What do you think?
Rate this book
The Persistence of Poverty: Why the Economics of the Well-Off Can't Help the Poor
In this important book, one of our boldest and most original thinkers charges that conventional explanations of poverty are mistaken, and that the anti-poverty policies built upon them are doomed to fail. Using science, history, fables, philosophical analysis, and common observation, Charles Karelis engages us and takes us to a deeper grasp of the link between consumption and satisfaction—and from there to a new and persuasive explanation of what keeps poor people poor. Above all, he shows how this fresh perspective can reinspire the long-stalled campaign against poverty.
208 pages, Hardcover
First published June 26, 2007
6 people are currently reading
233 people want to read
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 - 13 of 13 reviews
January 19, 2011
This unassuming little book (albeit with a strident subtitle) does something strange and convincing: convinces the world that the venerable law of diminishing marginal returns is ill-conceived and dead wrong. In particular, he demonstrates that during conditions of insufficiency or scarcity, some types of goods (what he calls "relievers" rather than "pleasers") exhibit behavior where each addition to consumption adds greater and greater benefits. His point in damn-near demolishing a central "law" of economics? To demonstrate that the supposedly irrational behavior of the poor -- refusing to work, gravitation to criminal behavior, refusal to moderate alcohol consumption, disdain for education -- is in fact rational, because their economic life involves primarily contact with goods that are relievers, not pleasers.
Kerelis' blunt and imaginative approach to the topic -- including a thorough rebuttal of standard objections at the end -- does seem intuitively correct, but when he trots out the graphs and rational-behavior models I ended up getting a bit cynical myself. Economic "laws" always struck me as suspect anyway, especially where human behavior is concerned. Still, from a public policy perspective, he does offer some very concrete proposals that make lots of rational sense. Which means they will never be enacted in the United States.
Kerelis' blunt and imaginative approach to the topic -- including a thorough rebuttal of standard objections at the end -- does seem intuitively correct, but when he trots out the graphs and rational-behavior models I ended up getting a bit cynical myself. Economic "laws" always struck me as suspect anyway, especially where human behavior is concerned. Still, from a public policy perspective, he does offer some very concrete proposals that make lots of rational sense. Which means they will never be enacted in the United States.
October 18, 2023
My high school AP Microeconomics teacher asked a volunteer to eat an entire bag of marshmellows. Mr. Potts had the student rate his enjoyment of each marshmellow on a 1-10 scale, with every new marshmellow getting a lower rating until the student asked to stop. A graph of his utility from each marshmellow demonstrated the economic law of diminishing marginal utility to the class. A rational individual makes decisions based on whatever maximizes their marginal utility. This is a bedrock principle of public policy, which this book asserts to be inapplicable below the poverty line.
People living in poverty in first-world countries make decisions about work, budgeting, and family planning that appear irrational to economists. The law of diminishing marginal utility indicates that a rational person balances their present and future selves, but the data collected by researchers document how the impoverished persistently and disproportionately prioritize the present moment, to their long-term detriment. Policy proposals from the left and the right both acknowledge this seemingly irrational behavior, but draw opposite conclusions about its cause.
Rightwingers blame the individual's bad choices, as well as a "culture of poverty" that causes or encourages dysfunctional behavior. Examples of this perspective are Black Rednecks and White Liberals; Coming Apart: The State of White America, 1960-2010; The Unheavenly City; and movies like The Florida Project.
Leftwingers counter, asserting that contemporary society is the dysfunctional actor. People on the bottom rung are either making the best of their limited opportunities, or are victims of the surrounding sociology. Examples I'm familiar with include MLK's Where Do We Go from Here: Chaos or Community?; The Alternative: Most of What You Believe About Poverty Is Wrong; The Corner: A Year in the Life of an Inner-City Neighborhood; and Joaquin Phoenix's Joker.
This book does not fit into either of these two major interpretive frameworks for explaining poverty. Instead, the author sets out to show how Mr. Potts' high school marshmellow experiment was incomplete, an "economics of the well-off." Karelis does this by categorizing our purchases and decisions as a mix of those that give us pleasure (marshmellows), and those that predominantly relieve negative emotions like boredom, stress, and pain. The conditions of living below the poverty line create a deep and persistent hole of negative emotions, and the desperate efforts of the poor to briefly relieve these psychological conditions can obviate the normal law of diminishing marginal utility. This has broad implications for how to craft effective policy reforms to reduce poverty.
