor and capital that can be used to produce products (such as goods or services); however, the term can also refer to anything that is used to produce products. It can also be used as an ...
:
** Lack of or poor quality
infrastructure
Infrastructure is the set of facilities and systems that serve a country, city, or other area, and encompasses the services and facilities necessary for its economy, households and firms to function. Infrastructure is composed of public and priv ...
** Widespread lack of skills needed for employment (including education) or high-wage employment
** Lack of equipment and automation that would boost productivity
* Economic mismanagement, such as regulatory failure
* Widespread corruption
* Inability of the government to guarantee stable market conditions, including physical security and enforceable
property rights
The right to property, or the right to own property (cf. ownership) is often classified as a human right for natural persons regarding their possessions. A general recognition of a right to private property is found more rarely and is typically ...
* High
burden of disease
Disease burden is the impact of a health problem as measured by financial cost, mortality, morbidity, or other indicators. It is often quantified in terms of quality-adjusted life years (QALYs) or disability-adjusted life years (DALYs). Both ...
* Barriers to
international trade
International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (see: World economy)
In most countries, such trade represents a significant ...
, possibly including
international sanctions
International sanctions are political and economic decisions that are part of diplomatic efforts by countries, multilateral or regional organizations against states or organizations either to protect national security interests, or to protect in ...
Non-circular causes of poverty
Generally poor economic conditions can also be due to temporary causes, which might not result in a "cycle of poverty" if the economy recovers thereafter. Temporary economic problems can be caused by:
*
Recession
In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various ...
(for which there are many causes) and the lower-activity portion of the
business cycle
Business cycles are intervals of Economic expansion, expansion followed by recession in economic activity. These changes have implications for the welfare of the broad population as well as for private institutions. Typically business cycles are ...
*
Climate change
In common usage, climate change describes global warming—the ongoing increase in global average temperature—and its effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes to E ...
* Disasters
** War, whether through direct destruction or general funding burden
** Natural disasters, including storms, drought, and earthquakes
**
Epidemic
An epidemic (from Ancient Greek, Greek ἐπί ''epi'' "upon or above" and δῆμος ''demos'' "people") is the rapid spread of disease to a large number of patients among a given population within an area in a short period of time.
Epidemics ...
s
** Famine
** Anthropogenic disasters, including accidents
A one-time event, whether affecting the economy in general or personal in nature, can push a given person or family into poverty, after which they enter the "cycle of poverty" which is difficult to escape. Examples of personal events that can have a negative economic impact include:
* The loss of a job or failure of a family-owned business
* A health issue, which can result in lost wages, a permanent disability, or
medical debt
Medical debt refers to debt incurred by individuals due to health care costs and related expenses.
Medical debt is different from other forms of debt, because it is usually incurred accidentally or faultlessly. People do not plan to fall ill or ...
in countries without free
universal health care
Universal health care (also called universal health coverage, universal coverage, or universal care) is a health care system in which all residents of a particular country or region are assured access to health care. It is generally organized ar ...
* The death of a family member
* An unplanned pregnancy
* Short-term financial mismanagement of personal savings or debt
* A breakup or divorce, if
alimony
Alimony, also called aliment (Scotland), maintenance (England, Ireland, Northern Ireland, Wales, Canada, New Zealand), spousal support (U.S., Canada) and spouse maintenance (Australia), is a legal obligation on a person to provide financial suppo ...
does not compensate for the loss of one partner's income
* A
foreclosure
Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.
Formally, a mortg ...
or
eviction
Eviction is the removal of a tenant from rental property by the landlord. In some jurisdictions it may also involve the removal of persons from premises that were foreclosed by a mortgagee (often, the prior owners who defaulted on a mortgage ...
* An automobile collision or other loss of a vehicle needed to get to work
* Commission of a crime that results in a criminal record and difficulty obtaining work
* Incarceration that results in loss of economic assets and social networks
Factors maintaining personal poverty
Once poor, people can experience difficulty escaping poverty because many changes that would allow them to do so require money they don't have, such as:
* Education and retraining with new skills
* Child care which would enable a single parent or second parent to work or take classes
* Transportation to a distant job
* Migration to an area with better economic opportunities
* Starting a new business, which might require market research, technical assistance, and startup funding
* Obtaining land for
subsistence farming
Subsistence agriculture occurs when farmers grow food crops to meet the needs of themselves and their families on smallholdings. Subsistence agriculturalists target farm output for survival and for mostly local requirements, with little or no su ...
* Curing a health condition that prevents work, including
diseases of poverty
Diseases of poverty (also known as poverty-related diseases) are diseases that are more prevalent in low-income populations. They include infectious diseases, as well as diseases related to malnutrition and poor health behaviour. Poverty is one o ...
which don't affect people outside of the "cycle of poverty"
According to the United States Census, in 2012 people aged 18–64 living in poverty in the country gave the reason they did not work, by category:
* 31% - Ill or disabled
* 26% - Home or family reasons
* 21% - School or other
* 13% - Cannot find work
* 8% - Retired early
Some activities can also cost poor people more than wealthier people:
* Rent – If unable to afford the first month's rent and security deposit for a typical apartment lease, people sometimes must live in a hotel or motel at a higher daily rate.Nickel and Dimed
* Food
** If unable to afford an apartment with a refrigerator, kitchen, and stove, people may need to spend more on prepared meals than if they could cook for themselves and store leftovers.
** Buying in bulk (large quantities) is usually cheaper than buying small quantities in multiple transactions, but poor people are less likely to have cash on hand to finance a large purchase of food needed for the more distant future. Poor people are less able to afford delivery or automobile transport of quantities too large to carry on public transit or bicycle.
** People who live in
food desert
Food is any substance consumed by an organism for nutritional support. Food is usually of plant, animal, or fungal origin, and contains essential nutrients, such as carbohydrates, fats, proteins, vitamins, or minerals. The substance is ing ...
s without access to fast transportation may buy more expensive food from nearby convenience stores, and have more difficulty transporting perishable goods.
