Friday, December 13, 2013

One Case of Homelessness

By now you've probably seen Tom Corley's list of twenty habits of the rich, compared to those of the poor. Corley studied 233 wealthy people and 128 poor people, and surveyed their habits over a period of five years. The list outlines the behavioral differences between the rich (67% of whom exercise aerobically 4 times a week, for example) and the poor (only 3% of whom make their children volunteer for 10 hours a month or more).

It's not great when I let someone else's writing bother me, but for some reason this list did. It's likely my politics getting in the way again. I've also heard some defenses of Corley's research, claiming he is simply talking about correlation and not causation. And that's a reasonable defense. But I also know that the author's point was not to list a series of interesting correlations, but then immediately caution readers that no one should infer that those actions had bearing on those people becoming wealthy or poor. The author's desired conclusion was not for readers to think, "Hey, that's interesting - but clearly we should not conclude that poor people might improve their lot if they changed their habits." In fact, it was the opposite. As Corley states in his interview with Dave Ramsey, "If you have good daily success habits, or 'rich habits'...you are going to be successful; if you have more poverty habits then rich habits, you are going to be poor. It's really not that complicated." That's a clear argument for causation.

Recently my wife sent me a story about one man's struggle with poverty and homelessness, and I thought it provided an interesting insight. Rather than a sweeping observation of classes of people, it is an autobiography of one college grad's brief period of misfortune that resulted in him having no place to live. Before going on, I'd ask that you please read the short article here.

Article Summary
The author documents how after moving to Montana for an AmeriCorps job, he came home after a week of working outside the city to find his belongings packed in boxes in the garage. His roommate's rent checks had be bouncing, and their landlord didn't make any mention of this until he came with eviction papers. The story then documents the surprisingly high costs of being homeless, from commuting costs (having to drive out of town in order to sleep in his car), to food costs (without a refrigerator, his food went bad), to housing (as going to a shelter early enough to get a bed required him to leave work early and jeopardize his job). Every so often, a large portion of his salary would go to renting a hotel room, just so he could shower. While it was expensive, it made him presentable enough to keep his job, allowed him to go to the library without sticking out, and improved his success rate when he asked friends to sleep on their couch again. The story certainly takes a turn as he documents how, with very little money but too much time, he starts doing drugs. It is interesting to note he started using after becoming homeless, to kill time, rather than it being a root cause to his homelessness. Eventually he took a chance at a new locale by moving to Seattle, where he has been housed ever since.

I have two main takeaways from this story. One, homelessness affects a wider group of people than I originally thought (e.g. - 39% of homeless are under 18). And two, once homeless, there are a multitude of financial and logistical complications that make it difficult to improve your lot. It is harder to eat healthy food once you no longer have a refrigerator. It is harder to leverage relationships for favors or better employment when you do not have regular access to showers. It's harder to maintain employment when dealing with the realization that you are right on the edge of disaster.

Now, I should note that this is a poor counterpoint to Corley's list because it is a case study on a questionable website, and Corley's list is based on years of surveys. And even though there is some obvious overlap, poverty is not the same thing as homelessness. But what I took away from the article is that, just as there are with the homeless, there are likely obstacles that make it difficult to get ahead once you find you are in poverty. I imagine it is more difficult to eat healthy food when the nearest grocery store that contains produce is two bus rides away. I imagine that long term self-improvement is harder if your focus is directed towards short term financial crises.

And just as economists might hope that giving money to poor people is a silver bullet that, in one motion, would solve the myriad problems of the poor, my guess is that Corley also believes he's stumbled upon a grand unifying theory of wealth and poverty: our habits determine our financial status. Want to solve poverty? Get better habits. As always, the real solution is probably going to be more complicated.


*Photo is from D.C.Atty at Flickr Creative Commons.

34 comments:

  1. If I remember Corley's study correctly, his sample was criticized somewhat. However, I still liked the takeaway from the listing, not so much as a scientific study, but just ways to try to live your life. Homelessness effects more than what can be seen, and laws meant to drive the homeless out of a town end up perpetuating the problem. It's a really nasty cycle, and this is one of the few times per year that people seem to think about the homeless as people and not just a problem. Additionally, its a lot easier to behave as the wealthy do when you are wealthy, but I do think bad habits create bad results. Like you said, it's a complicated problem with a complicated solution.

