Most people tacitly assume a more elaborate counter-factual

Wednesday, July 31st, 2019

Does burning your money make you poor?

Almost everyone responds, “Obviously.”  And in a sense, it is obvious.  If you take all your money and burn it, you’ll be hungry and homeless as a result.  QED.

In another sense, though, burning money might not change a thing.  How so?  Suppose if you don’t burn your money, you flush it down the toilet instead.  Empirical researchers who look will detect zero effect of burning money on your standard of living.  Why?  Because your Plan B is just as impoverishing as your Plan A.

As far as I know, no researcher bothers to study the connection between burning cash and living in poverty.  But researchers do study analogous issues, like: Does becoming a single mother lead to poverty?  At least according to some studies, once you adjust for preexisting characteristics, women who have kids out of wedlock are no poorer than women who don’t.

How is this even possible?  You have to think about what single moms would have done if they hadn’t gotten pregnant.  Maybe they would have just spent more time hanging out with irresponsible boyfriends and partying.  If so, researchers will detect no effect of single motherhood on poverty.

There’s nothing literally wrong with this result, but it is easily misinterpreted.  Key point: Most people who affirm that “Single motherhood causes poverty” tacitly assume a more elaborate counter-factual.  Something like: “Continuously working full-time without getting pregnant.”  And if that’s the counter-factual, “Single motherhood causes poverty” is almost as undeniable as “Burning money makes you poor.”  Empirical research can and occasionally does disprove common sense.  But more often empirical research just addresses a different but superficially similar question.


  1. Kirk says:

    It’s yet another example of the correlation fallacy. The eye sees “Poor single mom”, and assumes that the causative factor is that she’s a single mom. Reality? She’s a single mom because she makes poor decisions, only one of which was getting pregnant and keeping the kid.

    This is true of more things than you might think… Many times, we’ve got cause and effect completely turned around, and mistakenly think we understand situations that we really, fundamentally do not.

  2. Graham says:

    That post has lessons in it for both sides of the traditional left/right social policy debates.

    For the right- sometimes people’s failure to live up to certain behavioral standards doesn’t really damage their futures. Even if it’s because they had none to begin with. It still means all the moralizing won’t help. Also, some rudimentary sex ed is useful at puberty and they might not get it at home from unnecessarily twee parents in some cases.

    For the left- It’s not about yet another revision in nauseating [really] detail of the sex ed curriculum. If you can’t get the message about pregnancy avoidance from one simple lesson, no additional lessons will help. Also, some people will have no future under any policy structure or, if they find one, it will be unusual and will be the result of efforts and conditions that could not have been predicted or facilitated by policy.

    And the one thing no progressive in today’s America will say unless it’s about rural white people, and no conservative will dare say at all for at least the past 2 generations, all the above is OK. Even the “no future” part.

  3. Graham says:

    Until recently the rich might have suffered social death from single motherhood [although they had ways and means to cover it up] but faced no fear of economic harm.

    The underclasses would have and still face no prospect of social death but single motherhood adds to their financial burden a fair bit, bu their lives would have been pretty nasty regardless, as described.

    The only people whose social fate would have been affected so badly as to affect their economic position, maybe, were the otherwise prosperous middle classes, and the only people whose social and economic fates would have taken a real pounding were the lower middle class and upper working class. The classes with something to lose and a real chance to fall.

    The classes that invented and most rigorously policed themselves for these kind of morals violations and, with some mild success, imposed the rules on society as a whole. For good reasons.

  4. Eat Squirrel says:

    The Calvinist’s “God predestined some people to be saved and others were predestined to eternal damnation” in secular skin.

  5. Alrenous says:

    The real question: does burning the poor make you money? For Marxists, clearly the answer is yes.

  6. Harry Jones says:

    Predestination in all its guises is what theorists trot out when they don’t want to admit that they don’t know the reasons why something happens.

    Any theology that attempts to justify God’s ways to man is overreaching, and is also missing the point. Man is incapable of understanding God fully and has no standing to pass judgment on God.

    But here on earth, poor girls are having babies out of wedlock and blaming other people for their problems. That’s humanity for you. The things we’re capable of figuring out we choose not to figure out.

  7. Aretae says:

    I thought it was actually worse than that from a Single Mother perspective.

    When measured against Same-Group Teens, Teen Pregnancy/Motherhood was associated with BETTER lifetime outcomes vs. same subgroup without the teen pregnancy.

  8. Graham says:


    Interesting if true, even for a subset. I have never seen or heard data on that. I might speculate that for some, the sudden onset of motherhood might sober them up fast and hard, and if they have any kind of support system at all, put them on a less stupid life path than the one they were on.

    For those flying completely without a net, or not inclined by nature to notice the life lesson, it probably still makes life worse.

  9. Graham says:

    Eat Squirrel,

    Maybe so. And the analogy is illustrative of something. But taking God and predestination out of it takes away the role of agency or design, the sense that some will or intent is at work, and makes it just an observation of circumstance.

    I’d hate to resort to ‘stuff happens because it happens’ because it is useless as analysis. I’m not convinced it is useless as truth.

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