* Banking – People who cannot maintain a
minimum daily balance In banking, a minimum daily balance is the minimum balance
Balance or balancing may refer to:
Common meanings
* Balance (ability) in biomechanics
* Balance (accounting)
* Balance or weighing scale
* Balance as in equality or equilibrium
Arts an ...
in a savings account are often charged fees by the bank, whereas people with larger amounts of wealth can earn interest on savings and substantial returns from investments.
Unbanked
The unbanked are adults who do not have their own bank accounts. Along with the underbanked, they may rely on alternative financial services for their financial needs, where these are available.
Causes
Some reasons a person might not have a bank ...
people must use higher-cost
alternative financial services
An alternative financial service (AFS) is a financial service provided outside traditional banking institutions, on which many low-income individuals depend. In developing countries, these services often take the form of microfinance. In develo ...
money order
A money order is a directive to pay a pre-specified amount of money from prepaid funds, making it a more trusted method of payment than a cheque.
History
The money order system was established by a private firm in Great Britain in 1792 and was ...
s for transferring to other people. People who have had previous credit problems, such as overdrafting an account, may not be eligible to open a checking or savings account. Major reasons for not opening a bank account include not trusting banks, being concerned about not making a payment due to a bank error or delay, not understanding how banks work, and not having enough money to qualify for a free account.
* Debt – People who have no net savings sometimes have to use high-interest credit cards or other loans to pay for emergency expenses or even daily needs. Interest must be paid on debt, and a lower
credit score
A credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of an individual. A credit score is primarily based on a credit report, information typically sourced from credit bu ...
(which can result from a low income) typically results in a higher interest rate, such as for a
subprime mortgage
In finance, subprime lending (also referred to as near-prime, subpar, non-prime, and second-chance lending) is the provision of loans to people in the United States who may have difficulty maintaining the repayment schedule. Historically, subpri ...
.
Payday loans
A payday loan (also called a payday advance, salary loan, payroll loan, small dollar loan, short term, or cash advance loan) is a short-term unsecured loan, often characterized by high interest rates.
The term "payday" in payday loan refers to ...
can have an extremely high interest rate, and other forms of debt not typically used by high-income consumers include
refund anticipation loan
Refund anticipation loan (RAL) is a short-term consumer loan in the United States provided by a third party against an expected tax refund for the duration it takes the tax authority to pay the refund. The loan term was usually about two to three ...
pawnshop
A pawnbroker is an individual or business (pawnshop or pawn shop) that offers secured loans to people, with items of personal property used as collateral. The items having been ''pawned'' to the broker are themselves called ''pledges'' o ...
s. In addition, individuals with low credit scores may fail credit checks when employers request them.
* Overdue payments – People who cannot afford to pay all of their bills on time, or who accidentally make a late payment due to waiting until the last possible day can incur late fees not affecting people who can simply schedule automatic payments from savings.
* Furniture – If unable to afford a piece of furniture, a
rent-to-own
Rent-to-own, also known as rental purchase or rent-to-buy, is a type of legally documented transaction under which tangible property, such as furniture, consumer electronics, motor vehicles, home appliances, real property, and engagement rin ...
agreement can make it available without having savings, but at a higher long-term cost.
* Transportation – If unable to afford a car, taking public transportation can take longer, effectively an increased cost in the form of lost time. Many poor people must live further away from work in order to find housing they can afford.
* Health care – Though most industrialized countries have free universal health care, in the United States and many developing countries, people with little savings often postpone expensive medical treatment as long as possible. This can cause a relatively small medical condition to become a serious condition that costs more to treat, and possibly causing lost wages due to missed hourly work. (Though poor people may have lower overall personal medical expenses simply because illnesses and medical conditions go untreated, and on average life span is shorter.) Higher-income workers typically have medical insurance which prevents them from experiencing excessive costs and often provides free
preventive care
Preventive healthcare, or prophylaxis, consists of measures taken for the purposes of disease prevention.Hugh R. Leavell and E. Gurney Clark as "the science and art of preventing disease, prolonging life, and promoting physical and mental hea ...
for example. In addition to personal savings they can use, higher-income workers are also more likely to be salaried and get sick time that prevents them from losing wages while seeking treatment. Because no skills or experience are required, some people in poverty make money by volunteering for medical studies or donating blood plasma.
* Government benefits may require paperwork or attendance at mandatory classes that a job wouldn't, effectively an increased cost in the form of lost time per unit of money taken in.
Government policy, government funding, and access to
financial services
Financial services are the Service (economics), economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, acco ...
can play a large role in preventing one-time events from pushing people into poverty, and in overcoming barriers to escaping poverty. People who cannot work due to a disability often rely on government assistance, family members, or charities, but may also have personal savings. Many governments have programs to support the elderly, given that many have not saved enough money to last throughout their planned retirement, and that many will experience health problems that prevent them from working. Inability to work can present an insurmountable barrier to exiting poverty if external assistance is insufficient.
Internal and external factors sustaining poverty
Amongst the most popular characterizations of the ongoing experience of poverty are that:
# it is systemic or institutionalized or
# a person is misguided by emotional challenges driven by historical experiences or
# a person is affected by a mental disability,
or a combination of all three reasons (Bertrand, Mullainathan, & Shafir, 2004).
Systemic factors
Donald Curtis (2006), a researcher at the School of Public Policy in the United Kingdom, identified that governments regard the welfare system as an
enabling
In psychotherapy and mental health, enabling has a positive sense of empowering individuals, or a negative sense of encouraging dysfunctional behavior. maintained, however, that the system lacks cohesiveness, and is not designed to be an empowerment tool.
For example, outside parties are funded to manage the effort without much oversight creating a disconnected system, for which no one leads (Curtis, 2006). The result is mismanagement of budget without forwarding progress, and those that remain in the poverty loophole are accused of draining the system (Curtis, 2006).
Bias
Jill Suttie (2018), wrote that implicit bias, which can be transferred nonverbally to children with no more than a look or a gesture, and as such is a learned behavior. Critical thinking skills can ward off implicit bias, but without education and practice, habitual thoughts can cloud judgment and poorly affect future decisions.
