Hicks: Policy levers to fight poverty hit their limitations

February 1, 2014

The big lesson on research and data about poverty is the limited effectiveness of public policy.

Fortunately, most poverty is temporary. For those healthy folks in long-term poverty, nearly all have made at least one of the big three mistakes: quitting high school, using drugs or having kids without a partner—with having a child without a spouse being the most pervasive.

New research tells us poverty can reduce the quality of decision making, with poorer households focusing less on the long term. It is no doubt harder for poor people to make these affirmative choices, given the relative absence of good example and the lack of resources to support them.

Becoming affluent requires good choices repeated throughout life. But, it is also true that making these choices is hard for children in affluent families, simply because these are tough, demanding choices.

Given this, there should be a convergence toward average or middle income by children of both rich and poor parents alike.

Notice of course, that the language is all about choice, for that is what it is, and is what serious research on poverty has been focusing on for a generation.

Moreover, it is dehumanizing and amoral to pronounce it otherwise. Poor teenagers know as well as rich ones what causes babies. They are simply more likely to make a bad choice, and less likely to rebound from the mistake.

New research from Harvard University finds that income mobility across generations is unchanged in half a century. This study also finds that parental income explains less than 10 percent of their adult child’s earnings.

Education and single parenting are much larger factors. It is what kids learn at home, not how much their parents make, that affects income mobility.

So the problem is the limits to policy. We spend upward of $150,000 per child on a high school education, but about one in seven kids fails to graduate.

We spend enormous sums on public contraception and abortion as well as sex education. There are hundreds of programs, and still the share of births to single moms grew from 5 percent to more than 40 percent over 50 years of our war on poverty.

If we wish to intervene with policy, it is going to have to aim directly at the parent-child interaction, and it is going to have to be all about choices.•


Hicks is director of the Center for Business and Economic Research and a professor of economics at Ball State University. His column appears weekly. He can be reached at cber@bsu.edu.


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