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What would happen if we randomly gave $1,000 to poor families?


umsami
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I thought this was really interesting. Yes, the impact of $1,000 in a poor African community will e different than in the U.S.  Still, for those who wonder about giving money directly--this may put their minds at ease.  I saw something on Facebook where a group of friends gather for breakfast each Christmas...and everybody contributes $100 to breakfast.  The breakfast for all 17 costs $200, then they give the rest as a tip to the waitress. 

 

Note: This was a five year, randomized study involving 10,000 families.

https://www.washingtonpost.com/opinions/2019/12/03/what-would-happen-if-we-randomly-gave-poor-families-now-we-know/

 

"

Their findings are significant: Cash transfers benefited the entire local economy, not just direct recipients. As money made its way through the area, both families who did and did not receive cash ended up substantially better off.

Just as importantly, they could find little in the way of adverse effects from the experiment, either in villages that got the cash or in those that didn’t. Spending on temptation goods — such as cigarettes, alcohol and gambling — did not increase. People didn’t work less. Rates of domestic violence didn’t change, nor did more children drop out of school. Local income inequality levels did not change. And contrary to a common fear, the program had minimal effect on prices: Inflation increased less than 1 percent over and above Kenya’s overall rate.

What made the study really path-breaking, though, is that it was huge: The money handed out amounted to more than 15 percent of the GDP in the treatment area, reaching 10,500 of the 65,385 households there. Dump that much cash into a local economy, and you would certainly expect it to grow. But by how much?...."

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I can't read the article since I don't pay for news, but does it say anything about the people using the money for something that would expand their ability to make more of their own money, resources, etc.? How was it disbursed? And did they use it up and then that was it until the next time there was an influx of charity or something else? Wish I could read it!

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46 minutes ago, WendyAndMilo said:

I don’t pay for the WP, but I could still read the article.  
...which had nothing to do with UBS or basic incomes...

I could still read it, too, and I don't pay for WP.

I also thought the article was not really about UBS, but about infusing cash directly to really poor areas by giving to a few families directly.  Extreme poverty in a 3rd world country and a few families is different from UBS in a 1st or 2nd world country.

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Our government pretty much did this during the GFC. Generally people spend it on "catch up." The shoes, the trip to the dentist, replacing worn out bras. If people did spend it on a wide screen tv, they've just purchased what is pretty much their only source of entertainment so I find it kinda hard to shame them.

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there are microbanks that will lend, what is to us small sums ($200?), to "entrepreneurs" in 3rd world countries. they use it to invest in their business.  they found lending to women more likely to make a difference, because they had an incentive to provide for their children and would take a longer view of things.

then went back years later to check on two women who had a stall in some market.  the only thing they could tell that was different - was the stall had a refrigerator (which did enable them to increase their business revenues), and had shoes, etc..  they had sent their kids to school - and they were developing marketable skills that would enable them to have a better life.

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3 hours ago, WendyAndMilo said:

It also made me think of the "what if" - what difference could I make if I took $1000 that I spent at big/online stores and instead bought from locally-owned stores/stands?  Because we are coming from a completely opposite economic base than that of Kenya, does it still matter, or is it just a drop in the bucket?

I think it does matter.  Not too long ago somebody posted thank you to whoever placed that order in my shop. It means my child will get new shoes tonight (or something like that). A small purchase (or even a big one) can really be a make or break thing for a locally owned store, Etsy shop, etc.. Yet if I don't buy something at Walmart, they will do just fine.  I try and remember that more and more.  I will try to buy stuff at the local Indo/Pakistani store or Arabic store, because they are owned by a family vs. buying the same thing cheaper at the big box store or through Amazon.  I buy my pita bread from a local bakery vs. the national brand at Walmart, etc.  I don't always do this, because (to be honest) of convenience. But ever since seeing that, I really do try and make the effort more and more.  

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16 minutes ago, umsami said:

I think it does matter.  Not too long ago somebody posted thank you to whoever placed that order in my shop. It means my child will get new shoes tonight (or something like that). A small purchase (or even a big one) can really be a make or break thing for a locally owned store, Etsy shop, etc.. Yet if I don't buy something at Walmart, they will do just fine.  I try and remember that more and more.  I will try to buy stuff at the local Indo/Pakistani store or Arabic store, because they are owned by a family vs. buying the same thing cheaper at the big box store or through Amazon.  I buy my pita bread from a local bakery vs. the national brand at Walmart, etc.  I don't always do this, because (to be honest) of convenience. But ever since seeing that, I really do try and make the effort more and more.  

