Thinking About Economics And Poverty Policy. What is the Problem? Old Age Insurance (Social...
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Transcript of Thinking About Economics And Poverty Policy. What is the Problem? Old Age Insurance (Social...
Thinking About Economics And Poverty Policy
What is the Problem?
Old Age Insurance (Social Security)
O People living longer, are unable to work, and are unable to take care of themselves
O Families unable to take care of their elders
O State and localities forced to provide care- costs were increasing
Social Security Act
of 1935
What is the Problem?
Unemployment Compensation
O Great Depression resulted in millions out of work, from no fault of their own
O No safety net for those workers
O Government (Federal and State) forced to provide benefits because of employer practices
Social Security Act
of 1935
What is the Problem?
Aid to Dependent Children (ADC)
O High rates of poverty among children
O Piecemeal private charities not helping the issue
Social Security Act
of 1935
What is the Problem?
AFDC (Aid to Families with Dependent Children) becomes TANF (Temporary Aid to Needy Families
O Culture of dependency
O High case loads = Increasing costs to states and federal government
Welfare Reform of
1996
Lack of congruence
between policy (aka intervention or solution) and
the problem
Thinking Through The Problem of Poverty With Economics In Mind
Utility“Individuals seek to maximize their own
utility, which is a similar concept to happiness, only broader” (Wheelan, 2010, p. 6)
O How does this concept apply to people in poverty?O Poor people are not supposed to engage in
maximizing their utilityO Trade off utility now for benefits later
O How does this concept apply to some of the policies currently in place?O Lack of choice (housing options, job
opportunities)O Sacrifice utility in order to receive benefit
Incentives Matter!O Is there an incentive to keep people in poverty?
O How does poverty help the economy?O Are we part of the problem?
O If one of the causes of poverty is lack of equality (equal access), would equality create additional problems?O Lack of innovation (e.g. universal
healthcare)O How are incentives used in existing policies?O Do our policies create any disincentives?
Cliff Effect
