Chapter 1 – View of Inequality and Poverty
1. Introduction
• This chapter sets the tone and themes for the book. While the U.S. (which will be the main country
that we’ll be looking at) is a rich country, there are substantial variations in the distribution of income
and a large number of people who are classified as poor.
• There are three competing explanations for the existence of poverty in the U.S.:
1. Flawed Character ("it's their own fault")
2. Restricted Opportunity (weak economy, poor schools, discrimination), and
3. Big Brother ("the government, as usual, screwed it up")
• If we wish to reduce poverty, the appropriate policies will depend on which of the three explanations
one views as the cause. A brief history of competing theories and policy is provided in the textbook;
please do make an effort to go over that section.
• A big part of the first chapter is devoted to conceptual issues of defining inequality and poverty. With
inequality, for example, income needs to be distinguished from wealth. The time frame of measurement
(transitory/short run or permanent/long run) is also relevant. The amount of public goods and services
provided and the concept of social equality are also involved. Inequality thus turns out to be a complex
subject that is difficult to operationalize.
• When going over the text, keep an eye out for the italicized terms above. Try to find out what they
mean.
2.
Key chapter takeaway – The Three General Causes of Poverty
• Before you even begin reading the textbook, ask yourselves "why are people poor?"
Spend at least 10-15 minutes trying to think about why some people are poor while some others are
rich. Try to jot down what you think could be some reasons behind poverty – perhaps it’s simply a
matter of luck i.e. you’re born to a poor family? Perhaps you’re born to a medium-income family but you
end up not doing well for yourself? Why could that be? Then read the text.
• As briefly mentioned above Schiller presents three theories of poverty: Flawed Character, Restricted
Opportunity and Big Brother. Who is to blame for poverty depends on which view we accept;
respectively: the poor themselves are responsible (under the flawed character view), a deficient
opportunity structure of our society is responsible (under restricted opportunity view), and the
government is responsible for creating poverty (under the big brother view).
• Similarly, the policy cures for poverty will reflect one's choice of cause. Historically, society's views
have ebbed and flowed between the different theories as well as the extent of poverty. On the one
hand, Herbert Hoover in 1929 said:" We in America are nearer to the final triumph over poverty than
ever before."
And just 8 years later, Franklin D. Roosevelt noted: "But here is the challenge to our democracy. In this
nation, I see tens of millions of its citizens - a substantial part of its whole population - who at this very
moment are denied the greater part of what the very lowest standards of today call the necessities of
life."
3. For more on “Flawed Character”
• Writers such as Steven Malanga of the Manhattan Institute for Policy Research seem to suggest flawed
character is more the cause of poverty than restricted opportunity. One of his articles was titled “The
truth about poverty: bad choices, not a bad economy, are to blame.” You can check it out if you are
interested or have the time.
• Other things to keep in mind:
o Political Persuasion
Our view of the "correct" cause of poverty may correlate with our politics. The flawed character
argument is popular with the Republicans (conservatives).Restricted opportunities are often a concern
of Democrats (liberals). Big brother would be the cause highlighted by libertarians. For the purpose of
this course, try not to let your political biases affect your reasoning. Try to treat the topics that we are
going to be learning about somewhat dispassionately for objectivity’s sake. Also remember that these
causes are not necessarily mutually exclusive.
• Financial Well-Being
Try to think of what contributes to one’s financial well-being. Income is certainly one item. And we are
definitely going to talk a lot more about income in the subsequent chapters. However, wealth and
social/public goods would be others.
Debt and other obligations might also be listed as factors vital for one’s financial well-being. Therefore,
keep on thinking about these other factors and what role they play in perpetuating/ameliorating
poverty.
