MEMOS TO THE COUNCIL OF BEHAVIORAL-ECONOMICS ADVISORS
†
A Behavioral-Economics View of Poverty
By
M
ARIANNE
B
ERTRAND
,S
ENDHIL
M
ULLAINATHAN
,
AND
E
LDAR
S
HAFIR
*
Standard theorizing about poverty falls into
two camps. Social scientists regard the behav-
iors of the economically disadvantaged either as
calculated adaptations to prevailing circum-
stances or as emanating from a unique “culture
of poverty,” rife with deviant values. The first
camp presumes that people are highly rational,
that they hold coherent and justified beliefs and
pursue their goals effectively, without mistakes,
and with no need for help. The second camp
attributes to the poor a variety of psychological
and attitudinal short-fallings that render their
views often misguided and their choices falli-
ble, leaving them in need of paternalistic
guidance.