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    1. That's a thoughtful response, Ryan. I do believe habits have an impact on our situation, but after hearing the interview with Corley I don't think it's nearly as simple as he portrays it. When he says "It's not that complicated" and that simply changing habits will cause you to be wealthy, I think it's a little dangerous to espouse that idea, especially when he has a platform like Ramsey's.

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    2. A worthy debate DB40 on poverty, homelessness and all that entails.

      But to frame Corley's arguments I believe we have to look at his target audience.

      I don't think he is marketing his book to poor people and saying "why don't you just do this and you will no longer be poor". His target audience is no doubt middle class folk who do have the resources to change their habits to get ahead but are currently choosing not to use them or are unaware of their potential. In that case he is not doing anything so much different to your blog or mine for that matter?
      Frugal habits, educating yourself on tac and investing, ring any bells? :)

      Agreed that the sales pitch is a little cruder but that was the gist I took from it. (Disclosure: I haven't listened to the audio part though so apologies if that's where things got really bad!)

      Cheers as always for a thought provoking post.

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    3. Thanks for the thoughtful comment, FIREstarter. I wouldn't say the interview was bad or anything. Though it is interesting that Corley stated the reason he wrote the book was to "bridge that gap between the rich households...and the poor households". It's likely though that this statement might have been made just because it sounds good, and his target audience may indeed be middle class people with the means to improve their habits.

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  2. Perhaps it's in the book, but I'm curious to know why he surveyed almost double the amount of wealthy versus poor (maybe that might have affected the results had it been equal amounts, though I know nothing about statistical significance). While not homeless, I grew up pretty poor, and from my observations way back when, I do agree it's a bit challenging to get 'a step ahead' to practice rich habits when survival needs need to be taken care of (Dear Debt actually wrote a post with something to this effect earlier this week). I'll have to look into Corley's habits and think about it some more, but I suppose if there's 'awareness' of what these habits are, then maybe it can have a positive effect (I mean, at least with the exercise example, that just seems beneficial all-around, you know?).

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    1. I wondered the same thing, Anna. I think there's a possible selection bias, too, since he's likely talking to people that he identifies as poor and who self-identify as poor.

      I'll go check out that post by Dear Debt as well. And I do agree about the exercise -- that has to help in a lot of areas. But, like everything, it's no silver bullet.

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  3. I'm suprised that he came to that conclusion and stated it on the interview. Maybe it's just because I've been listening to too many Freakonomics podcasts, but it seems like their are other variables that are self reinforcing. For example the health food vs junk food. Junk food is cheaper and so the poor are more likely to buy it. The poor would be more likely to be working jobs that involve standing on your feet all day as opposed to sitting in a chair. One would think you would be less likely to go running after being on your feet for 8+ hours. I think those things need to be studied deeper so they can be eliminated from the data.

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    1. Can you ever listen to too many Freakonomics podcasts, Micro?

      I completely agree about understanding the context of those habits. It's possible that the habits are likely the consequence of wealth or poverty, rather than a root cause.

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  4. You should read the new book out by mullainathan and Shafir called scarcity. It has real science in it.

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    1. Nicole & Maggie,

      I read the overview of that book and it sounds like a great one (and probably a book rich with subjects for more blog posts). I'll be going by the library soon to get a copy. Thank you for the suggestion!

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  5. You know... issues of poverty are very complicated, and it's SOOOO easy for someone on the outside looking in to say "well, why don't they just do xyz." I keep thinking about a young woman who worked for us at the music school. She came from a poor family but was working hard to change her situation... she was taking classes at the local community college, she was holding down a job, and she was a bright kid.

    Anyhow, at some point in her recent past her mother (who apparently had bad credit) had talked her into co-signing on a loan for a car. This was her mother's car... not her car (she had to take the bus across town to get to work and school). Her mother had defaulted on the loan, but since she was the co-signer, and the only one of the two who had a job, they came after her. Long story short, they garnished her already small wages, so her take home pay went from tiny to ridiculous. She stuck it out for a few months but finally had to quit because she just couldn't afford to work 30 hours per week for practically no money.

