Poverty Facts and Myths


The Playing Field Is Not Level

America has been built upon a set of ideals and aspirations. These are epitomized in the concept of the American Dream. The Dream asserts that anyone in America can make it with enough hard work and talent. The reason for this, is that individuals from all walks of life are seen as being able to climb a ladder of opportunity. They are able to climb that ladder because the playing field is viewed as level. As a result, poverty can be avoided through motivation and skill.

Therefore, according to the mythology, inequality and poverty are neither unjust nor problematic because they represent the importance of individual agency, self-reliance, and meritocracy. Ultimately, American equality of opportunity is believed to provide the mechanism for anyone to succeed.

Unfortunately, the playing field in America is not level. Research has shown that the process begins with the financial resources of parents and the neighborhood a child is raised in. This then affects the quality of schooling a child receives, which then influences the type of job and career that they acquire and work at. All of these, in turn, can affect the quality of health an individual experiences, along with how well one is prepared for the retirement years.

Monopoly Analogy

One way to quickly visualize the uneven playing field is with a simple analogy to the game of Monopoly. The objective of Monopoly is to acquire properties, build houses and hotels, collect rent, make money, and eventually put the other players out of business. The rules themselves are straightforward. Normally, each player is given $1,500 at the start of the game. The playing field is in effect level, with each of the players’ outcomes determined by the roll of the dice and by their own skills and judgments.

This notion of a level playing field is largely the way that we like to imagine the economic race in America is run. Each individual’s outcome is determined by their own skill and effort, and by taking advantage of what happens along the road of life. Our belief in equality of opportunity as a nation underlies this principle.

However, let us now imagine a modified game of Monopoly, in which the players start out with quite different advantages and disadvantages, much as they do in life. Player 1 begins with $5,000 and several Monopoly properties on which houses have already been built. Player 2 starts out with the standard $1,500 and no properties. Finally, Player 3 begins the game with only $250.

The question becomes who will be the winners and losers in this modified game of Monopoly? Both luck and skill are still involved, and the rules of the game remain the same, but given the differing sets of resources and assets that each player begins with, these become much less important in predicting the game’s outcome. Certainly, it is possible for Player 1, with $5,000 to lose, and for Player 3, with $250, to win, but that is unlikely given the unequal allocation of money at the start of the game. Moreover, while Player 3 may win in any individual game, over the course of hundreds of games, the odds are that Player 1 will win considerably more often, even if player 3 is much luckier and more skilled.

In addition, the way each of the three individuals are able to play the game will vary considerably. Player 1 is able to take greater chances and risks. If he or she makes several tactical mistakes, these probably will not matter much in the larger scheme of things. If Player 3 makes one such mistake, it may very well result in disaster. Player 1 will also be easily able to purchase properties and houses that Player 3 is largely locked out of, allowing the rich to get richer and the poor to get poorer. These assets, in turn, will generate further income later in the game for Player 1 and in all likelihood will result in the bankrupting of Players 2 and 3.

Consequently, given the initial advantages or disadvantages at the start of the game, the result is additional advantages or disadvantages as the games progresses. These, in turn, will then lead to further advantages or disadvantages, and so the process goes.

This analogy illustrates the concept that Americans are not beginning their lives at the same starting point. But it also illustrates the cumulative process that compounds advantages or disadvantages over time. Differences in parental incomes and resources exert a major influence over children’s ability to acquire valuable skills and education. These differences in human capital will, in turn, strongly influence how well children compete in the labor market, and therefore help to determine the extent of their economic success during the course of their lives.