Poverty Premium Research (Harvard Business Review)

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Multinationals that failed to take these realities into account saw their best-laid business plans go bust. P&G’s PUR sachets were envisioned as a low-priced competitor to bottled water; in reality, though, poor households are used to boiling their tap water or drinking it untreated. Grameen Danone’s real competition among rural populations wasn’t expensive store-bought yogurt—it was homemade yogurt that consumers produced for a fraction of the cost.

In places where poor consumers benefit from lower prices, they often incur other costs. For example, the informal economy fails to ensure safe working conditions and reasonable wages, product quality controls, or taxes for the state. The brunt of these externalities is borne by the poor, as workers, consumers, and beneficiaries of government funds. Such places may have a “poverty premium” that multinationals could help eliminate, but that premium does not take the form of higher prices.

The Problem with the “Poverty Premium,” Harvard Business Review, Ethan Kay and Woody Lewenstein, April 2013

Ethan Kay gave a Ted Talk about creating cookstoves for poverty survivors.

Better Options Mean Better Results

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Image Source: Wordery.com

Clearly a much better set of options could be provided to African Americans—and poor people of all colors—today. As historian Lerone Bennett Jr. eloquently reminds us, “a nation is a choice.” We could choose to be a nation that extends care, compassion, and concern to those who are locked up and locked out or headed for prison before they are old enough to vote. We could seek for them the same opportunities we seek for our own children; we could treat them like one of “us.” We could do that. Or we can choose to be a nation that shames and blames its most vulnerable, affixes badges of dishonor upon them at young ages, and then relegates them to a permanent second-class status for life. That is the path we have chosen, and it leads to a familiar place.

The New Jim Crow by Michelle Alexander

 

We could choose to be a nation that extends care, compassion, and concern to those…locked out…before they are old enough to vote.

 

Stillbirth Equals Prison Time

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Marsha wandered through her first days at Tutwiler in a state of disbelief. She met other women like herself who had been imprisoned after having given birth to stillborn babies. Efernia McClendon, a young black teenager from Opelika, Alabama, got pregnant in high school and didn’t tell her parents. She delivered at just over five months and left the stillborn baby’s remains in a drainage ditch. When they were discovered, she was interrogated by police until she acknowledged that she couldn’t be 100 percent sure the infant hadn’t moved before death, even though the premature delivery made viability extremely unlikely. Threatened with the death penalty, she joined a growing community of women imprisoned for having unplanned pregnancies and bad judgment.

Just Mercy: A Story of Justice and Redemption by Bryan Stevenson

Poverty Premium Research (University of Michigan and UC Davis)

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“Because they have to buy small quantities, they have little inventory at home and can’t wait until a sale presents itself to purchase again, making it even harder to take advantage of sales,” says Orhun, professor for marketing. “It’s a double whammy.”

“It’s not about poor people making poor decisions; it’s about them facing liquidity constraints,” she says, “and it matters even for what we’d consider small purchases.

Frugality is Hard to Afford, news release about research completed by Professor Yesim Orhun and PhD student Mike Palazzolo; 02/24/2016

Frugality is Hard to Afford, Working Paper (Revising for invited resubmission at Journal of Marketing Research), Mar 20, 2016, Mike Palazzolo – Paper available for download

Perhaps this sounds like a subtle discovery about minor household goods. But it supports a larger point about poverty: It’s expensive to be poor. Or, to state the same from another angle: Having more money gives people the luxury of paying less for things.

Why the poor pay more for toilet paper — and just about everything else by Emily Badger, Washington Post, 3/8/2016

In a recent working paper, the University of Michigan’s A. Yesim Orhun and Mike Palazzolo, point to how two of American shoppers’ (and marketers’) favorite money-saving strategies, the limited-time offer and buying in bulk, come with savings that are more accessible to some consumers than others. Choosing to buy things when they’re on sale or packaged in huge quantities is something lots of shoppers may take for granted as a matter of preference, but for many, these purchases—and the savings that come with them—are out of reach.

The Privilege of Buying 36 Rolls of Toilet Paper at Once, The Atlantic, Joe Pinsker, MAY 12, 2016

Limited access to supermarkets and discount stores, which contributes to the idea that poor people end up paying more for things or the “poverty penalty,” is one of the biggest problems facing low-income neighborhoods.

