Research Paper

For my research paper I am going to explore the relationship between urban development and poverty rates in associated areas.  I plan on looking at major cities in the United States to see how their populations have changed in the past half century and how their poverty rates have changed.  My question is: does urban development have an effect on poverty in those developing areas?

Thesis: Population growth in urban areas has a negative effect on poverty rates.  As urban areas become more developed a greater number of people in those areas become poor due to job competition and over crowding.  

This is an important topic to look at because in some areas poverty is a huge problem.  If a relationship were found between urban development and poverty then there may be a possibility to implement policies to aid the problem.  Poverty is something that drastically affects many people in this country and if policy makers could find some of the sources that cause poverty they could perhaps do more to combat it.  Researching this specific relationship is one of the ways that policy makers can begin to see what sort of things causes poverty to increase and possibly generate new policies to help prevent poverty.  

I chose this topic because I know that there are many things that cause poverty.  However, I wanted to explore one specific thing that might cause poverty to increase.  I did some research in one of my other classes about poverty in relation to health.  I found that, typically, there are actually more poor people in rural areas than in urban ones, which I found interesting. I also found that the poor in rural areas are worse off than the poor in urban settings. So, this made me want to see if I could find a relationship between growth in urban areas and an increase in the respective poverty rates.

As I mentioned, there are many things that affect poverty.  I believe that urban development is one of them but I realize there are so many other things that come into play as well that I may have a hard time controlling for.  For example, people who are born into poverty and people who move into cities and are already poor which increases both development and poverty rates. Also there may be general aspects of urban life that force people into poverty other than job competition or overcrowding.  I am using a website that allows you to select any city in America and see statistics including population size and poverty over the years.  I am hoping that this and other resources will provide me with enough information to fully and accurately see a connection between urban development and poverty rates. 

Why do drug dealers still live with their moms?

In chapter 3 of Freakonomics the authors discuss the business of dealing crack cocaine.  They review data and evidence collected by a student who spent years living with, studying, and researching a gang of drug dealers in Chicago.  The title of the chapter asks the question, "why do drug dealers still live with their moms?" Most people assume that those who deal drugs would make enough money to live on their own, especially those who deal with a large gang such as the Black Gangster Disciple Nation that the authors discuss in the chapter.  The authors argue that contrary to popular belief, most drug dealers do not make very much money and, as a result, live with their parents out of necessity.  They find that only those at the very top of the gang make a substantial living selling drugs.  Those who are doing all the leg work and actual selling of the drugs, barely make any money doing so.  The authors make the argument that dealing drugs, within a gang at least, is only a lucrative business if you are close to the top and in charge. If you are not an authority figure, then you likely will still live at home with your mother. 

Though much of the chapter consists of anecdotal and factual evidence to tell the story of what life of a drug dealer is like, the authors do point to some of the spreadsheets that they acquired directly from the gang to show their levels of income.  Four statistics that they provide are:
p. 102 how much a leader of a gang makes on a monthly basis, p. 103 how much workers under the leader make on a monthly basis, p. 102 the number of members in that specific gang, p. 105 statistics on the area in Chicago in which the gang members resided.

On page 102, the authors state that the leader, J.T. had a monthly net income of $8,500 which translates to a $102,000 a year salary, tax-free.  The authors use this statistic as a way of illustrating their point that those at the upper levels of a gang do make a lot of money and can earn enough to live very comfortably.  This statistic is presented before all other income levels of gang members are presented as a way of leading the reader on to further wonder why do drug dealers live with their moms if they're making this much money. However, the authors then reveal on the next page that the officers who work for J.T. make $7 an hour and the foot soldiers make $3.30 and hour which is less than minimum wage.  This brings the authors point to light that most drug dealers do not make much money which forces them to live with their mothers.  A wage of $3.30 an hour is well below minimum wage and is not a livable wage whatsoever which is why many of the drug dealers still live at home.