Same here, I try to buy from local, independent shops as much as possible and do the bulk of my grocery/household supplies shopping at an employee owned store. And we very rarely eat at any national chains, although I admit that’s as much about the food as wanting to support independent restaurants. I try to limit my use of Amazon to once a year for more obscure, specific Christmas gifts for our stockings. So far this year I’ve succeeded and have not yet even placed that order.

Edited by Frances
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It (specific to the article) seems completely logical to me!

Translating it to US possibilities is way more complicated than that. I, personally, don’t have much of an immediately local economy. I grew up in a town with slightly more options, but not many.  I did spend a few years in more urban areas that had more utilitarian mom and pop businesses, where I could see potential for a decent impact. But when your location is basically pizzerias and a Rite Aid, there’s only so much more pizza and antacids you can buy to keep things circulating!

My township supervisors are dead set on bringing more businesses to us. Unfortunately, they have their sights set on things like Dollar General 🤢 which won’t bring increased wages, and corporate organic farming which says it will, but could take out the family farms in the surrounding area if it’s successful.

There are so many double edged swords swinging around out there, there’s definitely no one-size-fits-all answer.

 

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It’s interesting to calibrate the amount, the culture, and the effects.

It’s well known that people who win the lottery usually end up worse off than before.  But a smaller infusion of cash can be really helpful, but not always.  I wonder where the line is, and whether it has to do with culture of saving/spending/community as well as with proportionate amount?

Around here if folks got an extra $1000 some would use it wisely and others would completely blow it.  I know this because I’ve seen it.

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Look up some of the research done on the impact of the PFD on the Alaskan economy, especially in rural areas.  There are 30+ years of data at this point on the impact.  While this payout is not limited to low income and is annual rather than monthly, it still has relevancy in this discussion.

Here is a pretty easy to read summary http://greenandgold.uaa.alaska.edu/blog/74354/iser-research-pfd-effect-socio-economic-well-being/

en of the day, people tend to use it for deferred expenses - things they would have to save up to pay for.

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I think it would be a boost to the local economy. I could see people getting necessities they have been putting off like dental work, new tires, new glasses, replace an old appliance that type of thing. It would make the families life less stressful and boost the local dentists, auto shops, etc.  I don't know how it would work as a long term regular thing but a one time 'boost' it could be great. 

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Depends entirely on the recipient, I think. Some are just so stuck in the cycle of generational poverty, it makes no impact. Some need that little bump that sends them on their way to improved situation. There’s not much way of knowing other than to be in the trenches with them. 

You could look at it as sowing seed. Some will not sprout, some will. 

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On 12/7/2019 at 9:52 PM, umsami said:

I think it does matter.  Not too long ago somebody posted thank you to whoever placed that order in my shop. It means my child will get new shoes tonight (or something like that). A small purchase (or even a big one) can really be a make or break thing for a locally owned store, Etsy shop, etc.. Yet if I don't buy something at Walmart, they will do just fine.  I try and remember that more and more.  I will try to buy stuff at the local Indo/Pakistani store or Arabic store, because they are owned by a family vs. buying the same thing cheaper at the big box store or through Amazon.  I buy my pita bread from a local bakery vs. the national brand at Walmart, etc.  I don't always do this, because (to be honest) of convenience. But ever since seeing that, I really do try and make the effort more and more.  

 

It is easier to see with a small business where your one purchase provides a particular good (Especially when they post and say it lke that). But a LOT of kids get shoes, school clothes, etc because their parents work for larger companies. And if people stop going to those larger companies (like Sears) the company goes out of business and those people lose their jobs, and have to struggle to find a new way to pay for shoes, food, clothes...

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4 minutes ago, vonfirmath said:

 

It is easier to see with a small business where your one purchase provides a particular good (Especially when they post and say it lke that). But a LOT of kids get shoes, school clothes, etc because their parents work for larger companies. And if people stop going to those larger companies (like Sears) the company goes out of business and those people lose their jobs, and have to struggle to find a new way to pay for shoes, food, clothes...

Right. Even your local UPS driver relies to some extent on Amazon’s success. UPS driver is not bad money.

(Better than restaurant jobs, which is what my township seems to focus on for community development. What they don’t seem to understand is that new dining options are an after-effect of economic growth, not a driver.)

