With regard to government policies: 1) Arktinkerer, I think you're on to something with the idea of having social programs be on a sliding scale, instead of having people cut off over a certain threshhold, and 2) I'll put in my vote for the VAT tax!
With regard to poverty itself, while the idea of someone having cable or a smartphone when they are receiving government assistance seems lavish, and the idea of someone having a(n exorbitantly expensive) cigarette habit when they are otherwise scraping by seems foolish, I would echo some of the earlier posters' reminders that poverty & voluntary simplicity are not the same thing. Poverty imposes many stressors on people that can impair their decision-making ability.
Two of my favorite psych studies that demonstrate this concept are the Rat Park experiment, showing that a positive and enriching environment tremendously decreases addiction rates, and a remake of the marshmallow experiment, showing that children whose lives are unstable have less self-control:
Rat Park experiment: "If you had asked me what causes drug addiction at the start, I would have looked at you as if you were an idiot, and said: 'Drugs. Duh.' . . .
One of the ways this theory was first established is through rat experiments -- ones that were injected into the American psyche in the 1980s, in a famous advert by the Partnership for a Drug-Free America. You may remember it. The experiment is simple. Put a rat in a cage, alone, with two water bottles. One is just water. The other is water laced with heroin or cocaine. Almost every time you run this experiment, the rat will become obsessed with the drugged water, and keep coming back for more and more, until it kills itself.
The advert explains: 'Only one drug is so addictive, nine out of ten laboratory rats will use it. And use it. And use it. Until dead. It's called cocaine. And it can do the same thing to you.'
But in the 1970s, a professor of Psychology in Vancouver called Bruce Alexander noticed something odd about this experiment. The rat is put in the cage all alone. It has nothing to do but take the drugs. What would happen, he wondered, if we tried this differently? So Professor Alexander built Rat Park. It is a lush cage where the rats would have colored balls and the best rat-food and tunnels to scamper down and plenty of friends: everything a rat about town could want. What, Alexander wanted to know, will happen then?
In Rat Park, all the rats obviously tried both water bottles, because they didn't know what was in them. But what happened next was startling.
The rats with good lives didn't like the drugged water. They mostly shunned it, consuming less than a quarter of the drugs the isolated rats used. None of them died. While all the rats who were alone and unhappy became heavy users, none of the rats who had a happy environment did."
http://www.huffingtonpost.com/johann-hari/the-real-cause-of-addicti_b_6506936.htmlMarshmallow experiment: "[A] child's ability to delay gratification and control him-or herself—often seen as a personality trait critical for academic success—can be hugely dependent on the child's sense of stability in the environment and trust in surrounding adults.
In a twist on the classic Stanford University 'marshmallow experiment,' in which young children's ability to resist eating a marshmallow was tested to show their self-control [by being offered 1 treat now or 2 treats if they waited], researchers led by Celeste Kidd, a professor of brain and cognitive sciences at the University of Rochester in New York recently found children who trusted the word of the adult tester and felt their environment was more stable waited four times as long for a treat as those who felt more insecure."
http://perdidostreetschool.blogspot.com/2012/11/study-shows-damage-poverty-and.htmlThe studies are analogous because in both, subjects with more positive environments are able to resist short-term gains that are not as good for them in the long run.
I don't mean to write off all individual responsibility -- poor decisions are not just the result of bad circumstances but rather a combination of nature and nurture. But I can see the principles of marshmallow experiment v.2 play out in some of my less financially fortunate friends' lives. They might blow money on an indulgence, which for a middle-class consumer clown would be merely ridiculous, while for them it can be the difference between having money or not for the next car repair or medical bill. But it's very difficult for them to imagine that money being there tomorrow. Like the kid who eats the 1 marshmallow in front of him because he can't trust that the adult will actually come back with 2 marshmallows if he waits, it's hard to trust in the future benefits of that money being greater than the present benefits. There's always some kind of emergency with family or friends that they are expected to help out with. Everybody around them is struggling, and it becomes a self-reinforcing pattern.
Basically, I agree with Emilyngh that "[g]enerally people do not act rationally based on their best long-term interests, they act on short-term desires and then rationalize them after." Poverty exacerbates this inherent problem by sapping people's strength to resist temptation and undermining trust in the ability to enjoy benefits in the future.