But the study suggests that low-income families can’t always afford bulk or sale items in the stores that they do have access to.

Why poor families are paying more for everyday items like toilet paper by Ahiza Garcia, CNN Money, March 25 2016.

Can Technology Solve Poverty?

Technology can address the symptoms of poverty

Apps are basically high tech communication devices. They are really useful for gathering and distributing information. In that respect, they can help address the symptoms of poverty by providing poverty survivors access to:

  • Information about potential resources.
  • Free educational resources, tutoring services and MOOCs.
  • Crisis lines addressing everything a person without health care or the cash to pay for professional help, including: medical questions, parenting questions, suicide hotlines, 12-step program hotlines, etc.
  • Legal advice
  • Job listings, resume advice, job advice, etc.
  • Establishing funding platforms to meet the needs of schools and similar resources in poverty stricken neighborhoods.
  • Applying for assistance through online forms (it is important to note that this has both positive and negative affects on access to those resources)

These apps can also affect public perception by answering the questions and addressing the prejudices surrounding poverty. They can attempt to educate the masses about the realities of poverty and the truth about who poverty survivors really are, including those of us who have experienced homelessness.

The voices of poverty survivors

All of these things currently exist and all of them require access to the internet and the specific technology required to connect to the applications. While there are plenty of poverty survivors (homeless included) who have some form of smart phone (Tracfone offers several android phones for less than $100 and a SUPER cheap pay-as-you-go plan…it’s really easy to get one), for many people that is where the technology ends.

Being able to leverage these opportunities often requires access to more than a low grade android cell phone. Determined poverty survivors with access to a reasonably well funded public library will use the computer lab to access all of these things. Others just shrug their shoulders and assume they don’t apply to them.

The thing that is missing from all of these resources and opportunities is the voice of poverty survivors themselves. Please watch the following TED talk by Mia Birdsong. She says it far better than I ever could:

Can technology solve poverty?

No. Poverty is not caused by technology, so technology is not close enough to the source of the problem to have a profound effect on the problem.

Technology does not pay the bills or end human rights violations. It does not block human trafficking, slavery, violence, exploitation or stalking (cyber or face-to-face). It does not end racism, sexism, homophobia, ageism, slander or classicism. It does not prevent police brutality or government corruption. It does not put food on the table, a roof over your head or clothes on your back. It does not force your employer to pay a living wage – or provide the paycheck that is owed to you.

It doesn’t even get you a job. Access to long lists of jobs posted to websites like LinkedIn is helpful, but it is NOT a job. If one of those job postings happen to materialize into a job, there’s no guarantee it will pay a living wage.

Poverty can be positively affected by technology. I encourage those with this particular skill set to look for ways to use those skills to positively change the world in every possible way, including addressing the symptoms of poverty. But never forget that these are symptoms and not root cause. Until the root cause is addressed, poverty will remain epidemic in this country and around the world.

-Originally posted to Quora in response to the (frequently asked) question Can apps be used to tackle societal problems like hunger or homelessness or income insecurity?

Economics of Fertility and Childbearing

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Are you likely to have more kids if you are rich or poor?  Or to put this in econo-jargon: Are kids normal or inferior goods?  (Reminder: When you get rich you buy more of a “normal good,” and less of an “inferior good.” And yes, the language of economics can be a bit cold.)…

Whether you cut the data across countries, through time, or across people at a point in time, the same fact arises: The richer you get, the fewer kids you have.

Yep, kids aren’t normal.

The Rich vs Poor Debate: Are Kids Normal or Inferior Goods?, Freakonomics.com, by Justin Wolfers

Admiration List: David Raether

David Raether went from having a extremely well paying job as a comedic writer for television, to losing absolutely everything and spend a few years homeless (on-the-street-homeless). Why? Because he decided to take a year off of work to address problems in his family. The house was paid for, they had money in the bank, it was a perfectly reasonable financial decision and exactly what his family needed.

Unfortunately, in the United States, taking time off of work to make positive changes in your personal life is tantamount to professional suicide. At the end of his 12-month sabbatical, David Raether was unable to find work. Since he and his wife were committed to keeping their children enrolled in the best school system in the United States, their cost of living remained where it had been when he was pulling in 100s of thousands per year. Without an equally good paying job, their savings dried up and things went from bad to worse.