The authors also show the statistic of how many people are actually in the gang.  Again, on page 102 they state that there are 120 bosses whom are paid very well and 5,300 people working under them.  This statistic is used to show the huge number of people that are affiliated with the gang and why it is not possible to pay that much people such high "salaries".  The authors then compared the game of drug dealing to that of professional sports, acting, and artists.  There's a large number of people competing but only a very small number, 2.2% in this case, make it big.  The authors compare the low level drug dealers who are earning very little to a high school athlete aspiring to reach the pros.  So, this statistic is used to show both how little most drug dealers are paid and how many drug dealers there are out there which makes it easy to see why so many of them would be living at home rather than lavish lifestyles.  By presenting this statistic first and then comparing it to professional sports it makes it easier to realize the situation of many drug dealers that are competing to try and make it to the top.

Lastly, the authors present many statistics on page 105 of the circumstances in which the people from J.T.'s area live in.  They say that 56% of children live below the poverty line, compared to the national average of 18%; 78% are from single-parent households; and the median income for the neighborhood is $15, 000 a year which is well less than half that of the national average.  By presenting this statistic last, the authors make it clear why anyone would ever choose to sell drugs and only make $3.30 an hour.  Since the economic conditions in the neighborhood are so terrible, being a drug dealer, though it doesn't pay well, has a certain stigma attached to it.  For kids growing up in this area, drug dealing is a cool thing to do and provides hopes of making a lot of money - though most barely make any.  So, from these statistics we see why someone would choose to work a job with such little pay.  Not only may it be one of the only opportunities available to them, but it also attaches to them a label of being in a gang which is something that people in that neighborhood value very highly.

The authors use these and other statistics to illustrate their point that though there are many drug dealers that make a lot of money, the vast majority barely make any and are forced to live with their parents and get other jobs to make ends meet.  I found this chapter very interesting.  I was actually fascinated to learn that gangs were so organized especially with respects to keeping track of their finances.  It is interesting to know that even those drug dealers who are affiliated with and sell for a gang are still relatively low-level dealers who do not profit very much from their activity.

Assignment #2

In chapter 3 of Poor Economics the authors discuss the idea of a health-based poverty trap in many third-world countries that they have studied.  They conduct research and experiments on the health care systems and the health of citizens in eighteen developing countries. From this research, the authors argue that though there are medicines and treatments available, as well as incentives, to these people, they do not always seize the opportunity to utilize them.  Much like the hunger issue that the authors discussed in the previous chapter, it seems as if the poor in these countries are not taking advantage of what is available to them and not taking actions that are in their best interests.  As a result of people not taking advantage of what is available to them, they remain unhealthy or sick and may not be able to better their situations at all.  The authors point to many data and statistics that they have found to help show that there are efforts being made to provide these people with medical help but they are not always willing to take advantage of it. 

One statistic that the authors provide shows that many people in Zambia do not purchase Chlorin, a product used to purify water.  They say that for $.18, a bottle of Chlorin can be purchased which will last a month and will help to clean up the drinking water.  If the water is cleaned with this bleach it can reduce diarrhea in young children up to 48%.  Despite the low price of Chlorin and the drastic effects it can have, only 10% of the population uses the product.  It is not, as the authors point out, for a lack of knowledge about the product; when asked, 98% of the people were able to name Chlorin as a water sanitizer.  Even when an experiment was conducted to reduce the price of Chlorin and see how it affected peoples purchasing habits, there was still one quarter of the population that would not buy the product.

The authors introduce these statistics both as numerical and anecdotal evidence to support their argument that people in poor countries do not take advantage of resources that can improve their health despite huge incentives.  They tell how even with the reductions in price there was still a large chunk of the population that chose not to buy Chlorin.  Through this statistic the authors are able to show that even though there were incentives to buy this product that could benefit them, people were still unwilling to do so.  I think this is one of the best statistics and stories that they provide in the chapter to reinforce their argument.  The price of Chlorin was reduced to $.07 and would last them a month, however 25% of the population did not purchase it.  This shows that there is at least some truth in what the authors say about people not taking advantage of what seems like readily available and accessible resources that are shown to improve health. 