Decision-making
A Dartmouth College (2016) study reported that probabilistic decision-making follows prior-based knowledge of failure in similar situations. Rather than choose success, people respond as if the failure has already taken place. Those who have experienced intergenerational poverty are most susceptible to this kind of learned behavior (Wagmiller & Adelman, 2009).Wagmiller, R. L., & Adelman, R. M. (2009, November 30). NCCP , Childhood and Intergenerational Poverty. Retrieved June 21, 2019, from http://www.nccp.org/publications/pub_909.html
Intergenerational
Professors of Sociology Wagmiller and Adelman (2009) asserted that roughly 35–46% of people who have experienced hardship in young and middle adulthood also experienced moderate to severe poverty in childhood. As of 2018, 7.5 million people experienced poverty in California alone (Downs, 2018).
Mental illness
In a qualitative study, Rudnick et al., (2014), studied people living in poverty with mental illness and determined that participants felt that wellness care, nutrition, housing, and jobs were severely lacking. Respondents asserted that the most significant problem was access to quality services; bureaucratic systems appear to be devoid of logic and treatment by providers were often unaccommodating and uncooperative (Rudnick et al., 2014).
Lowered productivity
The stress of worrying about one's personal finances can cause lower productivity. One study on factory workers in India found payment earlier in the work period increased average worker output by 6.2%.
Choices and culture
Personal choices and cultural influences can also make it difficult to escape poverty, such as:
* Choosing not to pursue education and skills that could be used to obtain a high-paying job
* A culture that disvalues education
* Low expectations for academic and economic success can be a
self-fulfilling prophecy
A self-fulfilling prophecy is a prediction that comes true at least in part as a result of a person's or group of persons' belief or expectation that said prediction would come true. This suggests that people's beliefs influence their actions. ...
* Belief that one is self-limited and destined to remain trapped in poverty
* Belief that one is a victim and powerless to break free from poverty
According to the
Brookings Institution
The Brookings Institution, often stylized as simply Brookings, is an American research group founded in 1916. Located on Think Tank Row in Washington, D.C., the organization conducts research and education in the social sciences, primarily in ec ...
, people who follow all three of the following steps end up with a poverty rate of only 2%, whereas people who follow none of the steps end up with a poverty rate of 76%.
# Finish high school.
# Get a full-time job.
# Wait until age 21 and get married before having children.
Correlation does not imply causation
The phrase "correlation does not imply causation" refers to the inability to legitimately deduce a cause-and-effect relationship between two events or variables solely on the basis of an observed association or correlation between them. The id ...
and these statistics could also indicate these three milestones are completely unavailable to 76% of the populations in poverty, and only 2% of the poor manage all three.
Discrimination and concentration
Discrimination can make it more difficult to access government programs, to find work, and to access resources and social networks that could help. For a variety of reasons, it is more difficult to escape poverty in areas of
concentrated poverty
Concentrated poverty concerns the spatial distribution of socio-economic deprivation, specifically focusing on the density of poor populations. Within the United States, common usage of the term concentrated poverty is observed in the fields of po ...
, where poor people may be forced to live by economic circumstance.
Racial segregation
Racial segregation is the systematic separation of people into race (human classification), racial or other Ethnicity, ethnic groups in daily life. Racial segregation can amount to the international crime of apartheid and a crimes against hum ...
can represent a combination of both discrimination and concentration.
Generational poverty
Generational poverty is poverty that is inherited across generations. This can happen because:
* Poor parents who know what their children need to succeed academically or economically cannot afford to provide that, such as tuition, books, tutoring, after-school programs, health care, transportation to school, safe housing, clothing, or adequate nutrition.
* Parents who are outside social networks that would be useful for economic advancement cannot introduce those children into those networks. In addition, they may not emphasize the value of networking to their children.
* Poor parents may pressure older children to drop out of school and work, for immediate wages at the expense of education that could provide higher long-term wages.
* Parents who have themselves not attended
secondary education
Secondary education or post-primary education covers two phases on the International Standard Classification of Education scale. Level 2 or lower secondary education (less commonly junior secondary education) is considered the second and final pha ...
, may not realize the advantages of attendance, and may not know when or how to apply.
* Poorly educated parents might not know how to nurture the
cognitive development
Cognitive development is a field of study in neuroscience and psychology focusing on a child's development in terms of information processing, conceptual resources, perceptual skill, language learning, and other aspects of the developed adult bra ...
of their children, and might be less able to provide educational assistance like help with homework.
* Parents who have made poor personal decisions may be bad
role model
A role model is a person whose behaviour, example, or success is or can be emulated by others, especially by younger people. The term ''role model'' is credited to sociologist Robert K. Merton, who hypothesized that individuals compare themselves ...
s for success, for example normalizing financial mismanagement or
substance abuse
Substance abuse, also known as drug abuse, is the use of a drug in amounts or by methods which are harmful to the individual or others. It is a form of substance-related disorder. Differing definitions of drug abuse are used in public health, ...
.
*
Child abuse
Child abuse (also called child endangerment or child maltreatment) is physical, sexual, and/or psychological maltreatment or neglect of a child or children, especially by a parent or a caregiver. Child abuse may include any act or failure to a ...
creates a number of physical and psychological problems that increase the probability of growing up poor, and the vast majority of abusive parents were themselves abused as children.
