American Enterprise Institute
2 HN recommenders · recommended in 4 months, 2014–2024
18:10 · 37K views · Jul 10, 2014
Megan McArdle's AEI Vision Talk 'Capital and Poverty' argues that social and financial capital work differently in low-income communities, and that this explains barriers to reaching the middle class.
Cited to explain why poor people's seemingly irrational financial decisions can rationally protect their social safety net.
4 comments from Hacker News
> This reflects a false belief that people who live in poor neighborhoods are less compassionate. In fact research suggests that people living in poverty tend to be more compassionate towards each other than rich people are toward the impoverished. It's comforting for wealthier people to hold this belief, because it makes us feel less bad about our own lack of compassion. From what I recall, its less that the poor are more compassionate, instead they participate in _reciprocal altruism_ as a form of insurance against further loss. I remember this talk this video -- poor people make seemingly dumb decisions because if they don't help their social network when it comes knocking, they're in effect _cutting themselves off_ from said network. The middle class is more insulated from this effect because those with emergency savings don't often need to borrow $500 because of a broken car or need to house their recently homeless sister and children, so capital can accumulate more easily.
A different theory is that some people value social capital above other forms of capital and that can be a rational thing to do: this video
For readers jumping to the comments: Any surplus went into the social capital (dowry etc), distributing it inside the countryside as non-fungible untaxable wealth. Putting a year's saving or even surplus into easily transportable goods like money would be a really dumb thing to do, as it was incredibly risky (dumb) thing to do. The author links to a talk on how this still plays a role in poor communities today: this video
> There's something I remember being told (or maybe read about too) I heard it from a youtube video this video