In the 1960s, the socialist MLK and the libertarian Milton Friedman proposed that the government's "War on Poverty" should include a means-tested basic income, or as I like to call it, "Social Security for All." Reducing age of eligibility for Social Security benefits from our 60s to our 20s, while phasing out distributions as income level rises, would eliminate material poverty for every American citizen without also discouraging work or bankrupting the government (see Charles Murray's In Our Hands: A Plan to Replace the Welfare State for the details). This bipartisan idyll was recently resuscitated by Andrew Yang, as well as the brief experiment with a means-tested basic income for every American during the coronavirus pandemic. A $1200 check and an additional $600/month in unemployment benefits did wonders for relieving poverty during the lockdown. I believe the positive data from further experiments by governments and nonprofits that give cash with few or no strings attached will eventually bring about a widespread adoption of basic income programs. This book offers an explanation of why the behavior of people in poverty will more closely align with the rest of society once a basic income sets a floor to their material conditions. - July 2020
People living in poverty in first-world countries make decisions about work, budgeting, and family planning that appear irrational to economists. The law of diminishing marginal utility indicates that a rational person balances their present and future selves, but the data collected by researchers document how the impoverished persistently and disproportionately prioritize the present moment, to their long-term detriment. Policy proposals from the left and the right both acknowledge this seemingly irrational behavior, but draw opposite conclusions about its cause.
Rightwingers blame the individual's bad choices, as well as a "culture of poverty" that causes or encourages dysfunctional behavior. Examples of this perspective are Black Rednecks and White Liberals; Coming Apart: The State of White America, 1960-2010; The Unheavenly City; and movies like The Florida Project.
Leftwingers counter, asserting that contemporary society is the dysfunctional actor. People on the bottom rung are either making the best of their limited opportunities, or are victims of the surrounding sociology. Examples I'm familiar with include MLK's Where Do We Go from Here: Chaos or Community?; The Alternative: Most of What You Believe About Poverty Is Wrong; The Corner: A Year in the Life of an Inner-City Neighborhood; and Joaquin Phoenix's Joker.
This book does not fit into either of these two major interpretive frameworks for explaining poverty. Instead, the author sets out to show how Mr. Potts' high school marshmellow experiment was incomplete, an "economics of the well-off." Karelis does this by categorizing our purchases and decisions as a mix of those that give us pleasure (marshmellows), and those that predominantly relieve negative emotions like boredom, stress, and pain. The conditions of living below the poverty line create a deep and persistent hole of negative emotions, and the desperate efforts of the poor to briefly relieve these psychological conditions can obviate the normal law of diminishing marginal utility. This has broad implications for how to craft effective policy reforms to reduce poverty.
In the 1960s, the socialist MLK and the libertarian Milton Friedman proposed that the government's "War on Poverty" should include a means-tested basic income, or as I like to call it, "Social Security for All." Reducing age of eligibility for Social Security benefits from our 60s to our 20s, while phasing out distributions as income level rises, would eliminate material poverty for every American citizen without also discouraging work or bankrupting the government (see Charles Murray's In Our Hands: A Plan to Replace the Welfare State for the details). This bipartisan idyll was recently resuscitated by Andrew Yang, as well as the brief experiment with a means-tested basic income for every American during the coronavirus pandemic. A $1200 check and an additional $600/month in unemployment benefits did wonders for relieving poverty during the lockdown. I believe the positive data from further experiments by governments and nonprofits that give cash with few or no strings attached will eventually bring about a widespread adoption of basic income programs. This book offers an explanation of why the behavior of people in poverty will more closely align with the rest of society once a basic income sets a floor to their material conditions. - July 2020
January 5, 2009
A fascinating book that made me think hard and often. What made the book so thought-provoking is that, if true, the main argument turns much of the conventional thinking on poverty policy on its head. It significantly changed my thinking on poverty. I don't know if the author is correct, but I will be looking for evidence one way or the other for a long time.
The basic point is that consumption to relieve misery is qualitatively different than consumption meant give pleasure (exhibiting increasing rather than diminishing marginal utility). The implications of this are that many self-destructive behaviors of the poor (for example, not working or not saving money) are not "irrational" or the sign of a mental defect, but are instead a natural, happiness-maximizing response to a miserable situation--a reaction that almost anyone would have in the same situation. The policy implications are that we shouldn't worry so much about perverse incentives created by helping the poor, and that we can spend a lot more relieving poverty-related misery without fear of creating perverse incentives.
Bonus: the book was short (~165 pages), well organized, and clearly written.