Early childhood adversity and basic needs stressors contributing to the cycle of generational poverty
*The stress of early childhood adversities, including basic need stressors and, at times, abuse and neglect are major causes of generational poverty. Studies have shown that the trauma of child abuse manifests negatively in adult life in overall health and even in employment status. Abuse and neglect are potential adversities facing those in poverty, the adversity that is shared among all below the poverty line is the daily stress over basic needs. "The stress of meeting basic needs takes all precedent in the family, and children learn that the only way to survive is to focus on getting basic needs met". Every member of a household in poverty lives the struggle of basic needs stressors and is impacted by it. The ability to secure and pay for childcare is another contributing factor to the problems those in poverty have with finding and keeping a job. These stressors are not just unpleasant, they are catastrophic to a body's health and development. Exposure to chronic stress can induce changes in the architecture of different regions of the developing brain (e.g., amygdala, hippocampus), which can impact a range of important functions, such as regulating the stress response, attention, memory, planning, and learning new skills, and also contribute to dysregulation of inflammatory response systems that can lead to a chronic "wear and tear" effect on multiple organ systems. Chronic stress is detrimental to our health and has even been proven to harm memory and organs, including the brain. Working memory, defined as a human's capacity to store information in the brain for immediate use, is known to be shorter for children raised in poverty versus those raised in even a middle-class environment. Children suffering through basic needs stressors from the earliest of years have to work harder than their peers to learn and absorb information.
Family background
A 2002 research paper titled "The Changing Effect of Family Background on the Incomes of American Adults" analyzed changes in the determinants of
family income
Family income is generally considered a primary measure of a nation's financial prosperity.
In the United States, political parties perennially disagree over which economic policies are more likely to increase family income. The party in power oft ...
between 1961 and 1999,
focusing on the effect of parental education, occupational rank, income, marital status, family size, region of residence,
race
Race, RACE or "The Race" may refer to:
* Race (biology), an informal taxonomic classification within a species, generally within a sub-species
* Race (human categorization), classification of humans into groups based on physical traits, and/or s ...
, and
ethnicity
An ethnic group or an ethnicity is a grouping of people who identify with each other on the basis of shared attributes that distinguish them from other groups. Those attributes can include common sets of traditions, ancestry, language, history, ...
. The paper (1) outlines a simple framework for thinking about how family background affects children's family and income, (2) summarizes previous research on trends in intergenerational inheritance in the United States, (3) describes the data used as a basis for the research which it describes, (4) discusses trends in
inequality
Inequality may refer to:
Economics
* Attention inequality, unequal distribution of attention across users, groups of people, issues in etc. in attention economy
* Economic inequality, difference in economic well-being between population groups
* ...
among parents, (5) describes how the effects of parental inequality changed between 1961 and 1999, (6) contrasts effects at the top and bottom of the distribution, and (7) discusses whether intergenerational correlations of zero would be desirable. The paper concludes by posing the question of whether reducing the intergenerational correlation is an efficient strategy for reducing poverty or inequality.
Because improving the skills of disadvantaged children seems relatively easy, it is an attractive strategy. However, judging by American experience since the 1960s, improving the skills of disadvantaged children has proved difficult. As a result, the paper suggests, there are probably cheaper and easier ways to reduce poverty and inequality, such as supplementing the wages of the poor or changing
immigration
Immigration is the international movement of people to a destination country of which they are not natives or where they do not possess citizenship in order to settle as permanent residents or naturalized citizens. Commuters, tourists, and ...
policy so that it drives down the relative wages of skilled rather than unskilled workers. These alternative strategies would not reduce intergenerational correlations, but they would reduce the economic gap between children who started life with all the disadvantages instead of all the advantages.
Another paper, titled ''Do poor children become poor adults?'', which was originally presented at a 2004 symposium on the future of children from disadvantaged families in France, and was later included in a 2006 collection of papers related to the theme of the dynamics of
inequality
Inequality may refer to:
Economics
* Attention inequality, unequal distribution of attention across users, groups of people, issues in etc. in attention economy
* Economic inequality, difference in economic well-being between population groups
* ...
and poverty, discusses generational income mobility in North America and Europe. The paper opens by observing that in the United States almost one half of children born to low income parents become low income adults, four in ten in the United Kingdom, and one-third in Canada. The paper goes on to observe that rich children also tend to become rich adults—four in ten in the U.S. and the U.K., and as many as one-third in Canada. The paper argues, however, that money is not the only or even the most important factor influencing intergenerational income mobility. The rewards to higher skilled and/or higher educated individuals in the labor market and the opportunities for children to obtain the required skills and credentials are two important factors. Conclusions that income transfers to lower income individuals may be important to children but they should not be counted on to strongly promote generational mobility. The paper recommends that governments focus on investments in children to ensure that they have the skills and opportunities to succeed in the labor market, and observes that though this has historically meant promoting access to higher and higher levels of education, it is becoming increasingly important that attention be paid to
preschool
A preschool, also known as nursery school, pre-primary school, or play school or creche, is an educational establishment or learning space offering early childhood education to children before they begin compulsory education at primary school ...
and early childhood
education
Education is a purposeful activity directed at achieving certain aims, such as transmitting knowledge or fostering skills and character traits. These aims may include the development of understanding, rationality, kindness, and honesty. Va ...
.
Lack of jobs due to deindustrialization
Sociologist
William Julius Wilson
William Julius Wilson (born December 20, 1935) is an American sociologist. He is a professor at Harvard University and author of works on urban sociology, race and class issues. Laureate of the National Medal of Science, he served as the 80th P ...
has said that the
economic restructuring
Economic restructuring is used to indicate changes in the constituent parts of an economy in a very general sense. In the western world, it is usually used to refer to the phenomenon of urban areas shifting from a manufacturing to a service sector ...
of changes from manufacturing to a service-based economy has led to a high percentage of joblessness in the inner-cities and with it a loss of skills and inability to find jobs. This "mismatch" of skills to jobs available is said to be the main driver of poverty.
Effects of modern education
Research shows that schools with students who perform lower than the norm are also those hiring least-qualified teachers as a result of new teachers generally working in the area that they grew up in. This leads to certain schools not producing many students who enter
tertiary education
Tertiary education, also referred to as third-level, third-stage or post-secondary education, is the educational level following the completion of secondary education. The World Bank, for example, defines tertiary education as including univers ...
.