Web Links
1. The Manhattan Institute is a Conservative think tank focusing on the flawed character and big
brother hypotheses.
https://www.manhattan-institute.org
2. The Heritage Foundation is a conservative think tank with a wide number of reports and articles
on poverty, inequality, and policy outcomes related to them. The Cato Institute is a libertarian
think-tank that tends to lean more on the Big Brother hypothesis than Heritage.
https://www.heritage.org/poverty-and-inequality
https://www.cato.org/research/poverty-social-welfare
3. The Roosevelt Institute is a progressive think-tank that leans more to the Left.
http://rooseveltinstitute.org/
4. Child Poverty and other course topics are considered at the National Center for Children in
Poverty.
http://www.nccp.org/
5. A Gallup Poll on how Americans view the importance of poverty compared to other issues.
http://news.gallup.com/poll/207521/worry-hunger-homelessness-lower-income.aspx
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Discussion Rubric
Rubric: I will be grading on four things: (1) citation of the readings and outside sources, (2) whether or
not the questions were addressed, (3) originality in response, (4) if they are responding to another
student, how did they respond to the original response instead of talking past them
(1) Students will be expected to properly cite both the weekly reading and an outside source. This
source can be a book, news article, or even a personal experience. I want to see evidence that they've at
least engaged with the reading on some level, not only that they've read it, but thought about how they
could connect what they've learned with something else in their experience.
0 points for no sources,
1 Citing both in a superficial manner. They might mention a statistic, but don't explain its significance
with relation to the question,
2 Citing both sources properly and using facts presented to build and defend their point.
(2) Students will have to answer the questions fully. By this I mean, they must address each part of the
question, and not just address part of it.
0 Talks past the original post, posting something that isn't relevant,
0.5 Gives a lazy or nonsubstantive answer. An example would be, "I agree/disagree" without defending
their argument in any substantive manner. Makes assertions without backing them up
1 Makes substantive point that address the question but don't dig that deeply into the question, the
premises behind it, or show interest in the material
2 Makes substantive, insightful points that show a deep understanding of the material, effort on the
poster's point. Shows that the student engaged with the weekly reading.
(3) I don't want students to just repeat each other. I want them to dig for unique answers to the
question
0-1 Largely regurgitates statements made by others or the main reading. Doesn't show much
independent thought
2 Brings in differing, nuanced perspective to material, that others may not have considered.
(4) Response
Students will have to respond to other students, and their responses will largely be graded on the above
points, and they'll be expected to actually respond to other students and not just talk past them.
Students will have to respond to two other posts. They can respond to the original post in a thread or to
responses to that post. The grade will be the average of the two responses.
Discussion Rubric
Rubric: I will be grading on four things: (1) citation of the readings and outside sources, (2) whether or
not the questions were addressed, (3) originality in response, (4) if they are responding to another
student, how did they respond to the original response instead of talking past them
(1) Students will be expected to properly cite both the weekly reading and an outside source. This
source can be a book, news article, or even a personal experience. I want to see evidence that they've at
least engaged with the reading on some level, not only that they've read it, but thought about how they
could connect what they've learned with something else in their experience.
0 points for no sources,
1 Citing both in a superficial manner. They might mention a statistic, but don't explain its significance
with relation to the question,
2 Citing both sources properly and using facts presented to build and defend their point.
(2) Students will have to answer the questions fully. By this I mean, they must address each part of the
question, and not just address part of it.
0 Talks past the original post, posting something that isn't relevant,
0.5 Gives a lazy or nonsubstantive answer. An example would be, "I agree/disagree" without defending
their argument in any substantive manner. Makes assertions without backing them up
1 Makes substantive point that address the question but don't dig that deeply into the question, the
premises behind it, or show interest in the material
2 Makes substantive, insightful points that show a deep understanding of the material, effort on the
poster's point. Shows that the student engaged with the weekly reading.
(3) I don't want students to just repeat each other. I want them to dig for unique answers to the
question
0-1 Largely regurgitates statements made by others or the main reading. Doesn't show much
independent thought
2 Brings in differing, nuanced perspective to material, that others may not have considered.
(4) Response
Students will have to respond to other students, and their responses will largely be graded on the above
points, and they'll be expected to actually respond to other students and not just talk past them.
Students will have to respond to two other posts. They can respond to the original post in a thread or to
responses to that post. The grade will be the average of the two responses.
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Chapter 1 – View of Inequality and Poverty
1. Introduction
• This chapter sets the tone and themes for the book. While the U.S. (which will be the main country
that we’ll be looking at) is a rich country, there are substantial variations in the distribution of income
and a large number of people who are classified as poor.
