Scott Beaulier and I argue that behavioral economics explains a lot about poverty; indeed, the poor deviate from neoclassical assumptions to an unusually large degree.  Consider, for example, the fact that the poor are far more likely to be single, even though being single is an expensive luxury. 

Law professor Amy Wax has a nice piece on poverty and the family that coheres well with a behavioral economics of poverty.  Wax’s main building block is the distinction between local and global choice, but it’s easy to interpret her story through a behavioral lens.  Here are some highlights from her “Diverging Family Structure and ‘Rational’ Behavior: The Decline in Marriage As a Disorder of Choice.”

Her strategy:

[M]y model rejects the notion that group disparities can be explained by positing a unitary “rational” response to the peculiar circumstances confronting distinct sociodemographic groups. Instead of linking choices directly to external conditions (either economic of social), this model turns inward to examine modes of thought and action that inform the decisionmaking process… The proposed explanation does not turn on external conditions, but looks to what is going on in people’s heads. How people think about costs and benefits – specifically as they relate to sexual and related conduct bearing on the quality of interpersonal relationships – is what matters most.

The “crummy boyfriend” problem:

[T]he single mothers the authors interview complain most consistently about their male partners’ infidelity, which often leads to the birth of children outside the relationship. But infidelity is only one factor impeding the formation of lasting unions. The women also describe a range of other shortcomings, including poor impulse control, violence, financial
profligacy, drug use, and poor work effort. These women’s observations strongly suggest that their failure to marry, despite a professed desire to do so, is a function of their men’s anti-social behavior – what Edin and Kefalas dub the “crummy boyfriend” problem.

…It can be argued that what makes boyfriends crummy is a tendency to think locally. The decision to engage in many of the complained-of behaviors would appear to involve a tradeoff between satisfying immediate desires and securing long-term benefits. The choices may minimize costs in the short run, but often wreak destruction in the long run.

Behavioral econ and contraceptive use:

One key behavior that affects reproductive patterns is the effective use of contraception. Although the failure to use birth control may not directly undermine relationship stability, conscientious contraception is critical to reducing out of wedlock childbearing. The evidence suggests that differential patterns of contraceptive use, with resulting variations in rates of extramarital pregnancy, are an important component of observed race and class differentials in extramarital childbearing… Because effective contraception requires anticipating the long-term costs of unprotected sex, groups that think globally can be expected to use control fertility more effectively and conscientiously, and those that think locally less so.

What went wrong:

[T]hese developments are best understood as the product of moral deregulation. The rise of individualism in the wake of sexual liberation weakened the moral and institutional conventions that dominated before the 1960s. The sexual mores embodied in these conventions were designed to guide most people to stable choices. By establishing “simple rules for simple people”… these strictures functioned not so much by encouraging global thinking as such, but by obviating the need to think, or to think very much, about family formation and sexual choice. Rather, all that was necessary was to follow the script, and the script was simple.

This makes sense as far as it goes, but I say that a lot of the “moral deregulation” wouldn’t have happened if the welfare state wasn’t around to foot the bill for irresponsible behavior.  Remember my critique of Charles Murray?

Imagine the welfare state were completely abolished.  Does Murray really
think that this wouldn’t make it considerably harder for lazy men to
sponge off the women in their lives?  Convince a lot of men to swallow
their pride and take a low-wage job?  Change the way that women look at a
macho but habitually unemployed man?  And that’s only the short-run
impact.  In the medium-run, what’s socially typical changes what’s
socially acceptable.  Murray has been wisely saying so for decades.  Why
on earth should he fatalistically assume that this interaction only
moves in one direction?

I say this works equally well for Wax.  If the welfare state were completely abolished, unprotected unmarried sex would immediately be a lot scarier.  And in the medium-run, what’s socially typical changes what’s socially acceptable.  When more of their peers delay child-bearing until marriage, even kids who ignore incentives will revise their behavior out of sheer conformity.

Will the whole process take decades?  Then we’d better get started today.