Graduates
Graduation is the awarding of a diploma to a student by an educational institution. It may also refer to the ceremony that is associated with it. The date of the graduation ceremony is often called graduation day. The graduation ceremony is a ...
who previously attended these schools are not as skilled as they would be if they had gone to a school with higher-qualified instructors. This leads to education perpetuating a cycle of poverty. People who choose to work in the schools close to them do not adequately supply the school with enough teachers. The schools must then outsource their teachers from other areas. Susanna Loeb from the School of Education at Stanford conducted a study and found that teachers who are brought in from the suburbs are 10 times more likely to transfer out of the school after their initial year. The fact that the teachers from the suburbs leave appears to be an influential factor for schools hiring more teachers from that area. The lack of adequate education for children is part of what allows for the cycle of poverty to continue. The problem undergoing this is the lack of updating the knowledge of the staff. Schools have continued to conduct professional development the same way they have for decades.
Culture of poverty
The culture of poverty is a concept in social theory that asserts that the values of people experiencing poverty play a significant role in perpetuating their impoverished condition, sustaining a cycle of poverty across generations. It attracted ...
Another theory for the perpetual cycle of poverty is that poor people have their own culture with a different set of values and beliefs that keep them trapped within that cycle generation to generation. This theory has been explored by Ruby K. Payne in her book ''A Framework for Understanding Poverty''. In this book she explains how a social class system in the United States exists, where there is a wealthy upper class, a middle class, and the working poor class. These classes each have their own set of rules and values, which differ from each other. To understand the culture of poverty, Payne describes how these rules affect the poor and tend to keep them trapped in this continual cycle. Time is treated differently by the poor; they generally do not plan ahead but simply live in the moment, which keeps them from saving money that could help their children escape poverty.
Payne emphasizes how important it is when working with the poor to understand their unique cultural differences so that one does not get frustrated but instead tries to work with them on their ideologies and help them to understand how they can help themselves and their children escape the cycle. One aspect of generational poverty is a
learned helplessness
Learned helplessness is the behavior exhibited by a subject after enduring repeated aversive stimuli beyond their control. It was initially thought to be caused by the subject's acceptance of their powerlessness, by way of their discontinuing atte ...
that is passed from parents to children; a mentality that there is no way for one to get out of poverty and so in order to make the best of the situation one must enjoy what one can when one can. This leads to such habits as spending money immediately, often on unnecessary goods such as alcohol and cigarettes, thus teaching their children to do the same and trapping them in poverty. Another important point Payne makes is that leaving poverty is not as simple as acquiring money and moving into a higher class but also includes giving up certain relationships in exchange for achievement. A student's peers can have an influence on the child's level of achievement. Coming from a low-income household a child could be teased or expected to fall short academically. This can cause a student to feel discouraged and hold back when it comes to getting involved more with their education because they are scared to be teased if they fail. This helps to explain why the culture of poverty tends to endure from generation to generation as most of the relationships the poor have are within that class.
The "culture of poverty" theory has been debated and critiqued by many people including Eleanor Burke Leacock (and others) in her book ''The Culture of Poverty: A Critique''. Leacock claims that people who use the term, "culture of poverty" only "contribute to the distorted characterizations of the poor." In addition, Michael Hannan in an essay argues that the "culture of poverty" is "essentially untestable." This is due to many things including the highly subjective nature of poverty and issues concerning the universal act of classifying only ''some'' impoverished people as trapped in the culture.
Life shocks
2004 research in New Zealand produced a report that showed that "life shocks" can be endured only to a limited extent, after which people are much more likely to be tipped into hardship. The researchers found very little differences in living standards for people who have endured up to 7 negative events in their lifetime. People who had 8 or more life shocks were dramatically more likely to live in poverty than those who had 0 to 7 life shocks. A few of the life shocks studied were:
* Marriage (or similar) break-ups (
divorce
Divorce (also known as dissolution of marriage) is the process of terminating a marriage or marital union. Divorce usually entails the canceling or reorganizing of the legal duties and responsibilities of marriage, thus dissolving the ...
)
* Forced sale of house
* Unexpected and substantial drop in income
*
Eviction
Eviction is the removal of a tenant from rental property by the landlord. In some jurisdictions it may also involve the removal of persons from premises that were foreclosed by a mortgagee (often, the prior owners who defaulted on a mortgage ...
*
Bankruptcy
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor ...
* Substantial financial loss
* Redundancy (being laid off from a job)
* Becoming a
single parent
A single parent is a person who has a child or children but does not have a spouse or live-in partner to assist in the upbringing or support of the child. Reasons for becoming a single parent include divorce, break-up, abandonment, becoming wid ...
* 3 months or more unemployed
* Major damage to home
* House burgled
* Victim of violence
*
Incarceration
Imprisonment is the restraint of a person's liberty, for any cause whatsoever, whether by authority of the government, or by a person acting without such authority. In the latter case it is "false imprisonment". Imprisonment does not necessari ...
* A non-custodial sentence (
community service
Community service is unpaid work performed by a person or group of people for the benefit and betterment of their community without any form of compensation. Community service can be distinct from volunteering, since it is not always performed ...
, or fines, but not imprisonment)
* Illness lasting three weeks or more
* Major injury or health problem
*
Unplanned pregnancy
Unintended pregnancies are pregnancies that are mistimed, unplanned or unwanted at the time of conception.
Sexual activity without the use of effective contraception through choice or coercion is the predominant cause of unintended pregnancy. W ...
and birth of a child
The study focused on just a few possible life shocks, but many others are likely as traumatic or more so. Chronic
PTSD
Post-traumatic stress disorder (PTSD) is a mental and behavioral disorder that can develop because of exposure to a traumatic event, such as sexual assault, warfare, traffic collisions, child abuse, domestic violence, or other threats on a ...
,
complex PTSD
Complex post-traumatic stress disorder (C-PTSD; also known as complex trauma disorder) is a psychological disorder that is theorized to develop in response to exposure to a series of traumatic events in a context in which the individual perceive ...
, and depression sufferers could have innumerable causes for their mental illness, including those studied above. The study is subject to some criticism.
