2007–2008 New Perspectives in Social Policy Seminar
IRP's annual New Perspectives in Social Policy seminar series seeks to reach beyond familiar and well-explored fields of poverty research, to challenge accepted paradigms, and to open paths to new research models and methodologies. The series was launched in 2006, to mark the Institute's 40th anniversary.
The 2007–2008 New Perspectives in Social Policy lecture was delivered April 3, 2008, by Charles Karelis, Research Professor of Philosophy, The George Washington University, and author of the book The Persistence of Poverty: Why the Economics of the Well-Off Can't Help the Poor (Yale University Press, 2007). Daniel M. Hausman, Herbert A. Simon Professor of Philosophy, UW–Madison, served as the respondent.
The Persistence of Poverty
Charles Karelis, Research Professor of Philosophy, The George
Respondent: Daniel M. Hausman, Herbert A. Simon Professor of Philosophy, UW–Madison
Thursday, April 3, 2008
12:15-1:30, 8417 Social Science Building
"The reformers are in the middle of the wrong debate about poverty," asserts Charles Karelis, research professor of philosophy at George Washington University, in his 2007 book The Persistence of Poverty: Why the Economics of the Well-Off Can't Help the Poor.
Why the wrong debate? Karelis says that the contentious choice between antipoverty policy that preserves work incentives and policy that guarantees income is not a choice that has to be made. He argues that both should remain in the antipoverty policy arsenal (while conceding that a return to “no-strings” cash assistance is “politically improbable”).
Karelis builds his case by arguing that standard microeconomic theory mistakenly assumes that giving people more income will reduce their willingness to work. Karelis counters that this is true only above a society’s broadly accepted level of income sufficiency (his idea of the income level appropriate for the poverty threshold). It is a difference, he argues, between income as a reliever and income as a pleaser; a small additional income for a person way below the poverty line will not be perceived as of much value because the person has so many other needs. Only if the person is closer to the income sufficiency threshold will it make sense for him or her to work more hours for a small increment in income.
Karelis uses a bee sting analogy to illustrate his point. If you give a person with six bee stings a dab of ointment to put on one of the stings, his discomfort will not noticeably decline because he still has five stings. The person is not likely to sacrifice leisure time or some other good in order to obtain the dab. On the other hand, once you have given the person five dabs, the sixth will be perceived as the most valuable—and the most worthy of sacrifice—because it will make him pain-free.
Just so could function, for example, an expanded earned income tax credit that brought low-wage workers closer to a sufficiency threshold, thus making work (and the sacrifice of leisure time that work entails) seem worthwhile. In other words, according to Karelis’ argument, government cash assistance that brings people just up to the level of sufficiency (not beyond it) will actually increase, not reduce, their work effort.