Speaking of Bad Decisions...

All this talk of food assistance programs put me in mind of a an article on the struggle of the poor to get enough food that appeared on NPR last summer. The economic problem then was the high gas prices, I'd imagine things are worse now. It stuck in the memory because the family they used to illustrate this struggle to get enough to eat -- a photograph of whom appeared with the piece -- were morbidly obese. Perhaps not the ideal family to use as a set-piece when talking about the hungry in America, though it does provide a nice illustration of the point raised in the article that Salty Girl linked to about the link between food programs and obesity.

As a side note, it seems that in very nearly every article on these types of issues -- the struggle of poverty -- the families used to illustrate the piece have made many conspicuously bad choices. I have to believe that the reporters are generally trying to find the most sympathetic stories -- that is the ones that best show how the problems of poverty are deep and about being unlucky and the rest -- but it's striking how there is always some egregiously bad decision making that appears in the article as well.

For example, the morbidly obese family is stuck in a town some distance from Toledo. There are few to no jobs in that town and without a car there is no way for them to get to work. Tragic. It also mentions that the family's current adult generation was raised middle class. So clearly, this kind of thing could happen to anyone, right? Well, maybe, but the matron of the family is also described as having "never worked" and having "no high school degree". And they talk about the bad luck of how a car accident "17 years ago" left her "depressed and and disabled" and "incapable of getting a job". But she's 40, so the car accident happened when she was 23. I'm sure it was debilitating and awful but why hadn't she finished high school or had any kind of job by the time she was 23? And given that she had no degree and no job, why was she having kids? Perhaps she missed the part of high school where they explain how babies are made...

And I don't mean to just pick on this one family in this one article. The NY Times ran a heart-string-tugging article some weeks ago describing the tough times faced by four families as they go through foreclosure and other economic-crash related problems. The story was written as sympathetically as possible so you had to kind of pick up the scattered details and reconstruct them for yourself to get a good picture of what went wrong for these people but in every case the way they had structured their lives prior to the crash was not going to work. In some of the cases it might have worked if everything had gone perfectly but that's not planning, that's gambling.

The one detail from that article that sticks most clearly in my mind was the story of the family who has one income of $30,000 now. In happier times, they had two incomes totalling about $60,000. And they bought a house which went up in value so they refinanced and took all of the new equity out of the house. The article didn't specify what they did with all of it but did mention that among their belongings in storage was an $8,000 4 piece mahogany and marble bedroom set that they had purchased just after taking the loan.

I make considerably more by myself than this family does as a whole at the best of times. And I don't have a family to support. And I live with someone who by herself makes considerably more than this whole family at the best of times. And we wouldn't dream of spending $8,000 on a bedroom set. Or, for that matter, anything else. If you're raising a family with 4 kids on $60K of dual income, it might be better to stick to Ikea than treating yourself to extravagant bedroom sets with money taken out of your home.

Now, of course, it's their life, if they want to throw away their security on home furnishings, that's their prerogative. But it does somewhat diminish the power of their story as a "tragedy". If you're hit by a bus while carefully crossing the street, that's a tragedy. If you're hit by a bus because you decided to practice your break-dancing on the median of a busy street while blind-folded that's less of a tragedy.

Now, of course, in a society as rich as ours we should have a safety net to prevent the worst of human suffering, even if self-caused. But we do need to be aware that not all human-suffering is inflicted by random chance and to the extent that you alleviate suffering caused by bad-decision making you are inviting more bad decision making.

This is what's known as "moral hazard" in insurance: the danger that if you remove the cost of recklessness you will get more recklessness. It's why there are things like deductibles and co-insurance, to make sure that just because you've got insurance on your car doesn't mean you feel no need to avoid running into things because it's all free to you.

Relatedly, it's also one of the best arguments against all the bailouts we've seen in the financial world this past year. Which is not to say that there weren't compelling arguments for them as well but it is why the government has been trying to work a little pain into the agreements along with all the cash.