Tracking in education
History in the United States has shown that Americans saw education as the way to end the perpetual cycle of poverty. In the present, children from low to middle income households are at a disadvantage. They are twice as likely to be held back and more likely not to graduate from high school. Recent studies have shown that the cause for the disparity among academic achievement results from the school's structure where some students succeed from an added advantage and others fail as a result of lacking that advantage. Educational institutions with a learning disparity are causing education to be a sustaining factor for the cycle of poverty. One prominent example of this type of school structures is
tracking
Tracking may refer to:
Science and technology Computing
* Tracking, in computer graphics, in match moving (insertion of graphics into footage)
* Tracking, composing music with music tracker software
* Eye tracking, measuring the position of t ...
, which is predominantly used to help organize a classroom so the variability of academic ability in classes is decreased. Students are tracked based on their ability level, generally based on a standardized test after which they are given different course requirements. Some people believe that tracking "enhances academic achievement and improves the self-concept of students by permitting them to progress at their own pace."
The negative side is that studies have shown that tracking decreases students' opportunity to learn. Tracking also has a disproportionate number of
Latino
Latino or Latinos most often refers to:
* Latino (demonym), a term used in the United States for people with cultural ties to Latin America
* Hispanic and Latino Americans in the United States
* The people or cultures of Latin America;
** Latin A ...
s and
African American
African Americans (also referred to as Black Americans and Afro-Americans) are an ethnic group consisting of Americans with partial or total ancestry from sub-Saharan Africa. The term "African American" generally denotes descendants of ens ...
s that have low
socioeconomic status
Socioeconomic status (SES) is an economic and sociological combined total measure of a person's work experience and of an individual's or family's economic access to resources and social position in relation to others. When analyzing a family's ...
in the lower learning tracks. Tracking separates
social class
A social class is a grouping of people into a set of Dominance hierarchy, hierarchical social categories, the most common being the Upper class, upper, Middle class, middle and Working class, lower classes. Membership in a social class can for ...
es putting the poor and minority children in lower tracks where they receive second-rate education, and the students who are better off are placed in upper tracks where they have many opportunities for success. Studies have found that in addition to the higher tracks having more extensive curriculum, there is also a disparity among the teachers and instructional resources provided. There appears to be a race/class bias which results in intelligent children not receiving the skills or opportunities needed for success or social/economic mobility, thus continuing the cycle of poverty. There is an overall perception that American education is failing and research has done nothing to counter this statement, but instead has revealed the reality and severity of the issue of the existence of tracking and other structures that cause the cycle of poverty to continue.
Theories and strategies for breaking the cycle
General approaches
While many governmental officials are still trying to solve poverty, many states and localities are making an effort to break the cycle. Mayor
Bloomberg Bloomberg may refer to:
People
* Daniel J. Bloomberg (1905–1984), audio engineer
* Georgina Bloomberg (born 1983), professional equestrian
* Michael Bloomberg (born 1942), American businessman and founder of Bloomberg L.P.; politician and ma ...
of New York City has been advocating a plan where parents are paid up to $5,000 a year for meeting certain goals that will better their lives. This policy was modeled after a Mexican initiative that aims to help poor families make better decisions that will help them in the long-term and break cycle of poverty and dependence that have been known to last for generations. In addition, many states also have been making an attempt to help break the cycle. For example, a bill has been proposed in the California Assembly that "would establish an advisory Childhood Poverty Council to develop a plan to reduce child poverty in the state by half by 2017 and eliminate it by 2027".Billitteri, Thomas. "States and Localities. ''CQ Researcher'' 17.31 (2007): 738–39. Even when the plan has poverty reduction as the goal, a rise in child poverty might be the reality for many states as it was in Connecticut. States are attempting to not only decrease the number of people in the cycle of poverty, but to also adjust the stringent work requirements that resulted from Congress's
welfare
Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specificall ...
reform. The tougher work restrictions have upset many poverty advocates who believe the new regulations prevent individuals who are vulnerable or who lack skills from preparing for work. California Democratic Representative McDermott believes as a result of this and other effects of the new limitations, it has been harder for individuals to escape a life of
poverty
Poverty is the state of having few material possessions or little income. Poverty can have diverse social, economic, and political causes and effects. When evaluating poverty in ...
.
In his book ''Children in Jeopardy: Can We Break the Cycle'', Irving B. Harris discusses ways in which children can be helped to begin breaking the cycle of poverty. He stresses the importance of starting early and teaching children the importance of education from a very young age as well as making sure these children get the same educational opportunities as students who are richer. Family values such as nurturing children and encouraging them to do well in school need to be promoted as well as a non-authoritarian approach to parenting. Harris also discusses the importance of discouraging teenage pregnancy and finding ways in which to decrease this phenomenon so that when children are born they are planned and wanted and thus have a better chance at breaking the cycle of poverty.
It has been suggested by researchers like Lane Kenworthy that increasing welfare benefits and extending them to non-working families can help reduce poverty as nations that have done so have had better results.
The
Harlem Children's Zone
The Harlem Children's Zone (HCZ) is a nonprofit organization for poverty-stricken children and families living in Harlem, providing free support in the form of parenting workshops, a preschool program, three charter schools, and child-oriented ...
is working to end generational poverty within a 100-block section of
Harlem
Harlem is a neighborhood in Upper Manhattan, New York City. It is bounded roughly by the Hudson River on the west; the Harlem River and 155th Street (Manhattan), 155th Street on the north; Fifth Avenue on the east; and 110th Street (Manhattan), ...
using an approach that provides educational support and services for children and their families from birth through college.
This approach has been recognized as a model by the
Obama administration
Barack Obama's tenure as the 44th president of the United States began with his first inauguration on January 20, 2009, and ended on January 20, 2017. A Democrat from Illinois, Obama took office following a decisive victory over Republican ...
's anti-poverty program.