This is an important story to be told about poverty (in general) and homelessness (specifically) within the United States. The far majority of Poverty Survivors are good, hard working people who hit on hard times.

Drug addicts and criminals are neither exclusive to, nor most prevalent among, the poor – there are plenty of addicts and criminals (white collar and otherwise) among the upper classes. But that’s a topic for another day.

David Raether has my admiration for surviving homelessness, pulling himself out of that tragedy, and having the courage to talk about it.

Admiration List: Rex Hohlbein

Rex Hohlbein started allowing homeless people use his office as a place to hang out during the day. This grew into a small and semi-official drop-in-center service where people could come to get out of the weather or pick up needed supplies.

That alone is admirable. Yet, what really stood out to me was the way this project got started because Rex took the time to get to know individuals. He didn’t just set up a charity, he started building relationships with poverty survivors and the network of donations grew out of those relationships. That is truly worthy of admiration.

 

 

Mass Blindness: Why don’t American’s see the poverty in their own backyards?

The most common reasons for mass blindness are as follows:

  1. Prosperity theology – Wikipedia This highly flawed religious belief took root in this country before it became the USA. It never left. People still think that poverty survivors (rape victims, abuse victims, people struck by illness, etc.) are cursed by God because they are ‘bad people.’ It’s religion-sanctioned victim-blaming, and it’s long-term effects have been extremely destructive.
  2. Welfare queen – Wikipedia: A highly effective political marketing/propaganda campaign utilized by President Reagan which vilified all poverty survivors based on a fictitious character developed, loosely, out of one female African American criminal who was convicted of fraud. It is a well-established fact that this campaign was an attempted to garner the support of white voters by demonizing black people – and it worked.
    1. The Truth Behind The Lies Of The Original ‘Welfare Queen’
    2. The Real Story of Linda Taylor, America’s Original Welfare Queen
    3. Ronald Reagan’s “welfare queen” myth: How the Gipper kickstarted the war on the working poor
    4. The myth of the modern welfare queen
    5. Return of the ‘Welfare Queen’
  3. Deserving or undeserving poor: A European belief that was imported to the United States by European immigrants and became a permanent fixture within our culture and politics. It is a well-established fact that the hyper-examination of the relative morality of people surviving a life-threatening crisis is counterproductive to the efforts to reduce poverty, homelessness, and everything that goes with them. But the social belief remains and grant money, political favor, and individual donations are often tied to proof that poverty survivors deserve assistance.
    1. Deserving vs. undeserving poor — for the love of God, here we go again
    2. deserving-vs-undeserving-poor
  4. Performance Poverty: Thanks to the combined efforts of politicians, Hollywood and authors like Charles Dickens, people in the USA have come to expect a very specific ‘show’ when they look for proof of poverty. Some expect to be entertained, others want proof that their investment of money and/or empathetic emotion is ‘worth it’ and, therefore, want a proper performance.
    1. Comparison arguments: This is frequently accompanied by non-logical comparison arguments like:
      1. “Look at these photos of poor people in Africa! Poor people in the USA are FAT, so they CAN’T be poor…not really.” The photos shown are invariably images of people surviving war, plague and/or drought, thereby leaving them so devoid of resources that their ribs are showing through their chest. All reasonable discussions about the realities of poverty in the USA are then dismissed because those people don’t ‘look poor.’
      2. Example: What is the biggest slum in the U.S.? There are American’s who answered this question with ‘they don’t exist here,’ and then proceeded to post photos of ‘real slums’ in other countries. These answers are then debunked by other Americans who proceed to post photos of slums here in the USA.
    2. Slum tourism – Wikipedia: Upper-class Americans are known to make entertainment out of poverty by traveling to other countries and gawking at the poverty survivors in those areas. It’s…unethical…to say the least. It’s also NOT restricted to international travel. It happens here in the USA.
    3. Tiny Tim (A Christmas Carol) – Wikipedia Every Christmas season local theater’s put on yet another performance of a Christmas Carol. There are old movies shown on TV and sometimes a new version is released. ONCE AGAIN the world watches as the poor are stomped on by Scrooge and yet, one particularly saintly and sickly child keeps his faith in both God and man, showing great generosity in his ability to extend forgiveness even to Scrooge – a fact which proves to be the tipping point for massive spiritual transformation within the old wicked miser. HURRAY! The Noble savage, in the form of a handicapped child without access to health care, has given proper service to the power-holding upper class by successfully transforming the man’s soul just in time for his death of old age! Americans of all ages leave the theaters filled with Holiday Cheer and a destructively erroneous image of the ‘deserving poor’ in the form of Tiny Tim, as well as an even more destructive storyline concerning the proper interaction between rich and poor. (No, I am not a fan of this story.)
  5. Service Trips: church groups, schools, and community organizations have a frustratingly common habit of taking groups of people (children, in particular) on service trips. Instead of examining and addressing poverty in their own city/town/neighborhood, they pile into a bus or a caravan of cars and go to some magical ‘poverty land,’ like the Appalachian mountains, where they help the ‘real poor.’ Now, just to be clear, poverty survivors exist in large numbers in the Appalachian mountains – the poverty in this region is VERY real (America’s poorest white town and Why Poverty Persists In Appalachia). I object the service trip culture because it presents and solidifies through action the idea that poverty ONLY exists in the Appalachian mountains or other well-known poverty-stricken regions. This directly and significantly contributes to the collective blindness the general public has towards poverty in the USA. It even has this weird way of convincing poverty survivors themselves that their own poverty is, at least partially, a figment of their own imagination because they don’t live in one of the recognized ‘poor areas.’ For example:  I may be homeless, but at least I don’t live in the Appalachian mountains – really???