    I'm not sure what happened to her. I think she was gonna try to make ends meet doing odd jobs that she could get paid for in cash because any "real job" that she got she'd just be back in the same situation. I just think it's one more example of how complicated the issues of poverty are, and how people can get totally destroyed through no fault of their own. I suppose one could argue that she should have refused to co-sign the loan, but really, how many 20 year olds would either understand the risk they were taking or be able to say no to their own mothers? The whole thing just makes me really, really sad.

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    1. That story outlines the sort of thing I'm talking about, EcoCatLady. Regardless of who's to 'blame' for the car loan, it illustrates the difficulties that face someone once she is in that situation. The incentives are backwards: traditional work (with the opportunity for raises, promotions, and looks good on a resume) now pays less than under the table work (which likely has a negative impact on future employment).

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  6. Best to have been poor for a while to appreciate what it really means. Hotel space by-the-day is indeed expensive.

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    1. Hi, 101 Centavos. I've never been poor so it might have been better for me to steer clear of the subject, but, you know, I never did have a good filter. :)

      I liked your post on changing demographics of America's rural areas, too. Cheers.

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  7. I think the line between the homeless and everyone else was certainly thinner when the recession hit. Suddenly we were hearing about middle class people losing their homes and having to live in tent villages. I think that's when people went, "whoa, could this happen to me?" I do have levels where I consider myself broke even though I'm not really. Funds that I do not want to touch unless the shit really hit the fan, and by then time yes, I would begrudgingly move in with one of my parents till I got back on my feet again, but my pride would seriously suffer. And I think sometimes it hard to motivate when you feel you lost everything and your pride is shattered. I think it makes me a lot more sympathetic to anyone who is homeless.

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    1. Good point, Tonya. Some of the numbers I heard about the people living in tent villages were shocking.

      I'd like to think that the space I have between us and the street is simply the result of my hard work and saving. While that's part of the story, a lot of it is just dumb luck. We moved here from San Diego in 2009 with no job prospects and very little money. I struggled to find work for a couple months, and finally got recruited by a head hunter for a temporary office job that lasted a whole 3 months! I then worked as a teacher for a little while ($30k salary...woot!) and finally got a permanent procurement job offer from the company I temped at. That got us settled and on our feet so Mrs. DB40 could go to school and we could pay tuition as we needed.

      But things could have turned out very differently if we didn't get those jobs early on. We got lucky in 2009.

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  8. Most poor people just don't have the resources and connection to do better. Mrs. RB40 spent some time with poorer friends this trip and it's hard. They are just so busy surviving that they don't have time and energy to improve their lives.
    That Corley's article just has too many % in it to be meaningful.

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    1. You said it better than I could, Joe. People who are busy surviving have a lot on their plate already. It's always hypothetically possible for an individual to still find a way to network and improve herself in the midst of that, and those stories are good to hear. But I don't know if bootstrapping is a viable solution for everyone in poverty.

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  9. I don't know what else to say other than amen. The habits are not causal. The man on the streets opened up my eyes to a whole new world of issues I hadn't even considered for homeless people. And that whole concept can absolutely be paralleled to finding yourself if poverty. It's easy to get richer when you've got assets. It's harder to pay rent each month that goes by when you're struggling.

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    1. Thanks, femmefrugality. That man's story was eye opening to me, too. Those issues of commuting & food costs and the difficulty of using your network of friends once you're homeless were surprising to me, but they do make sense.

      I get the feeling that Corley's habits might be the result of becoming rich or poor,rather than the cause. After you move up the hierarchy of needs, I think your efforts naturally might flow to building better connections with others, focusing on exercising and eating well, etc.

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  10. How great it would have been if becoming rich is just a matter of having the right habits. But then there is more to it than just that for sure.

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    1. Agreed, Jen. I know 'it's complicated' is not as satisfying response to poverty but I prefer that to the simplification that Corley presents.

      Also, sorry for not stopping by the blog but my site isn't properly getting ahold of your RSS feed. This happened with another blog I follow, and I'm trying to figure it out. But, anyway, thanks for commenting as it reminds me that I haven't seen the update on my blogroll...

