Economics 101 & Public Square

The Best Way to Help the Poor

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Then the righteous will answer him, ‘Lord, when did we see you hungry and feed you, or thirsty and give you something to drink? When did we see you a stranger and invite you in, or needing clothes and clothe you? When did we see you sick or in prison and go to visit you?’ “The King will reply, ‘Truly I tell you, whatever you did for one of the least of these brothers and sisters of mine, you did for me.”

–Matthew 25: 37-40

Are the poor getting poorer while the rich get richer?

Reading the news, you’d think so – take a look at these recent reports from ABC News and Forbes, for example.

Are these claims true, and what does this mean for the Christian’s obligation to care for the poor?

Different Types of Poverty

Scripture is clear that not only are we called to care for the poor, but we will be judged on whether we did. How do we best carry out this call? Answering this question involves sorting out a couple nuances up front.

  1. There are different types and causes of poverty and they should be treated differently.
  2. Poverty is relative. It’s a lamentable condition in any situation, but being poor in the United States or any other first world country is not anything like being poor in a developing third world country.

Regarding the first point, Dr. Glenn Sunshine has argued in previous posts that while most biblical references to the poor regard material poverty, these references can and do include spiritual poverty.

Sunshine goes on to say that you can be poor through no fault of your own, but you can also be poor though your own doing, either by laziness, gluttony, drunkenness, or chasing fantasies as Proverbs 23:21 and 28:19 point out.

The focus of this post, though, is on the second point, specifically poverty in the United States. Poverty has been a policy focus of the federal government since Lyndon Johnson declared the first “War on Poverty” in 1965. Since then, we have spent fifteen trillion dollars on domestic poverty alleviation.

Even after fifteen trillion dollars, the poor are still among us. But in all the numbers, is it possible we are missing something?

We live in one of the most dynamic economies planet earth has ever known. We have experienced massive economic growth since 1965 and our per capita GDP continues to rise. This week’s video gives us a glimpse behind the statistics and shows us that the poor are in fact doing better in America.

What this video is getting at is that we often misunderstand income mobility because we measure it incorrectly. The data surrounding income mobility is often incorrect, because it doesn’t examine individuals. When data doesn’t follow individuals, it skews the results. The truth is the poor are not getting poorer and staying poor.

Most people who start out in the lower income quintiles don’t stay there. In fact, more than fifty percent climb out of the the lower quintiles.

  • Data from the University of Michigan suggests that of households that were poor in 1975, over ninety-five percent of them were no longer poor by 1991.
  • The Treasury Department reports that between 1996 and 2005, “roughly half of taxpayers who began in the bottom income quintile in 1996 moved up to a higher income group by 2005.”
  • The Brookings Institution and Pew Charitable Trusts took a look at generational income mobility, and found that “the current generation of adults is better off than the previous one.”

This illustrates a concept called income mobility, which is an indicator of a thriving society. Remember when you started working for the first time? You had low levels of education, skills, and experience. You probably didn’t make very much. I had my first job when I was fifteen. I worked in an ice cream shop and I earned the minimum wage.

I was grateful for that job. As I gained education and experience, I moved out of those types of jobs into higher skilled jobs where I was able to make different types of contributions to the common good. This is a story many Americans share.

A Long-Term Solution

If we think back to the Scripture that started this post, Matthew 25: 37-40, the real question is how do we foster a society in which the poor climb out of poverty on their own merits?

Each and every person who is poor is made in the image of God and has gifts they can use to serve others through trade. When we think of the poor and we think of the scriptural command to care for them, what is it that we want for them? Certainly part of what we want is for them to able to care for themselves and their families.

The United States has historically been a place where we let markets thrive. It’s been a place where you can start with nothing and make millions using your creativity. The best long-term way for us to fulfill the command of Scripture regarding the poor is to support a system of free markets and well-defined property rights.

This is the reason the poor in the U.S. fare so much better than the poor in developing countries. It is also why most of the poor in the U.S. don’t stay poor. The goal of modern market trade is permanently lifting the poor out of poverty.

