Why Some People Will Remain Poor

Why do some poor people stay poor?

It’s a question to which everyone appears to have an answer.

“Poor people are lazy.”

“Poor people are bad with money.”

“Poor people don’t have the money mindset.”

These assumptions are, at best, subjective and, at worst, demeaning. These arguments are flawed because they are based on small sample sizes rather than statistical studies. Even though I think that certain individuals are impoverished as a result of these events, there was little or no experimental research in this area until recently.

Researchers at the London School of Economics wrote a paper, “Why Do People Stay Poor?” earlier this year that demonstrated how a lack of preliminary wealth (rather than motivation or talent) is what continues to keep people in poverty. The researchers tested this theory by randomly distributing wealth (in the form of livestock) to female villagers in Bangladesh and then observing how that wealth transfer affected their future finances.

Their study clearly demonstrates that many poor people remain poor not because of their skill or ambition but because they are compelled to work in low-paying jobs in order to survive.

They are, in essence, trapped in poverty. This is a poverty trap in which their lack of funds prevents them from ever receiving training or investment to work in higher-paying jobs. You may be skeptical of these findings, but similar results have been discovered by experimental researchers who conducted random cash transfers in Africa.

The truth is that money breeds more money. We all know this to be true in making investments, but these scientific studies indicate that it is also true in the job market. Without economic means, people find it extremely difficult to acquire the necessary skills and training to advance. As a first-generation university student who was privileged enough to have their tuition paid for by a need-based scholarship, I agree.

This truth was brought home to me after learning of the recent death of famed actor Chadwick Boseman, best known for his role in Black Panther. Boseman, who did not come from a wealthy family, was able to attend Oxford’s Drama Academy thanks to a secret benefactor who turned out to be Denzel Washington.

That is the power of money. Not the flashy vehicles. Not the private jets. The mansions, not so much. But the ability to make a difference in someone’s life. Consider the cumulative impact of Washington’s gift on Boseman’s career and the world. Consider how Black Panther has inspired many young black children due to that gift.

This is why wealth has such a strong influence. Because it empowers people to make meaningful changes in their lives, whether purchasing a cow in Bangladesh or funding an acting scholarship in another country, wealth is a force of change.

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