The basic point is that consumption to relieve misery is qualitatively different than consumption meant give pleasure (exhibiting increasing rather than diminishing marginal utility). The implications of this are that many self-destructive behaviors of the poor (for example, not working or not saving money) are not "irrational" or the sign of a mental defect, but are instead a natural, happiness-maximizing response to a miserable situation--a reaction that almost anyone would have in the same situation. The policy implications are that we shouldn't worry so much about perverse incentives created by helping the poor, and that we can spend a lot more relieving poverty-related misery without fear of creating perverse incentives.
Bonus: the book was short (~165 pages), well organized, and clearly written.
September 16, 2017
Using common sense and philosophy to argue for a different way of thinking through economic models? Necessary.
November 7, 2009
I agree that this is an important book, helping to explain why poor people tend to do five things that help keep them poor: not working at paying jobs, not saving, not pursuing education, drinking to excess, and taking risks with the law. Through thoughtful introspection and careful logic, Karelis reframes conventional economic thinking to establish a framework in which those choices are rational for people with incomes less than sufficient for meeting basic needs. The final chapter, "Economic Justice Reconsidered" is particularly thought-provoking. Karelis manages to do all of this and more in an elegant and stylish little book.
The one place I would fault him in his reliance on a utilitarian viewpoint to think about aggregate welfare for society. While this framework may be the best we can do--I think I would go along with that--there is a lot of controversy about utilitarianism. It's pretty easy to convince yourself that there are NO aggregate welfare functions that are completely satisfactory once you start studying the subject.
The one place I would fault him in his reliance on a utilitarian viewpoint to think about aggregate welfare for society. While this framework may be the best we can do--I think I would go along with that--there is a lot of controversy about utilitarianism. It's pretty easy to convince yourself that there are NO aggregate welfare functions that are completely satisfactory once you start studying the subject.
May 1, 2010
Although it has its flaws, The Persistence of Poverty is a highly interesting book. Its premise is that there are conditions where the Law of Diminishing Returns is violated, and these are exactly the conditions that the poor face. In essence, they are trapped in a potential well which is difficult to escape. He further divides goods into different subtypes, depending on the velocity of their marginal utility (as a function of wealth). It's very interesting, and certainly very plausible.
The problem is that there's no empirical evidence anywhere in the book, except for an old Greek myth. He even seems hostile to any sense of positivism, and dismisses the one bit of relevant evidence (classic experiments by Kahneman and Tversky) because they contradict his findings.
Overall it is good armchair philosophy, and worth thinking about. It's great that they offer rebuttals to specific criticisms because, even though the rebuttals aren't always persuasive, they get you to think even more. And that's what this book should be about.
The problem is that there's no empirical evidence anywhere in the book, except for an old Greek myth. He even seems hostile to any sense of positivism, and dismisses the one bit of relevant evidence (classic experiments by Kahneman and Tversky) because they contradict his findings.
Overall it is good armchair philosophy, and worth thinking about. It's great that they offer rebuttals to specific criticisms because, even though the rebuttals aren't always persuasive, they get you to think even more. And that's what this book should be about.
July 21, 2008
Compact and to the point. It takes on the many notions that people have about poverty and why so many poor people seem unable to get out of that status and posists some new approaches to considering the problem. Most of the ideas seem like things I would have imagined most people already thought--that the old conceptions are still so prevalent that a book like this seems like a set of new ideas is an unfortunate statement about how terribly misguided and inconsiderate this nation that believes itself so Christian has become.
October 15, 2009
A revolutionary premise tediously presented, The Persistence of Poverty felt like a slog and a half even at a slim 163 pages of text. I guess the endless jargon, impenetrable graphs, and interruptive appendices were necessary to fully rebut the sacrosanct economic presumptions he was tackling - but that's cold comfort to the lay reader. You can get the gist in this summary by Steven Pearlstein in the Washington Post.
October 17, 2012
Fascinating read for anyone who has ever wondered why the poor behave in a manner that is not self-serving (Ex: Why don't the poor work more if more income would improve their situation). Karelis makes a strong argument of how to treat the poor and explains the behavior of the impoverished in our country.
November 12, 2008
Great book with an astounding fundamental premise - that the economic law of diminishing marginal returns is incorrect. Lays out a strong argument for redefining it, and while it doesn't offer much in terms of practical advice, it's a very interesting concept to explore.
March 14, 2011
I couldn't get through it. Hope to try another book...similar theme... more engaging.
March 1, 2012
A clear compact discussion between economic theory, real world evidence, and policy. This is how people should argue.
May 7, 2013
Interesting, but heavy on economic theory
Displaying 1 - 13 of 13 reviews