We must understand the problem if we are going to be part of the solution. Poverty of some sort, spiritual or material, will always be with us, but it doesn’t have to be abject, long-term poverty. It’s imperative that we not only act to care for the short-term needs of the poor, but that we direct our attention toward the long-term solution: better functioning markets, which will improve the lives of everyone, rich and poor alike.

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  • Roy M Carlisle

    This analysis is familiar to many of us but without an awareness of racial and ethnic differences it does not seem especially enlightening. We need more nuanced data methinks, R

    • Dr. Anne Bradley

      Roy – I appreciate the concern you are raising. I think your point reinforces the point Dr. Horowitz is making in the video.

      Unless we follow individuals, we don’t have a real sense of how real conditions and quality of life are changing for people of all races and ethnicities.

      What the statistics do show is that certain minority groups and single parent families are more likely to be poor. That said, we do see that those lowest income quintiles show the most upward movement in terms of real income over time, which is promising.

      What we must concern ourselves with is how to ensure that we live in an opportunity society so that all races and ethnicities have the best chances for long-term prosperity.

      – Anne

  • Ben C

    This is a good article with helpful clarifications – thanks! I have read and heard much of the same, especially from Thomas Sowell. I do have a question about Dr. Horwitz’s use of the term “household.” In your article, you refer to “individuals.” But individuals and households are not the same, and if I am not mistaken, we must track the relative and absolute income of individuals – flesh and blood people – over time, not just households. Households change in size and income amount, especially as households today, on average, are smaller than they were a generation ago. Household income and per capita income are quite different. The Brookings study referenced in the Forbes article seems to be looking at households (“household” comes up 179x in the study and the beginning of the abstract says this: “We use a new, large, and confidential panel of tax returns to study the permanent-versus-transitory nature of rising inequality in individual male labor earnings and in total household income, both before and after taxes, in the United States over the period 1987-2009.”); this is where I would say the study goes wrong, although I haven’t read it yet. Could you please comment on whether the distinction between “household” and “individual” is important, and if so, whether Dr. Horwitz’s analysis is still correct?

    On a side note, it seems odd to me that the Brookings Institution on the one hand puts out a study saying that income inequality is rising, yet in conjunction with the Pew Charitable Trust releases another study showing the income mobility of families across generations. How are we to make sense of such disparate information coming from the same source? I suppose we could attribute it to the various authors/economists involved in each study, but is this sufficient? It leaves me feeling distrustful of the Brookings Institution.


    • Dr. Anne Bradley

      Ben – your insight is quite intuitive and thoughtful. You’re correct in thinking the individual should be our focus in all of this.

      Unfortunately, the data are often reported and collected as “household” data, which, as you pointed out, skews the results. The reason that we often have data in household terms is because of how families file their income for tax purposes.

      This doesn’t diminish Dr. Horowitz’s point, though. Even though we have household data, we still see income mobility. On net, more individuals within those household units are increasing their real income over time.

      Regarding your second question, Brookings puts out research authored by a variety of different economists who could be using data differently, and possibly interpreting it differently.

      What I wanted to leave readers with was this: if we don’t make efforts to follow individuals, we could be making errors when we say the poor are getting poorer. Hope that helps!

      – Anne

  • Jolly Beyioku

    Your article started with Matthew 25:37-40 and acknowledges that the poverty mentioned in the Bible is mostly in reference to material poverty, and then said that “these references can and do include spiritual poverty.” Just a couple of questions for you: Who are the spiritually poor? Do economic / market solutions resolve spiritual

    It seems to me that knowing what spiritual poverty is and those afflicted by it could shed light into the why of materially poverty. Your writing seems to indirectly imply that the reason why people are materially poor is because they lack spiritual fortitude and that material riches are indications of spiritual wellness, and thus the market
    provides all-encompassing solution to poverty.

    Using the Bible, I have found that Isaiah 58 does shed light into the understanding of poverty.

    • Anne Bradley

      Jolly, thanks for your question. For an extended discussion on spiritual and other types of poverty I would direct you to Dr. Glenn Sunshine who did a blog series on this last year for IFWE.

      In sum, one can have vast amounts of material wealth and be spiritually poor and this could manifest itself in a variety of ways. One example is that you could worship material wealth over the transforming love of Christ or you could have other things in your life that you worship above the Lord. Societies based on free-markets and market trade in and of themselves will not solve spiritual poverty, only the transformative love that comes from a relationship with Jesus Christ can do that.

