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Alleviating Poverty Doesn’t Have To Be So Hard, And Behavioral Science Can Help

It’s time to shift how social service providers interact with the people they are catering to–and treat them more like people.

Alleviating Poverty Doesn’t Have To Be So Hard, And Behavioral Science Can Help
[Top Image: wacomka via Shutterstock]

Living in poverty means not just living with less money than other people. It also means dealing with extra pressures of time, cost, and mental space. For example, someone without a bank account will often spend more money cashing a paycheck than someone who has one. Poverty has even been shown to reduce cognitive ability. When faced with a big car repair bill, people on lower incomes will test lower in a subsequent IQ test than someone with more money, one study in New Jersey showed.

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A new report from ideas42, a New York think-tank, explores some of these under-acknowledged effects and asks us to think about the context of poverty as much as its financial realities. It argues that by changing the environment faced by the people on lower incomes, we can change people’s behavior and make poverty-alleviation programs more effective than they are today. In other words, it calls for a “behavioral science” approach that takes account of people’s actual circumstances:

Interventions grounded in behavioral science can range from small “nudges” or programmatic tweaks to large policy overhauls. Alone or in combination, these interventions act as force multipliers, ratcheting up the effectiveness of any given program or initiative. While good behavioral design cannot fully offset the negative effects of structural problems like racism and economic inequality, it can help families derive maximum benefit from the resources and services available to them.

At the heart of the idea of behavioral science is the idea that “preferences” aren’t stable. In this case, it means that two people will respond to a situation differently depending on their means and background. That contradicts classical economic thinking that says we’re all basically the same and all basically rational, holding preferences “that remain more or less consistent across time and place.” For example, we might think that a public campaign to reduce obesity simply requires telling people that certain foods contain a lot of sugar and fat. But it doesn’t work like that. People’s choices are shaped by things like access to healthy food and whether their friends eat healthily. In effect, the choice is different for different people.

The report calls for a change in thinking among service-providers catering to people on lower-incomes, laying out three broad sets of principles to follow:

ideas42

Cut Costs

That doesn’t just mean financial costs. It means, for example, the costs imposed by service-providers in being unclear in how they communicate. “The harder your constituents need to work to understand you, the greater the cognitive burden you impose,” the report says. “Common responses to a flood of information include shutting down, takin g the path of least resistance, or defaulting to something familiar. Service providers should make every effort to identify and communicate the truly important information up front, with further details provided later or upon request.”

ideas42 calls for reducing the paperwork required in official applications, family-friendly opening hours, shorter orientation processes, fewer conditional tests for benefits, and more cash transfers rather than, say, food stamps that allow people to buy only a certain set of goods. “In many cases, cash is preferable to in-kind support, or even to gift cards and vouchers, as it gives families the flexibility to meet their needs as they arise,” the report says. It also recommends a one-stop-shop approach where a “visit or phone call to a single facility gives [families] direct access to health, education, finance, and other basic resources for both parents and children.”

ideas42

Create slack

ideas42 proceeds from the idea that people in poverty have reduced flexibility in decision-making, so that if something unforeseen happens, they don’t have the means to react as proactively as someone with more money. Logically, that means a small amount of additional income could go a long way. “Extra income may make it possible to pay all of the month’s bills on time, to finally make a payment on that outstanding loan, or to take care of the tooth that’s been throbbing for weeks. These activities could in turn lead to improved credit, lower total interest paid, and the avoidance of a major medical expense downstream,” the report says.

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The report also considers the greater time pressures on the poor–for example, that they’ll have to do all their own cleaning, whereas someone on more income might take some clothes to the laundry. “We might even consider implementing a ‘concierge service’ for families living in poverty–providing something akin to a personal assistant to help manage complex schedules and complete critical tasks,” the authors say (optimistically). Other ideas include sending frequent, timely, and friendly reminders of appointments and commitments, and “flex funds”–small loans that offer an alternative to payday lending with its punitive interest rates.

ideas42

De-stigmatize services and benefits

The report calls for approaches that deal with the “moral tax” of poverty–that is, the way a person’s situation harms “their understanding of who they are, where they fit in society, and what’s possible for their future.” Interventions here could be as simple as changing the language of public assistance away from “recipient” or “case” to “member,” “customer,” or “participant.” It might involve “identity priming”–where people are encouraged to reflect on when they felt proudest of themselves. And it could mean treating people as “experts” in their own lives, by asking how and why they make certain decisions.

Many companies have taken a behavioral approach in providing services, considering the behavioral context in which customers make decisions. In a sense, ideas42’s approach transfers that way-of-thinking to poverty. Its report may not offer many direct answers, but it is full of interesting things to think about as we try and break of some persistent and negative social cycles.

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About the author

Ben Schiller is a New York staff writer for Fast Company. Previously, he edited a European management magazine and was a reporter in San Francisco, Prague, and Brussels.

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