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In different states, my parents and also my husband and I were involved in an organization that housed homeless families in churches.  They spent a week at each church and each family was assigned a classroom set up with beds.  The churches had kitchens and showers (toiletries provided) so it was sort of like living in a dorm.  During the day the kids went to school and there was a shuttle to work or the organization's 'day center' for folks who were looking for jobs if they didn't have a car.  Breakfast supplies were kept so that each family could fix a simple breakfast.  Dinners and weekend meals were brought by church members, who ate with the families.  The program has a very high success rate for getting families into independent housing within 6 months or a year.  There was usually help with outfitting the new apartment with the basics.  

Over the years it seemed like the families could be divided into 2 groups. One group had a material need.  Due to job loss, divorce, or some other crisis they lacked the physical necessities.  Once they found a job, they saved and quickly transitioned to a more stable situation.  For these folks, a bonus $1000 would have been great and likely moved them out of the program a month earlier because it might be a deposit on a rental.  

In the other group were folks who struggled to make good decisions.  They'd get their first paycheck and go get a mani-pedi rather than 'splurging' on a celebratory $2 bottle of nail polish and saving the rest.  They would stop by and ask what meal the church people had brought, and then decide that they'd rather go get fast food (and, before somebody points out that anybody might really hate any particular meal, there were always sandwich supplies and often leftovers in the fridge).  They would come in late after the doors were locked at 11 (plans were made for folks who worked late shifts, but otherwise the church volunteers locked the doors when they went to bed at 11).  Instead of board games, the park, or DVDs at the church, they'd go to the movies.  For these folks, $1000 would have been gone by the end of the month.

Between this volunteer work and my current volunteer gig at an inner-city afterschool program, I've become more convinced that few of the problems are strictly money problems.  It frustrates me when $ problems aren't dealt with quickly, mostly so that those folks who have a purely financial issue can be moved out of the system so that more effort can be put into the remaining (and at times I think majority) of families in need.  That being said, I'm not sure how to best address the issues in the second group.  My hunch is that it is more people/time intensive than money intensive, and it's harder to find people who are willing to keep working with a frustrating family for years to help turn the situation around.  

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I’m going to rabbit-trail note that a small business using guilt salesmanship can backfire too.

Someone who owns a small store here posted on my FB a meme that when we buy “local” and “small business” we aren’t funding some CEOs third vacation home - we are funding a mom’s school supplies for her kid or summer camp.

I decided to not shop there this Christmas bc of that and the fact that her store closes on Black Friday and pushes Small business Saturday instead. I think both these tactics are going to put her out of business eventually. Small business Saturday is fine but to be closed in the heaviest shopping day of the year is nuts. And if the only way they can convince me to shop there vs a larger company online is via guilt tripping me (they don’t even have kids btw) - then I can only speculate as the quality of their product or service. It’s a business, not a charity.

Working for a large corporation isn’t all bad and those people have kids too. 
 

All that aside... I feel I should just put in my sig line that I am pro universal healthcare, and pro minimum income that scraps all the piecemeal services and pro debt free state college for anyone that wants to attend. 

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10 minutes ago, Murphy101 said:

I’m going to rabbit-trail note that a small business using guilt salesmanship can backfire too.

Someone who owns a small store here posted on my FB a meme that when we buy “local” and “small business” we aren’t funding some CEOs third vacation home - we are funding a mom’s school supplies for her kid or summer camp.

 

 

I HATE that meme. "So MY kids school supplies and summer camp don't count because I work for a larger company instead of a small company?"  (And I used to work for Boeing. now it's a smaller family owned business. But we don't go around trying to win work by trumpeting that we are a smaller company (More medium size than small, about 100 employees))

 

I'll choose who to shop with depending on what they sell and the service they give. Not whether it is a larger or smaller company, in general.

I'd LOVE to shop at our local toy store. Unfortunately, they went out of business a few years ago (right before TOys R Us did)  I used to shop there all the time before someone wants to guilt trip me it was my fault they went out of business (I preferred what they sold to what was available at TRU so we did more shopping there except for when we had gift certificates to sped)

 

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13 minutes ago, ClemsonDana said:

In different states, my parents and also my husband and I were involved in an organization that housed homeless families in churches.  They spent a week at each church and each family was assigned a classroom set up with beds.  The churches had kitchens and showers (toiletries provided) so it was sort of like living in a dorm.  During the day the kids went to school and there was a shuttle to work or the organization's 'day center' for folks who were looking for jobs if they didn't have a car.  Breakfast supplies were kept so that each family could fix a simple breakfast.  Dinners and weekend meals were brought by church members, who ate with the families.  The program has a very high success rate for getting families into independent housing within 6 months or a year.  There was usually help with outfitting the new apartment with the basics.  