Two-generation poverty alleviation approach
A two-generation poverty alleviation approach focuses on the education, health and social services, and opportunities that parents and children desperately need to lift their families from the depths of the bondage of poverty to a stable and healthy state mentally, physically, and financially. A two-generation approach is a holistic plan for poverty alleviation and "is needed to help low-income parents and children improve their situation". Using a two-generation approach, parents are taught additional career skills, provided leadership training, and given access to job opportunities with higher wages. Children are given access to better educational programs, free preschool, free childcare, and the supplies they'll need to be successful in school. The family unit receives counseling for the current stressors of poverty as well as childhood trauma. All members of the household are given access to full healthcare benefits, food services at home and in school, and financial relief for their bills, clothing, and transportation in the short-term to relieve the basic needs stressors that prevent the family from taking the time to learn and grow. The preschool program Head Start believes that the only system that works for a preschool is one where the child as a whole is considered, which includes their health and their parents' ability to succeed. The two-generation poverty alleviation approach sees each member relieved of the basic needs stressors that plague their minds, ensures that they are physically and mentally healthy, provides them the opportunities to learn the skills needed for higher wage jobs, and gives them access to higher wage jobs without discrimination.
Effects on children
Children are most vulnerable to the cycle of poverty. Because a child is dependent on their guardian(s), if a child's guardian is in poverty, then they will be also. It is almost impossible for a child to pull themself out of the cycle due to age, lack of experience, lack of a job, etc. Because children are at such a young and impressionable age, the scars they gain from experiencing poverty early in life inevitably carry on into their adult life. "Childhood lays the foundations for adult abilities, interests, and motivation." Therefore, if they learn certain poverty-related behaviors in childhood, the behaviors are more likely to perpetuate.
Studies have shown that household structure sometimes has a connection to childhood poverty. Most studies on the subject also show that the children who are in poverty tend to come from single-parent households (most often matriarchal). In 1997, nearly 8.5 million (57%) poor children in the US came from single-parent households. With the rate of divorce increasing and the number of children born out of wedlock increasing, the number of children who are born into or fall into single-parent households is also increasing. However, this does not mean that the child/children will be impoverished because of it.
According to Ashworth, Hill, & Walker (2004), both urban and rural poor children are more likely to be isolated from the nonpoor in schools, neighborhoods, and their communities. Human nature is to have relationships with others but when a child is isolated due to their socioeconomic status, it's hard to overcome that when the status doesn't improve. Therefore, poor children also have more tense relationships which sometimes results in abnormal, non-constructive, or other unexplained behaviors.
There have been programs developed to specifically address the needs of poor children.
Francis Marion University
Francis Marion University is a public university near Florence, South Carolina. It is named in honor of American Revolutionary War Brigadier General Francis Marion.
History
The university dates back to 1957, when the University of South Caro ...
's Center of Excellence to Prepare Teachers of Children of Poverty has a number of initiatives devoted to equipping teachers to be more effective in raising the achievement of children of poverty. It is located in South Carolina and provides direct teacher training as well as facilitates research in the area of poverty and scholastic achievement. Head Start is a program for low income families who provides early childhood education as well as parent involvement. Results show that attending these programs increases children's academic outcomes. The problem is that in high poverty areas this is supposed to be a helpful resource, but they start to hold lower quality due to lack of funds to keep places updated.
Often the communities in which impoverished children grow up in are crime ridden areas; examples of these areas in America are
Harlem
Harlem is a neighborhood in Upper Manhattan, New York City. It is bounded roughly by the Hudson River on the west; the Harlem River and 155th Street (Manhattan), 155th Street on the north; Fifth Avenue on the east; and 110th Street (Manhattan), ...
and
the Bronx
The Bronx () is a borough of New York City, coextensive with Bronx County, in the state of New York. It is south of Westchester County; north and east of the New York City borough of Manhattan, across the Harlem River; and north of the New Y ...
. Crime and maltreatment at a young age may reduce a child's ability to learn by up to 5%. Adopting a criminal lifestyle only worsens the effects of the cycle as they are often incarcerated or killed in many types of gang violence.
Developing world
In the
developing world
A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreem ...
, many factors can contribute to a poverty trap, including: limited access to
credit
Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt), ...
and
capital markets
A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers to ...
, extreme
environmental degradation
Environmental degradation is the deterioration of the environment (biophysical), environment through depletion of resources such as quality of air, water and soil; the destruction of ecosystems; habitat destruction; the extinction of wildlife; an ...
(which depletes agricultural production potential), corrupt governance,
capital flight
Capital flight, in economics, occurs when assets or money rapidly flow out of a country, due to an event of economic consequence or as the result of a political event such as regime change or economic globalization. Such events could be an increas ...
, poor education systems,
disease ecology
Disease ecology is a sub-discipline of ecology concerned with the mechanisms, patterns, and effects of Host–pathogen interaction, host-pathogen interactions, particularly those of infectious diseases. For example, it examines how Parasitism, para ...
, lack of
public health care
Publicly funded healthcare is a form of health care financing designed to meet the cost of all or most healthcare needs from a publicly managed fund. Usually this is under some form of democratic accountability, the right of access to which are se ...
, war and poor
infrastructure
Infrastructure is the set of facilities and systems that serve a country, city, or other area, and encompasses the services and facilities necessary for its economy, households and firms to function. Infrastructure is composed of public and priv ...
.
Jeffrey Sachs
Jeffrey David Sachs () (born 5 November 1954) is an American economist, academic, public policy analyst, and former director of The Earth Institute at Columbia University, where he holds the title of University Professor. He is known for his work ...
, in his book ''
The End of Poverty
''The End of Poverty: Economic Possibilities for Our Time'' () is a 2005 book by American economist Jeffrey Sachs. It was a ''New York Times'' bestseller.
In the book, Sachs argues that extreme poverty—defined by the World Bank as incomes of ...
'', discusses the poverty trap and prescribes a set of policy initiatives intended to end the trap. He recommends that
aid agencies
An aid agency, also known as development charity, is an organization dedicated to distributing aid. Many professional aid organisations exist, both within government, between governments as multilateral donors and as private voluntary organization ...
behave as
venture capitalists
Venture capital (often abbreviated as VC) is a form of private equity financing that is provided by venture capital firms or funds to start-up company, startups, early-stage, and emerging companies that have been deemed to have high growth poten ...
funding
start-up companies
A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend t ...
