Cognitive effects of poverty

A new paper by Anandi Mani, Sendhil Mullainathan, Eldar Shafir, and Jiaying Zhao shows some pretty profound effects of poverty on cognition and decision making. The paper says that poverty is equivalent to pulling all-nighters in terms of its effect on your ability to perform routine tasks and make good decisions. It reminded me of a conversation I had with Mark Hecker, director of Reach, Inc., a nonprofit working on literacy in DC, about children who’ve been abused. He asked me to think about that feeling of indigence and anger that shoots up when someone bumps into you. It’s startling, difficult to process, and affects everything we do next. Children who’ve suffered abuse feel that way all the time, which puts additional stress on them to make good decisions, to concentrate in school, and more.

It’s a good reminder that putting ourselves in someone else’ shoes is often impossible; someone who has grown up middle class never worrying about money is not going to approach large expenditures the same way that someone who grew up poor will. Analyzing decision making of poor and disadvantaged individuals is subject to so many more constraints that we realize.

The social safety net: Attitudes and values

The Pew Global Forum highlights a hefty paper by some folks at the New America Foundation (.pdf here) today on Americans’ attitudes towards the social safety net. There are enough facts in it that trying to summarize it here would be futile, but you can probably guess the results. Americans are less supportive of programs for the poor than their European counterparts. One of the most striking revelations is how much Republican support for taking care of those who cannot take care of themselves has declined, since the Reagan administration, but perhaps more interesting, since the end of the George W. Bush administration. Somehow, being in the biggest recession that most of us can remember led those who identify as Republicans to think we should support the poor less.

I won’t say I’m not baffled.

Though the study does not go into it, part of this likely has to do with the increased distaste for the national debt, a war that is raging in Congress right now with little end in sight. I’m not going to enter that fray or even link to the madness because I think it’s ludicrous and irresponsible, but you can google “debt ceiling” and see for yourself, if you like.

Reading the Pew survey reminded me of a conversation I had with my dad about Social Security. He’s eligible to collect benefits and is trying to decide whether to get on the rolls now or wait. He’s afraid that means testing will be implemented and then he will not be eligible, but starting to collect also means that he will not be able to work one or two days a week as he has done since he retired. Means testing turns Social Security into one of the programs for people who cannot take care of themselves, and if Pew is right, support for it will dramatically drop. Many of my father’s generation seem to be of the mindset that “I paid into Social Security; it’s my right to collect,” while many of my generation see a small chance of Social Security existing into the future (rightly or wrongly), and perhaps have tended to write off that portion of our incomes.

There is a lot more in the NAF report about the intersection of value and attitudes. It is worth a read.

Jobs, poverty and teen child-bearing

Several weeks ago, I printed out an NBER working paper on teen childbearing by Melissa Schettini Kearney and Phillip B. Levine. I had every intention of reading it then, but it just wasn’t going to happen at the end of this totally crazy semester. Since then, a few things forced my hand. I finished the semester (yay for surviving my first year of professoring!), the paper has been accepted for publication in the Journal of Economic Perspectives, Matt Yglesias put together a nice little review of the article in Slate, and a friend emailed me rather incensed by Yglesias’ review. From a quick scan of the JEP version, it doesn’t appear too much different from the NBER version, but my comments refer to the NBER version.

Yglesias’ review presents Kearney and Levine’s research as novel and surprising, but I think that misses the point. While the authors do a good job of aggregating statistics from several data sources and findings from different papers, the primary contribution of this paper is not novel, but rather confirming what we already know: that teen pregnancy is higher in the US than other places and; that poverty likely causes teen pregnancy more than teen pregnancy causes poverty. Past studies, cited in the paper, have shown that teen pregnancy has little to no effect on outcomes when you control for poverty, or within-family characteristics, and in some cases, may even result in better outcomes than if the teen hadn’t become pregnant. This is a significant theme in Edin and Kefalas’ ethnographic study, Promises I Can Keep, which I discussed here, and other research in fields such as sociology and demography.

Ultimately, the economics community thought it was an important paper as it went to a very prominent journal, but I really just see it as a good synthesis of what we know.

In related, and I think more exciting research, the link between poverty and teen child-bearing may be even tighter than suggested Kearney and Levine’s paper, though not in the way that the Kearney and Levine paper posit. A working paper by three Duke Sanford professors, Elizabeth Oltmans Ananat, Christina Gibson-Davis, and Anna Gassman-Pines examines the link between job losses and teen pregnancy.

I’m so predictable. I love this paper because even the anticipation of poverty, or joblessness, more specifically, predicts teen pregnancy rates. The authors show that when mass layoffs are announced in a North Carolina (before the layoffs actually occur), that county sees a subsequent corresponding reduction of births to teenagers in that county, but only for Black teenagers. The mechanism appear through both reduced pregnancy rates and reduced birth rates, which suggests that teens are both practicing safer sex and having more abortions when job prospects in their counties suddenly become dimmer.

There were a few places I thought the paper could improve, and the first one is my primary concern. Even though the authors find a statistically significant effect, I’m curious about the mechanism for how this affects teenagers. What evidence is there to show that teenagers would be affected by these job losses? Why aren’t they just in school and ignoring them? Initial information about their education level, school attendance, when they enter the workforce, etc, would be useful, to sell the story. I think the age and education of teens would be a big factor here. Wouldn’t you see a bigger effect for teens closer to graduation? Or a smaller effect in counties where teens are more likely to go to college (say wealthy Orange county, where Chapel Hill is located)?

