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Why is it so hard to escape poverty? - Ann-Helén Bay

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Imagine that you’ve been unemployed for months. Government benefit programs have helped you cover your expenses, but you’re barely getting by. Finally, you receive a paycheck— but there’s a catch. Your new job pays enough to disqualify you from benefit programs, but not enough to cover your costs. So how do we design benefit programs that don’t penalize you for working? Ann-Helén Bay investigates.

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Meet The Creators

  • Educator Ann-Helén Bay
  • Director Avi Ofer
  • Narrator Christina Greer
  • Animator Avi Ofer
  • Composer Salil Bhayani, cAMP Studio
  • Sound Designer Amanda P.H. Bennett, cAMP Studio
  • Editorial Director Alex Rosenthal
  • Director of Production Gerta Xhelo
  • Producer Bethany Cutmore-Scott
  • Editorial Producer Dan Kwartler
  • Script Editor Alex Gendler
  • Fact-Checker Eden Girma
Additional Resources for you to Explore
How can government combat poverty among the citizens of its country?

The question has been discussed by politicians and social thinkers for centuries. A recurring topic in the discussion is the balance between means-tested versus universal benefits. Means-tested benefits are targeted towards individuals with little resources. Intuitively one would assume that to channel the help to the most needy, is the most effective way to get rid of poverty. Means-testing does however have some serious defects, and should not be the sole or the primary strategy for poverty reduction. Means-tested benefits have behavioral consequences, as recipients are discouraged from taking steps to improve the economy (van Oorschoot 2002). Means-testing also entails stigma, as recipients have to uncover that they do not live up to the widely held norm of self-sufficiency (Titmuss 1968).

The risk of stigma can discourage individuals from applying for benefits they are entitled to. Universal welfare programs are not targeted to the poor, but cover the whole population such as education, healthcare, child allowances, child-care and pensions. Many countries have some universal programs, primary schools being the most widespread, but universalism as a welfare model is first of all a characteristic of the Nordic countries (Rothstein 2001). Several studies conclude that a system based on universal benefits redistribute resources more effectively from the rich to the poor than a system based on benefits targeted to the poor (McFate, Smeeding and Rainwater 1995, Korpi and Palme 1998). Other studies do however nuance their conclusions (Marx et al 2013Gugushvili and Hirsch 2014).

The proposal of an unconditional basic income granted to all members of the society takes the idea of universal benefits even further. Several prominent thinkers and political activists have endorsed the idea, such as the British mathematician, philosopher and Nobel laureate in literature, Bertrand Russel and The American economist and Nobel Memorial Prize winner Milton Friedman. Coming from different academic disciplines and political orientations, they both considered basic income as a means to combine the fight against poverty with autonomy and freedom for the individual.

More recently the Tesla and SpaceX founder Elon Musk has argued in favor of basic income as a response to automatization. The idea of basic income has also reached the agenda of The Organization for Economic cooperation and Development (OECD), who released a policy brief on the topic in 2017. The Basic Income Earth Network (BIEN), was founded in 1986 with the purpose to educate the general public about basic income. One of the founding fathers of the network, the Belgian professor Philippe Van Parijs published together with his colleague Yannick Vanderborght in 2017 the book Basic Income. A Radical Proposal for a Free Society and a Sane Economy. At BIEN’s website you will find publications on basic income and basic income-projects in various parts of the world.

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About TED-Ed Animations

TED-Ed Animations feature the words and ideas of educators brought to life by professional animators. Are you an educator or animator interested in creating a TED-Ed Animation? Nominate yourself here »

Meet The Creators

  • Educator Ann-Helén Bay
  • Director Avi Ofer
  • Narrator Christina Greer
  • Animator Avi Ofer
  • Composer Salil Bhayani, cAMP Studio
  • Sound Designer Amanda P.H. Bennett, cAMP Studio
  • Editorial Director Alex Rosenthal
  • Director of Production Gerta Xhelo
  • Producer Bethany Cutmore-Scott
  • Editorial Producer Dan Kwartler
  • Script Editor Alex Gendler
  • Fact-Checker Eden Girma