-Originally posted on Quora in answer to the question: Do Americans care about their poor people?

Service Project Ideas: Helping the Homeless

If you really want to use your service project to help the homeless, then consider doing the following:

  1. Make a List About YOU: Make a list of all of the key characteristics that describe you, right now, as a person. Try to make it as exhaustive as possible.
    1. What categories do you fit into? For example: race, gender, religion, sexual identity, family situation (e.g.: kids, no kids, married, single), education level, health status (e.g.: healthy, diabetes, food allergies, disabled, etc.)
    2. Identify those categories that you think are most important during homelessness. For example: Diabetes is potentially deadly without proper diet and/or medical care, adult shelters will not take anyone under age 21, and caring for children while homeless is extremely difficult.
  2. Imagine Yourself Homeless: Picture yourself facing some catastrophic financial or physical emergency that leaves you instantly homeless right now. What would you do? Where would you go?
  3. Research: Do a little research and identify those resources that you would attempt to utilize in that situation.
  4. Make Contact: Contact those organizations and tell them you are looking for:
    1. Volunteer work to complete a service project.
    2. Opportunities to meet and work with people who are currently homeless and similar to yourself in a few key ways. Example short lists:
      1. 21 years old, female, no children.
      2. Over 50 with diabetes
      3. 35 years old, male, single parent, 3 kids
      4. 26 years old, lesbian, 2 dogs
  5. Listen: Let the organization tell you what they need help with and then do your best to provide assistance.
  6. Reflect: After a few weeks of volunteer work, sit down and re-imagine yourself homeless. Based on what you now know, what would you do? What are the dangers and challenges other people, just like you, are facing? Are any of those things particularly surprising? What is your biggest fear?

All of this will provide some real insight into what it feels like to be homeless AND the many unique and often maddeningly difficult challenges people surviving homelessness are forced to face.

Follow up that experience by pursuing some tools to help you make a positive impact on poverty and homelessness in the future:

  1. Social Justice: Take a social justice workshop (if you can) and pay particular attention to the justice issues faced by poverty survivors (homeless included).
  2. Mentoring/Internship: If you complete the first part of this plan and decide that you really want to do more – contact the non-profit and ask for a mentor or an internship. Getting to know people who’ve built a career out of fighting poverty and homelessness is far more important and useful than any number of textbooks, news articles, books, workshops, etc.
  3. Emergency Plan: If you were facing a serious emergency that would place you into a homeless situation, what would you do. Take some time with this, really identify the financial and physical needs that would have to be addressed. How can you plan for the worst right now? How can you face a catastrophic financial emergency and get through it? What is your plan? Keeping yourself out of homelessness is important! It’s extremely difficult to survive homelessness, much less combat it while trying to survive. It’s also important to remember…ALWAYS remember!…that anyone can experience homelessness at any time. Poverty is an equal opportunity employer.

-Originally posted to Quora in answer to the question: What can I do as a service project to help out the homeless?