• There are three competing explanations for the existence of poverty in the U.S.:
1. Flawed Character ("it's their own fault")
2. Restricted Opportunity (weak economy, poor schools, discrimination), and
3. Big Brother ("the government, as usual, screwed it up")
• If we wish to reduce poverty, the appropriate policies will depend on which of the three explanations
one views as the cause. A brief history of competing theories and policy is provided in the textbook;
please do make an effort to go over that section.
• A big part of the first chapter is devoted to conceptual issues of defining inequality and poverty. With
inequality, for example, income needs to be distinguished from wealth. The time frame of measurement
(transitory/short run or permanent/long run) is also relevant. The amount of public goods and services
provided and the concept of social equality are also involved. Inequality thus turns out to be a complex
subject that is difficult to operationalize.
• When going over the text, keep an eye out for the italicized terms above. Try to find out what they
mean.
2.
Key chapter takeaway – The Three General Causes of Poverty
• Before you even begin reading the textbook, ask yourselves "why are people poor?"
Spend at least 10-15 minutes trying to think about why some people are poor while some others are
rich. Try to jot down what you think could be some reasons behind poverty – perhaps it’s simply a
matter of luck i.e. you’re born to a poor family? Perhaps you’re born to a medium-income family but you
end up not doing well for yourself? Why could that be? Then read the text.
• As briefly mentioned above Schiller presents three theories of poverty: Flawed Character, Restricted
Opportunity and Big Brother. Who is to blame for poverty depends on which view we accept;
respectively: the poor themselves are responsible (under the flawed character view), a deficient
opportunity structure of our society is responsible (under restricted opportunity view), and the
government is responsible for creating poverty (under the big brother view).
• Similarly, the policy cures for poverty will reflect one's choice of cause. Historically, society's views
have ebbed and flowed between the different theories as well as the extent of poverty. On the one
hand, Herbert Hoover in 1929 said:" We in America are nearer to the final triumph over poverty than
ever before."
And just 8 years later, Franklin D. Roosevelt noted: "But here is the challenge to our democracy. In this
nation, I see tens of millions of its citizens - a substantial part of its whole population - who at this very
moment are denied the greater part of what the very lowest standards of today call the necessities of
life."
3. For more on “Flawed Character”
• Writers such as Steven Malanga of the Manhattan Institute for Policy Research seem to suggest flawed
character is more the cause of poverty than restricted opportunity. One of his articles was titled “The
truth about poverty: bad choices, not a bad economy, are to blame.” You can check it out if you are
interested or have the time.
• Other things to keep in mind:
o Political Persuasion
Our view of the "correct" cause of poverty may correlate with our politics. The flawed character
argument is popular with the Republicans (conservatives).Restricted opportunities are often a concern
of Democrats (liberals). Big brother would be the cause highlighted by libertarians. For the purpose of
this course, try not to let your political biases affect your reasoning. Try to treat the topics that we are
going to be learning about somewhat dispassionately for objectivity’s sake. Also remember that these
causes are not necessarily mutually exclusive.
• Financial Well-Being
Try to think of what contributes to one’s financial well-being. Income is certainly one item. And we are
definitely going to talk a lot more about income in the subsequent chapters. However, wealth and
social/public goods would be others.
Debt and other obligations might also be listed as factors vital for one’s financial well-being. Therefore,
keep on thinking about these other factors and what role they play in perpetuating/ameliorating
poverty.
Web Links
1. The Manhattan Institute is a Conservative think tank focusing on the flawed character and big
brother hypotheses.
https://www.manhattan-institute.org
2. The Heritage Foundation is a conservative think tank with a wide number of reports and articles
on poverty, inequality, and policy outcomes related to them. The Cato Institute is a libertarian
think-tank that tends to lean more on the Big Brother hypothesis than Heritage.
https://www.heritage.org/poverty-and-inequality
https://www.cato.org/research/poverty-social-welfare
3. The Roosevelt Institute is a progressive think-tank that leans more to the Left.
http://rooseveltinstitute.org/
4. Child Poverty and other course topics are considered at the National Center for Children in
Poverty.
http://www.nccp.org/
5. A Gallup Poll on how Americans view the importance of poverty compared to other issues.
http://news.gallup.com/poll/207521/worry-hunger-homelessness-lower-income.aspx
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