Why Are Poor People Poor? Here Are 7 Points From Various Researches

Have you ever wondered why poverty tends to run in some families - from generation to generation? In their characteristic ways, Africans often advance religious causes for such patterns - such as curses laid on the ancestors. But, in 2024, we need to know better than that: The situation has far more realistic than religious backgrounds.

Therefore, here, we wish to share a summary compilation of various scientific researches identifying the roots of poverty in the lives of certain people and families. To eliminate poverty therefore, these roots of poverty must be dealt with.

Here they are:

1. Opportunity recognition

Studies show that entrepreneurs who can identify viable opportunities are more likely to succeed (Kirzner, 1973; Shane & Venkataraman, 2000). The clear implication here is that the failure to recognise opportunities is a major factor behind perpetual poverty in the lives of many.

2. Focus and prioritization

Research also emphasizes the importance of focusing on high-impact activities in order to arrive at major successful outcomes (Drucker, 1954; Covey, 1989). Without such disciplined focus, a person continues to divert from one economic opportunity to another without reaping the fruits of any of them. Thus, the person remains poor perpetually.

3. Resource allocation

Misallocating resources due to poor opportunity identification can perpetuate poverty (Banerjee & Duflo, 2011). This is because every resource has its use cases. 

Therefore, when you allocate these resources wrongly, they make less or no economic impacts that can enable you to overcome poverty. Talk about square peg in a round hole.

4. Human capital

Research shows that limited access to education and skills training is a major factor hindering opportunity recognition (Becker, 1962). Therefore, it encourages poverty.

5. Social networks

Weak social connections can restrict access to valuable information and opportunities (Granovetter, 1973). Therefore, a poor ability at networking is certainly a major factor behind perpetual poverty in people's lives.

6. Cognitive biases

Research reveals that biases like confirmation bias and loss aversion can lead to poor decision-making (Kahneman & Tversky, 1979). These cognitive biases issue mainly from people's upbringing. It's left for everyone to work on eliminating them.

7. Institutional barriers

Systemic issues like discrimination and lack of access to credit can limit opportunities (Bourdieu, 1986). This may appear like an area we have no control over on individual bases, but it exposes why we all should work together to eliminate such institutional barriers in our various societies.

Conclusion

Poverty is complex. As a result, these factors often intersect. Addressing opportunity identification, issues with maintaining focus, and the other factors can be one of the best approaches to comprehensive personal or societal poverty alleviation strategies.

With the above 7 points purposely made handy, you can personally review them again and again - even everyday. This way, the can remain fresh in your mind while you work on eliminating them.

References:

Banerjee, A. V., & Duflo, E. (2011). Poor Economics.

Becker, G. S. (1962). Investment in Human Capital.

Bourdieu, P. (1986). The Forms of Capital.

Covey, S. R. (1989). The 7 Habits of Highly Effective People.

Drucker, P. F. (1954). The Practice of Management.

Granovetter, M. S. (1973). The Strength of Weak Ties.

Kahneman, D., & Tversky, A. (1979). Prospect Theory.

Kirzner, I. M. (1973). Competition and Entrepreneurship.

Shane, S., & Venkataraman, S. (2000). The Promise of Entrepreneurship as a Field of Research.