This statistic does seem realistic to me because they did an experiment to see if price was what was holding people back from buying the product.  They found that though there was a large increase in the number of people who bought Chlorin after the discount was offered, there were still many people who did not.  What I would ask is what are the reasons for those who chose not to buy it? Maybe they did not have young children who would greatly benefit from the product. Perhaps they never suffered from diarrhea and didn't feel the need to purchase Chlorin.  I think there could be many reasons why 25% of the population did not purchase Chlorin and the authors did not really go into that at all.  I think it would have been interesting to somehow conduct a survey of the people who do not use Chlorin for their water and ask why they don't.  Also, comparing the health of those who do and do not use Chlorin would also have been an interesting thing to do.  However, it was a good statistic to help illustrate the point that there are cheap resources available that some people choose not to use.

Assignment #1

Chapter 2 of Poor Economics looks at the relationship between malnutrition and the ability to perform at a job and be a productive worker.  The chapter focuses on poor countries which often have trouble getting as many nutrients as they need in their diets.  The topics they discuss were aroused by the announcement made in 2009 by the UN Food and Agriculture Organization which said that there were more than a billion people in the world suffering from hunger.  They discussed the notion of a "poverty trap" which is essentially a predicament many poor people find themselves in when they cannot afford to eat enough food which leaves them unproductive and unable to pull themselves out of poverty.  Malnutrition is the root of the poverty trap which keeps many people in poverty in poor parts of the world.  The authors look at what effects increases in incomes has on peoples food consumption.  The assumption is that with more money people will buy more food and consequently become more productive and be lifted out of poverty.  However, they found that many people choose to buy better tasting and quality food rather than buying more food which has no impact on how much nutrition they are receiving.  Also, people elect to purchase luxury goods such as cell phones, televisions, and DVD players with any extra income because of the utility they get from these goods.  Nourishment as an infant and young child, they found, has been associated with greater health and success later in life because it allows you to reach your full physical and intellectual potential.  The better you eat in your early years, the authors say, the more productive you can be as an adult and hopefully avoid the hunger-based poverty trap.  In the end they conclude that much of the food policy is focused on providing cheaper grain for people; however, they argue that it is not necessarily cheaper grain that will remedy the problem, it is more nutritious foods and investments in nutrition that will help the poor become more healthy. 

The hunger-based poverty trap that the authors discuss is the idea that people who are malnourished are unproductive and therefore remain poor.  The authors look to several anecdotes to help explain how people can be caught in this poverty trap.  One man that they studied had lost his job as an agricultural laborer and was too old to begin a new job in construction.  Without any income his family was forced to split up just to survive.  He now lives off the help of his brother and the little food he can get for himself.  The man attributed the fact that no one would hire him to not having enough food and therefore not being a useful worker. 

The authors also reference their numerical data that they collected in their eighteen-country study to illustrate the problem of the nutrition-based poverty trap.  They stated that in these countries food accounted for about 50 percent of of consumption.  Other consumption by the people in these countries was devoted to "luxury" goods such as alcohol, cigarettes, parties, and televisions.  They found that because those people were living in such bad conditions, having something such as a party or television that could make them happy was extremely important to them.  One man even stated that the television was more important to him than food. The authors found that many people in poor countries chose to purchase luxury items rather than food with income that they had available to them which left many of them under nourished.  And, when they do choose to spend additional income on food, it is spent mostly on better food rather than more food. The authors use the data and statistics collected from this study, along with anecdotal evidence, to show that many people do get trapped in poverty due to a lack of nutrition in their diets which results in an inability to be productive. 

I believe that the theory of a hunger-based poverty trap makes perfect sense, however I am not sure if it is the sole factor in why people remain poor.  I do think that the evidence they provide certainly suggests that a lack of food has profound effects on ones' well-being and ability to be production.  But, there are many other reasons why people remain in poverty.  In many of the countries that they studied there are not as many opportunities to become wealthy, especially for those who live in rural areas in which agricultural labor may be the only option for work.  Also, the poor have a harder time moving from place to place which results in them literally being stuck in one location in some cases.  So, even though malnutrition greatly effects people, it is only one piece of what keeps people in the so called "poverty trap".