The ability of inhabitants to migrate and commute is also problematic and suggests a (you guessed it!) spatial auto-correlation issue that I imagine is present. The authors claim they are underestimating the effects of job losses by ignoring migration and spillovers, but I wonder whether there are spillover effects that could be estimated through job loss in surrounding counties, rather than just say it’s a lower bound. Also, if spatial auto-correlation is present, that’s going to affect the standard errors, not just bias the estimates.
A minor, but I think incredibly important interesting, result is that the job losses also resulted in fewer black mothers reporting a father’s name on the birth certificate. The magnitude of the effect is approximately half of the effect of that on the pregnancy rate itself, which is pretty large. I think this result actually goes a long way towards answering my first question: Why do we think teenagers would be affected by this? If the story is that teens are being more careful about sex or having more abortions when their job prospects are low, is it really their own unemployment they fear, or also their partner’s? Teenage parents are less likely to be married than their older counterparts, so who is supporting them through their pregnancy? Paying for prenatal visits? Do teens feel they’re going to be working and raising their children? My own work shows that black mothers at any age are more likely to receive a promise of financial support and Edin & Kefalas suggest that the promise is key to the marginal have a baby (or at least stop trying not to have one) for mothers of low socio-economic status. I think this relationship could be teased out a little more.
All in all, it’s a good read, and presents an interesting counterpoint to the Levine and Kearney paper. L&K say poverty causes teen pregnancy, but the Duke paper says that teens are responsive to future job prospects, and respond by delaying (or at least trying to avoid) childbearing.
At first glance, the papers might seem incongruous, but it’s really a stock versus flows kind of issue. Other things equal, teenagers in poverty are more likely to become pregnant early due to a host of factors, but they still plan and have an idea about how they will care for the child. When that plan is disrupted, it appears it can affect some teens’ decision to bear children, on the margin.

Anticipating divorce

This Journal of Human Resources paper by Elizabeth Ananat and Guy Michaels is a few years old now, but as I’m readying my first dissertation chapter for submission, I’ve been reading up and reminding myself of various literatures and it seemed appropriate. Ananat and Michaels present an intuitive, causal story for how divorce causes women to live in poverty. It seems pretty straightforward: the break-up of a marriage means women are less likely to live in a household without income from someone else, but also that women work to compensate for such income losses by going back to work, moving in with siblings, etc.

Divorce increases the probability of living in a household without other earners. In fact, we estimate that breakup of the first marriage significantly increases the likelihood that a woman lives in a household with less than $5,000 of annual income from others—the likelihood rises from just over 5 percent for those whose first marriage is intact to nearly 50 percent for those whose first marriage breaks up. However, women can and do respond to income loss from divorce by combining with other households, through paths including remarriage or moving in with a roommate, sibling, or parents. Moreover, women further compensate through private (for example, alimony and child support) and public (for example, welfare) transfers, and by increasing their own labor supply.

I use the same logic to say that as long as she has some idea that the divorce (or union dissolution in my case as I include unmarried couples) is imminent, a woman should make compensatory decisions regarding the future loss of income, not just the immediate loss of income.

E.O. Ananat with Guy Michaels. “The Effect of Marital Breakup on the Income and Poverty of Women with Children.Journal of Human Resources 43.3 (2008): 611-629.

Welfare reform and desperation

This weekend’s NYT has a report on the status of welfare recipients in the recession. The consensus, it seems, is that things aren’t going so well.

The poor people who were dropped from cash assistance here, mostly single mothers, talk with surprising openness about the desperate, and sometimes illegal, ways they make ends meet. They have sold food stamps, sold blood, skipped meals, shoplifted, doubled up with friends, scavenged trash bins for bottles and cans and returned to relationships with violent partners — all with children in tow.

I thought that selling sex was a rather obvious omission from this list. Even without it, though, it’s a rather depressing read.

Breastfeeding Follow-up

After Saturday’s post about breastfeeding, Katina sent me a link to a recent blog post on the history of marketing formula and some recent legal changes, which I believe are for South Africa, concerning how formula can be marketed. It’s a bit long, but it is an interesting read. In particular, Sarah Emily’s post echoes the story I was told on Saturday:

This isn’t to suggest that women should have their choices about how they feed their babies curtailed – or that it’s only advertising which causes women to choose to use baby formula. Far from it. The problem, though, is that, particularly in poor nations, advertising or other promotional methods encourage breastfeeding mothers to switch to baby formula when it’s unlikely that they’ll be able to afford to buy more formula, and where they may dilute formula with too much water to make it go further. This water may not be clean, and it’s difficult to keep bottles and teats sterile without electricity or plumbing.

So, not only is the nutritional value of the formula decreased through dilution, but the risk of water-borne diseases is elevated.

During the question and answer session following my talk on Saturday, many women expressed concern at the very low average durations of breastfeeding in my sample, about 3 and a half months. Some people wanted to say this was so different than the norm in the rest of the world, but Sarah Emily suggests it’s not:

The cause for these new regulations and other measures introduced internationally to encourage mothers to breastfeed for the first six months of life, is a concern that rates of breastfeeding remain low in comparison to what they were during the early twentieth century. For all the good that the Code and other laws have done, it remains the exception, rather than the rule, for women to breastfeed for such an extended period of time.

She also has a great old advertisement. My only caveat to add would be that while supporting breastfeeding as a healthy choice for mothers and babies is important, it’s also critical that we not demonize women who simply cannot breastfeed. Supplying those women with formula and reducing the stigma there is important, just as it is important to create more accepting spaces for mothers to breastfeed their children.