. Venture capitalists, once they choose to invest in a venture, do not give only half or a third of the amount they feel the venture needs in order to become profitable; if they did, their money would be wasted. If all goes as planned, the venture will eventually become profitable and the venture capitalist will experience an adequate rate of return on investment. Likewise, Sachs proposes,
developed countries
A developed country (or industrialized country, high-income country, more economically developed country (MEDC), advanced country) is a sovereign state that has a high quality of life, developed economy and advanced technological infrastruct ...
cannot give only a fraction of what is needed in
aid
In international relations, aid (also known as international aid, overseas aid, foreign aid, economic aid or foreign assistance) is – from the perspective of governments – a voluntary transfer of resources from one country to another.
Ai ...
and expect to reverse the poverty trap in Africa. Just like any other start-up, developing nations absolutely must receive the amount of aid necessary (and promised at the G-8 Summit in 2005) for them to begin to reverse the poverty trap. The problem is that unlike start-ups, which simply go bankrupt if they fail to receive funding, in Africa people continue to die at a high rate due in large part to lack of sufficient aid.
Sachs points out that the extreme poor lack six major kinds of
capital
Capital may refer to:
Common uses
* Capital city, a municipality of primary status
** List of national capital cities
* Capital letter, an upper-case letter Economics and social sciences
* Capital (economics), the durable produced goods used f ...
: human capital, business capital, infrastructure,
natural capital
Natural capital is the world's stock of natural resources, which includes geology, soils, air, water and all living organisms. Some natural capital assets provide people with free goods and services, often called ecosystem services. All of t ...
, public institutional capital, and knowledge capital. He then details the poverty trap:
The poor start with a very low level of capital per person, and then find themselves trapped in poverty because the
ratio
In mathematics, a ratio shows how many times one number contains another. For example, if there are eight oranges and six lemons in a bowl of fruit, then the ratio of oranges to lemons is eight to six (that is, 8:6, which is equivalent to the ...
of capital per person actually falls from generation to generation. The amount of capital per person declines when the population is growing faster than capital is being accumulated ... The question for growth in per capita income is whether the net capital accumulation is large enough to keep up with
population growth
Population growth is the increase in the number of people in a population or dispersed group. Actual global human population growth amounts to around 83 million annually, or 1.1% per year. The global population has grown from 1 billion in 1800 to ...
.
Sachs argues that sufficient foreign aid can make up for the lack of capital in poor countries, maintaining that, "If the foreign assistance is substantial enough, and lasts long enough, the capital stock rises sufficiently to lift households above subsistence."
Sachs believes the
public sector
The public sector, also called the state sector, is the part of the economy composed of both public services and public enterprises. Public sectors include the public goods and governmental services such as the military, law enforcement, infra ...
should focus mainly on investments in human capital (health, education, nutrition), infrastructure (roads, power, water and sanitation, environmental conservation), natural capital (conservation of biodiversity and ecosystems), public institutional capital (a well-run public administration, judicial system, police force), and parts of knowledge capital (scientific research for health, energy, agriculture, climate, ecology). Sachs leaves business capital investments to the private sector, which he claims would more efficiently use funding to develop the profitable enterprises necessary to sustain growth. In this sense, Sachs views public institutions as useful in providing the
public goods
In economics, a public good (also referred to as a social good or collective good)Oakland, W. H. (1987). Theory of public goods. In Handbook of public economics (Vol. 2, pp. 485-535). Elsevier. is a good that is both non-excludable and non-riva ...
necessary to begin the
Rostovian take-off model
Rostow's stages of economic growth model is one of the major historical models of economic growth. It was published by American economist Walt Whitman Rostow in 1960. The model postulates that economic growth occurs in five basic stages, of vary ...
, but maintains that
private goods
A private good is defined in economics as "an item that yields positive benefits to people" that is excludable, i.e. its owners can exercise private property rights, preventing those who have not paid for it from using the good or consuming its be ...
are more efficiently produced and distributed by
private enterprise
A privately held company (or simply a private company) is a company whose shares and related rights or obligations are not offered for public subscription or publicly negotiated in the respective listed markets, but rather the company's stock is ...
. This is a widespread view in
neoclassical economics
Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a good ...
.
Several other forms of poverty traps are discussed in the literature,Paul Collier, The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It, Oxford University Press, 2007; Stephen C. Smith, Ending Global Poverty, Palgrave Macmillan 2005; Partha Dasgupta, An Inquiry into Well-being and Destitution, Oxford UP, 1995. including nations being landlocked with bad neighbors; a vicious cycle of violent conflict; subsistence traps in which farmers wait for middlemen before they specialize but middlemen wait for a region to specialize first; working capital traps in which petty sellers have inventories too sparse to earn enough money to get a bigger inventory; low skill traps in which workers wait for jobs using special skill but firms wait for workers to get such skills; nutritional traps in which individuals are too malnourished to work, yet too poor to afford sustainable food; and behavioral traps in which individuals cannot differentiate between temptation and non-temptation goods, and therefore cannot invest in the non-temptation goods which could help them begin to escape poverty.
See also
References
External links
* "The Joint conference of African Ministers of Finance and Ministers of Economic Development and Planning Report." May, 1999, Addis Ababa, Ethiopi * Ajayi, S. Ibi, Mahsin, S. Khan. "External Debt and Capital Flight in Sub-Saharan Africa." IMF, 200 * Collier, Paul et al. "Flight Capital as a Portfolio Choice." Development Research Group, World Bank.
* Emeagwali, Philip. Interview, "How does capital flight affect the average African
{{DEFAULTSORT:Cycle Of Poverty
Research on povertyChild povertyUrban decayEconomic problemsWaste of resourcesArticles containing video clipsDevelopment economics
Trap
A trap is a mechanical device used to capture or restrain an animal for purposes such as hunting, pest control, or ecological research.
Trap or TRAP may also refer to:
Art and entertainment Films and television
* ''Trap'' (2015 film), Fil ...