      However, we do need a society where people, even those who don’t know Christ, are encouraged to serve others and to pursue their self-interest to help others rather than for greedy and selfish purposes.

      Markets discourage corruption and encourage people to use their gifts and skills to serve others. Markets are comprised of sinners, saved and unsaved and in this sense they are not perfect and will always have limitations. That said, they are the best known mechanism for fostering social cooperation and wealth accumulation.

      If you are interested in the topic of poverty, IFWE is releasing a 13 chapter edited volume on the topic in the spring of 2014. We have some of the best economists and theologians contributing chapters and I think it will shed more light on these important questions you raise here.

      • Anthony Bernard

        Poverty is not a topic one should spend time studying, since it makes as much sense as studying Satanism to Know God. What a man or woman spends their Precious and Short Time on earth L-Earning about, or sowing their fertile and willing mind with, “That shall he.she harvest in Abundance.” If that be poverty or darkness, how great is that darkness. man can not sow poverty into his mind or spirit, without reaping that which h sows. God is very specific on this topic and The Word of God, Jesus Christ, nor His Apostles, spread very little, if any, long dissertations or remedies on poverty, devil worship, sowing more weeds than good seed to reap a good crop, but “As ye sow,into your own mind and body… that shall you harvest,

        Sow ideas, information, suggestions, and offer help and knowledge to those who are i need, and you do god’s will, to give to your neighbor, that which he is in need of, not merely agreement that poverty is his lot in life, and nothing can be done to change it.

        Jesus said: “The poor you shall always have with you.” Simply because that is how they appear as their own image and likeness, since they rarely are believers or study the Gospel, and if they do, they study poverty and the means to achieve and hold on to it, more than they study how to escape it… through knowledge of the Words of Jesus and faith in God, to fulfill their desires and needs, if they but seek, knock and ask, at the door of Abundance and not at the door of Lack, Poverty and Ignorance of the Law of Life… One Talent, buried deep in the sand, will not Profit any one of God’s children, because they breach the Law of Increase with their unbelief and unwillingness to put to uses their Talent to serve mankind with whatever Talent God gave them to gain more Talents.

        • Jason


          Your broad stereotype of the poor is despicable. The widow of the widow’s mite was very poor. Jesus himself had “nowhere to lay his head.” Scriptures are full of examples of the poor who were believers and were chosen of God. There are also examples of wealthy believers (i.e. Abraham). One’s material affluence is not necessarily a reflection of one’s belief in or study of the Gospel.


  • Anthony Bernard

    The best way to help the poor is to lead them to the ways of riches… education and labor for their daily bread, and teach them to do the same to others… brotherly love. Any other way is the short cut Jesus warned us about. My yoke is easy, and my burden… light. Since wisdom is light, and knowledge is power, the use of both are the way of Jesus. Show me any passage in the Word of God where the poor were given any special treatment or cure for their ailments other than admonition… “Take up thy bed and walk… As thou hast believed… so be it unto you!” ~Jesus Word to the poor~

    Change your thoughts and you change your own circumstances and destination from that day forward. Poverty is simply a state of mind, manifested through the power of God, to give what is asked. The Jews, in their Exodus from slavery, complained about their freedom from the Egyptians, therefore god gave them their just reward… lost in their own deceit until every last complainer died, and the few just men, were given their ow heart’s reward… The Promise of Abraham, who believed in God, and to him, it was imputed as Righteousness.

    Jesus said: “The poor you shall always have with you.” but here was never anthing more said directly, about the best way to help them, other than… “The Gospel be preached unto them, and then, theirs cold be the Kingdom of Heaven, but only by doing, and not simply hearing and not understanding, that Word, that spoke of the Faith of Believers, A Talent Buried, will get you Nothing, neither form Man, nor from God!

    “L-Earn of Me”, said Jesus, “For I am meek, and lowly in Spirit. My yoke is easy, and my burden, is Light!” He and His Sayings, are that light. That which a man sows, that also shall he reap. Nothing sowed, nothing to reap! that is the God’s Honest truth!

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