      Cheers.

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  11. From "Think and Act Anew: How Poverty in America Affects Us All," Who are “the poor?”

    1. they cannot afford housing that is clean, safe, and in good repair;
    2. they cannot afford nutritious food for themselves and their family on a regular basis;
    3. they cannot consistently pay their utility bills even though it is a priority;
    4. their children are not adequately clothed for school with clean clothes that fit and are in good repair, and they do not have proper clothing for work;
    5. they cannot afford to go to the doctor for any kind of illness for fear that the visit will be beyond their means to pay for it.

    I would say it's a little more than just attitude.

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    1. That's the second really interesting book suggestion in this thread. Thanks, Bryce! It's on my list now.

      Number 5 and number 3 on the list seem like tremendous obstacles (though they all are certainly necessities that make it very hard to work on those habits noted in Corley's list). But I could see the psychological hardship from being sick and not being able to do anything about it, or simply not being able to keep the heat or lights on, to be things that would keep me from being able to concentrate on anything else whatsoever.

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  12. I can't imagine having an issue happen that would leave me homeless and not having friends or family take me in. Even in cities where I don't know many people, there's always a relationship to be made with someone who will help.

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    1. Hi Stephanie,

      I think in most cases (and in the author's), there are usually going to be friends to stay with for a while. But I can also imagine there's a time in which someone's generosity might run out.

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  13. I had back surgery in my early 20's. As a result, I wasn't able to work for several months. My parents took me in during that time but I've always wondered where I would've gone had I not had that safety net.

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    1. Hi Holly. I've had similar periods of unemployment and have gotten lucky breaks during those times. I found the article's statistics on homelessness typically being a short term situation to be interesting. It seems like it's usually the result of a period of really bad luck.

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  14. Excellent post, DB40. Having grown up very, very poor, I can see both sides. I love Tom Corley's stuff, but how much does he really know, never having been there? That being said, having been dirt poor, and having worked with lots of dirt poor people, they do often look to instant gratification solutions instead of long term solutions. This is their own fault, but when you're wading in sh_t, it's kind of all-consuming and can be difficult to focus on the nice, sandy beach on the other side of many, many months of running the marathon out of poverty. We've learned this in our own journey from massive amounts of debt to on our way to debt free. We started the year with a DTI of 65%. Every move in the right direction was a huge struggle, but now, after a year, the race is getting a bit easier to run. I think that's the key: if you can make it through the really, really tough parts on the road to a better life, you can probably make it to the finish line

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    1. Thanks for that really thoughtful comment, Laurie. I am in the same boat as Corley, having never been truly poor but sitting here commenting on it. I figure if I'm going to speak out of ignorance, I might as well be sympathetic and let me heart bleed a little.

      I like your concept of a tipping point: once you make a certain amount of progress, I wonder if the rest of the race becomes easier to deal with.

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  15. Before I met my wife, I was much more of the opinion that in general people were able to make what they want out of their life. I still think that's true a lot of the time, but my wife has spent a lot of time working at substance abuse recovery centers and there are TONS of stories of people who are dealt incredibly bad hands in life. I think there's very little that's totally insurmountable, but I also think it's pretty easy to think that America is the land of limitless opportunity when you haven't faced any real obstacles.

    In the case of habits, I think it's probably true that there are some habits that are generally good and some that are generally bad. But I don't think it's as simple as doing good things and avoiding bad ones. There's more too it than that, but of course nuance doesn't sell books.

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    1. I feel the same way, Matt. I do think personal choices and habits obviously play a large role in the results you'll see; and very little is insurmountable, as you say. But I also need to remember the ridiculously cushy environment and circumstances I have compared to those of people around me, and acknowledge the probability that I wouldn't have good habits or have made as many good choices if I faced more difficulty.

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  16. I think people should be responsible for their own choices but I realize that sh*t happens all the time and we people should be mindful of that too. Some people have it a lot easier than others and its not fair for those people to judge others when they have never suffered for anything. All I know is to work hard and save as much as possible so that I can be prepared for MOST of what can happen in life.

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    1. That really is all any of us can do, DATG. We can do our best and hope for the best.

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