Monday, April 07, 2008

Does analyzing poverty require a new economics?

I hate economics. I did very well in it in high school, and when forced to deal with it in college. But I simply hate dealing with it. Mostly because economists want us to treat it like a science - on the order of physics or chemistry - when in actuality it is an extension of psychology. Economists hate it when I say it, but they know it is true.

One problem which has defied classical economic analysis is poverty. Why do people who are poor tend to stay poor and have children who stay poor? This despite the many counterexamples from American society where people have "pulled themselves up by their bootstraps." Now, one economist claims to have the answer. For the rich, economics is all about managing scarcity. For the poor, it is all about dealing with the most urgent problem first, which may or may have anything to do with scarcity.


I am not sure I buy the argument exactly, but it certainly forces us to take a new look at poverty.

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