Over the years it seemed like the families could be divided into 2 groups. One group had a material need.  Due to job loss, divorce, or some other crisis they lacked the physical necessities.  Once they found a job, they saved and quickly transitioned to a more stable situation.  For these folks, a bonus $1000 would have been great and likely moved them out of the program a month earlier because it might be a deposit on a rental.  

In the other group were folks who struggled to make good decisions.  They'd get their first paycheck and go get a mani-pedi rather than 'splurging' on a celebratory $2 bottle of nail polish and saving the rest.  They would stop by and ask what meal the church people had brought, and then decide that they'd rather go get fast food (and, before somebody points out that anybody might really hate any particular meal, there were always sandwich supplies and often leftovers in the fridge).  They would come in late after the doors were locked at 11 (plans were made for folks who worked late shifts, but otherwise the church volunteers locked the doors when they went to bed at 11).  Instead of board games, the park, or DVDs at the church, they'd go to the movies.  For these folks, $1000 would have been gone by the end of the month.

Between this volunteer work and my current volunteer gig at an inner-city afterschool program, I've become more convinced that few of the problems are strictly money problems.  It frustrates me when $ problems aren't dealt with quickly, mostly so that those folks who have a purely financial issue can be moved out of the system so that more effort can be put into the remaining (and at times I think majority) of families in need.  That being said, I'm not sure how to best address the issues in the second group.  My hunch is that it is more people/time intensive than money intensive, and it's harder to find people who are willing to keep working with a frustrating family for years to help turn the situation around.  


I would agree this tends to be the case. I would be interested in knowing if a secondary commonality was how invested or interstates the second group was with people they were staying with and how much of their lives were integrated with people who tended to make similar choices as them?

For example, many of those behaviors aren’t about spending money so much as avoid connections or not feeling a connection.  And some of that may never be fixable - so then what? I have a son on the spectrum who would absolutely spend on food like that. BUT we have had decades of role playing and discussion about how meals aren’t just for enjoying food. They are a social construct and a source of fuel and sometimes we have to sacrifice how much we enjoy it for the sake of social engagement, health, or pure mathematical finance.  DECADES of those discussions and still when he comes over for a family meal, he abruptly gets up when done eating or avoids the table if he doesn’t like the meal, unless I quietly signal a reminder/suggestion that doesn’t put him in the spot publicly. He lives on his own, pays his bills, works reliably and hard - but it’s purely by grace and dumb luck that he isn’t in that second group. And it is exhausting for him to remember all the million things we don’t have to think about that are “common sense” like this. When under stress, there’s just no energy left to do it. I think here are a lot of people out there who have felt like that for years, generations even.   I’m not sure how to fix it either. I know a key that I’m ridiculously fortunate to have a connection with my son that allows us to guide him.  Many don’t and I’m unsure how to create this starting in adulthood with strangers. 

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1 hour ago, Murphy101 said:


I would agree this tends to be the case. I would be interested in knowing if a secondary commonality was how invested or interstates the second group was with people they were staying with and how much of their lives were integrated with people who tended to make similar choices as them?

For example, many of those behaviors aren’t about spending money so much as avoid connections or not feeling a connection.  And some of that may never be fixable - so then what? I have a son on the spectrum who would absolutely spend on food like that. BUT we have had decades of role playing and discussion about how meals aren’t just for enjoying food. They are a social construct and a source of fuel and sometimes we have to sacrifice how much we enjoy it for the sake of social engagement, health, or pure mathematical finance.  DECADES of those discussions and still when he comes over for a family meal, he abruptly gets up when done eating or avoids the table if he doesn’t like the meal, unless I quietly signal a reminder/suggestion that doesn’t put him in the spot publicly. He lives on his own, pays his bills, works reliably and hard - but it’s purely by grace and dumb luck that he isn’t in that second group. And it is exhausting for him to remember all the million things we don’t have to think about that are “common sense” like this. When under stress, there’s just no energy left to do it. I think here are a lot of people out there who have felt like that for years, generations even.   I’m not sure how to fix it either. I know a key that I’m ridiculously fortunate to have a connection with my son that allows us to guide him.  Many don’t and I’m unsure how to create this starting in adulthood with strangers. 

