Designing for Scarcity: A Behavioral Approach to Two-Generation Strategies with Poverty Interrupted

It's easy to agree that poverty is a problem, but explaining its causes and prescribing solutions is a far more difficult and complex task. What if children born into poverty were as likely to succeed as their wealthier peers? What if intergenerational poverty were not an unavoidable and enduring evil, but entirely tractable?

These are the challenging questions that ideas42, a unique social enterprise that uses insights from behavioral economics to address tough social problems, is seeking to answer with a new initiative called Poverty Interrupted. By combining effective program design with behavioral insights drawn from the cognitive effects of scarcity, Poverty Interrupted aims to end intergenerational poverty for families with young children. Currently in the research and design phase, Poverty Interrupted will identify behavioral barriers that are preventing better outcomes for people in poverty. Once identified, the findings of this research will be used to develop interventions designed to mitigate those obstacles.

Despite the efforts and expenditures of countless public and private organizations each year, poverty remains a severe problem in the United States. As of 2012, the relative poverty rate in America is 17.4%—well above the OECD average of 11.1% (OECD 2014). Beyond the inherent injustice of that statistic, it is also extremely expensive to society for low-income families to fail. The national cost of poverty—including both public spending and lost earnings—is estimated to be $500 billion per year, or nearly 4% of GDP (Holzer et al. 2007). Children are especially vulnerable; in 2012 more than 21% of Americans under 18 were living in poverty (OECD 2014). Most concerning of all, if current trends continue, many of these children will grow up to head low-income households of their own, and continue a cycle of intergenerational poverty.

Despite these disheartening facts and figures, ideas42 believes that emerging insights from behavioral economics offer hope. Central to the Poverty Interrupted initiative is the recognition that poverty presents inherent cognitive challenges that must be addressed before economic mobility can be achieved. Members of the project team will present initial findings and promising solutions at Prosperity Now's 2014 Asset Learning Conference in an interactive round table session titled Designing for Scarcity: A Behavioral Approach to Two-Generation Strategies on Wednesday, September 17 at 4pm.

The session will be framed by the concept of scarcity – exploring how a shortage of money, time and other important resources taxes our ability to make decisions, pay attention and exert self-control. This cognitive effect has significant implications for programs and policies that serve and support low-income families whose lives are marked by chronic scarcity. The Poverty Interrupted team will discuss breakthrough research on scarcity in behavioral economics and will allow participants a chance to identify drivers of scarcity in their own organizations and communities.

Join the session to learn more about Poverty Interrupted and the unique opportunity to combine ideas42's expertise in behaviorally-informed design with the existing knowledge in the poverty-fighting space to break the cycle of poverty for millions of people.

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