There is very little you can do after a point I think. We have been involved in the life of a man whom my DH met in jail ministry. Our church has gone above and beyond to encourage and support him when he got out of jail and turned to us for help. Providing work, help with rent and food when things got bad, counseling, character witness in probation hearings, etc. He has ADHD I believe, and in our attempts to get him on his feet and independent, dh and I found ourselves practically parenting a guy only a decade younger than ourselves. He can’t make sound decisions as far as time management, work management, financial management. I’ve insisted he will do no more handyman work on our house based on his poor estimation of time needed and the workspace mess he leaves behind. It breaks my heart. He thinks he’s going to make it as a handyman service, I just want him to hold onto a reliable job. Dh believes his former life of running after one mind altering substance after another has permanently addled his mind. He’s a smart guy, but he can’t think longer term than today or shorter term than some future in which he’s got it all. 

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@Murphy101, I think there was a large component of what was normal among the people that they spent the most time with - the program wasn't rigid, so the families were welcome to socialize with whoever they wanted to - on Saturdays they might spend the day hanging out with family or friends elsewhere.  Some of the folks had problems relating to people and understanding social norms, which I'm sure made employment more difficult.  Others had little ability to see beyond the next hour.  When I talk about going to get fast food, they'd sometimes go pick it up and then come back and eat with everybody else, saying that they just didn't feel like casserole or chili or whatever today.  Making that choice a couple of times each week with a family adds up when you're trying to save for a housing deposit.  But, I agree that helping folks to understand what behavior is productive is a decades-long conversation and hard to start with a 40 year old with a family.  I remember my mom talking about how they had to get a guy to go back and ask for a job back - he had gotten mad and quit after a few days over something that was a routine workplace inconvenience.  I grew up with decades of hearing relatives complain at times about various work issues and, as a young adult, realized that, well, they pay you because sometimes it's not fun.  But, that man may have been in an environment where quitting because they changed your work day or asked you to stay an extra 30 minutes or swapped the shift of a new employee seemed normal.  I think that long-term relationships with people not in that environment are probably the best fix because just 'coaching' can be taken as 'you don't really get it' if there isn't a relationship behind it.  But, at the same time we encourage people to surround themselves with people with the same goals or values, so productively employed, high-functioning people who have the bandwith to help don't usually find themselves befriending homeless folks who can't hold down a job, even if they might enjoy time together if they really got to know each other.  

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31 minutes ago, SamanthaCarter said:

There is very little you can do after a point I think. We have been involved in the life of a man whom my DH met in jail ministry. Our church has gone above and beyond to encourage and support him when he got out of jail and turned to us for help. Providing work, help with rent and food when things got bad, counseling, character witness in probation hearings, etc. He has ADHD I believe, and in our attempts to get him on his feet and independent, dh and I found ourselves practically parenting a guy only a decade younger than ourselves. He can’t make sound decisions as far as time management, work management, financial management. I’ve insisted he will do no more handyman work on our house based on his poor estimation of time needed and the workspace mess he leaves behind. It breaks my heart. He thinks he’s going to make it as a handyman service, I just want him to hold onto a reliable job. Dh believes his former life of running after one mind altering substance after another has permanently addled his mind. He’s a smart guy, but he can’t think longer term than today or shorter term than some future in which he’s got it all. 

We have a program locally that is similar to the church one mentioned above except that it involves intensive coaching about priorities and financial management.  They charge a tiny amount for the room for the family SPECIFICALLY AND ONLY to give them an entree into explicitly teaching the family to prioritize housing costs above everything else SO THAT when they get out into permanent housing they are more likely to keep it.  

It truly is parenting level talk, over and over, for 3-6 months.  After that they have to leave.  This is a pretty successful program but it also is only 2/3 successful—an important thing to recall.  IOW, even a wildly successful program only has 2/3 of their guests leaving into permanent housing; and these are all families with children.  Kind of sobering.  But still eminently worthwhile.

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Imo. We as a society need to be able to accept some people, possibly as much as 1/4- 1/3 even, are never going to be successful in the concept of fully supporting themselves long term for a large portion of their life.  For lots of reasons that blaming character or bad choices won’t change their situation or help us have an ethical plan for coping with that reality.

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