Let me start by saying I think there is merit to the idea that people who need more money just to pay for basic daily goods are more likely to spend it on those consumer goods that drive general economic growth and job creation moreso than giving the same money to people whose basic needs and wants are already more than satisfied and who already spend large sums on luxury goods (e.g., the people more likely to spend that extra $1 million on a long ago created painting which has only slightly more positive economic impact than throwing the money down a well.
But that is more the case in a normal situation where the poor are getting some modest extra money at regular intervals. This proposal of giving them a lottery style windfall is different, and the problems Loren and others have pointed to of wasteful/destructive spending is real. However, some of their claims and arguments are problematic and overstated.
What you're missing is that no amount of money is long-term life changing for most of those at the bottom. They get money, they spend it, soon they're back where they started or even worse off.
As I already stated, I think that's overly cynical. Is that what YOU would do?
What Loren would do is an irrelevant anecdote. OTOH,
thebeave cited an article claiming that 70% of lottery winners are broke within a few years, which appears to be a bullshit number. I can find zero valid empirical basis for the claim, just lazy journalists citing other lazy journalists, citing think-tanks who just seem to make shit up. In contrast, I can find peer reviewed systematic academic research which concludes things like....
"Contrary to the myth that a big lottery win will ruin the winners’ lives, lottery winners tend to be well-adjusted and their life quality seems to improve. Suggestions for future research are discussed."
and "[Winning the lottery] had no significant effect on self-assessed overall health, but a significant positive effect on mental health."
Which implies that the anecdotes showing some rather tragic outcomes for some winners who become worse off than before represent a minority of cases, while most winners have either and overall positive result.
In addition, while it is mostly lower income who play the lottery, they are a select non-random sample of the poor. They are the poor especially likely to be bad gamblers and poor decision makers, such as playing the lottery, and thus this sub-group who play the lottery are more likely to blow through a windfall. So, whatever the minority % of lottery winners are who make their lives worse by winning, that % is higher than the % of the poor who would do so by being given a big check, because they are a random sample of the poor rather than a random sample of people that play the lottery.
However, while the frequency of bad outcomes for those that win lottery is overstated, and while lottery players are not representative of total poor population, it is the case that many lottery winners that were poor make terrible decisions, and that even many of those who don't win the lottery make terrible decisions with what little money they have.
Just the lottery itself reveals this,
since those in the bottom 20% of net worth are almost 4 times as likely to make the bad financial decision of playing the lottery. Note it isn't a simple matter of the poorer you are the more you play because you could use the money.
People at the 40th percentile but still below the median in wealth don't play any more often than the people at the 80th percentile.
Then there are the subset of poor who spend what little money the have $200 sneakers, expensive jewelry, and thousands of $ to trick-out a honda civic. So, while it seems to be exaggerated hyperbole that 70% of these poor who would get this $1mil from the government would be broke again and worse off in a few years, it is the case that some notable % of them would in fact waste their windfall on items that fail to improve their lives and even make their lives worse (such as further indulging their drug addictions which are disproportionately more common among the poor).
Why is this the case?
Perhaps you fancy yourself as more responsible or maybe just smarter, than any poor people?
Clearly the reasons are more complicated than this, yet those factors do matter. The higher % among the poor who making bad, self-destructive decisions like playing the lottery, gambling in general, and heavy use of the most dangerous drugs would support that they are more likely to be irresponsible and self-destructive with their money and than the average person.
As for "smarter", despite widespread misrepresentation of the data, the poorest Americans are much more likely to be below average IQ.
This graph below is the most extensive recent study of the relationship.
Ironically, This graph and study is most often cited to try and show that there is no consistent overall relationship between wealth and IQ. That is true, because as you can see, the number of dots above and below the median 100 IQ are about equal at most levels of income and the same for people with the most wealth as for people in the middle class. But that is not the question at hand, which is whether the poorest Americans are disproportionately lower in IQ. The data clearly show that answer is "yes." Look at the very bottom line of the graph showing people who hover around or below $20k in total net worth. That dark black "blob" in the lower left of the graph is the result of tons of black dots there, several times (about 3-5 times) more dots than are on the lower right side. This means that among the poorest Americans, 70%-85% of them are below the national IQ average.
Now, conservatives will try to say that all these relationships exist only because bad decisions, low impulse control, and low intelligence are THE primary causes of poverty. Whereas most on the left will deny that these factors are even correlated with poverty let alone the cause of it. Both are wrong. As is typical of extreme scores on most variables (i.e., extreme poverty), they rarely arrive at that score for any single cause, but rather are so extreme because all the various causal influences on that variable happened to push those cases in that one direction, which will happen to a minority of cases by chance.
Plenty of very rich people (about half) are just as low IQ as this 75% of low IQ poor, and plenty or the rich are irresponsible. Also, while many of the poor have had random misfortune, plenty of the middle class and even the rich have also suffered misfortune, yet overcame it in the long run. But when misfortune, bad impulse control, addiction-prone biology, low IQ, and being born into low opportunities all happen to happen to the same person, there are very likely to get a person near the bottom of wealth. Thus, low IQ is not a cause at all for some people's poverty, and rarely a sufficient cause for anyone, and often a byproduct rather than cause of poverty due to low childhood nutrition, stress, poor education, etc.. Yet, it is still strongly enough associated with poverty that it would likely lead poor people to make worse decisions on average that negatively impact their ability to retain a sudden gain in wealth.
Also, some of the other factors arealso actually by-products of rather than initial causes of the person's poverty. The extreme desperation and deprivation of poverty will lead a person to drug use, and to taking bigger risks including lottery or crime, and to treating themselves something lavish and showy to try and dull the shame felt by daily poverty. Plus, impulse control and holding off for long term gain even when a short term reward is available is a trained skill. The more you do it, the better you get at it. And the poor have had little opportunity to practice that skill, because they rarely have the $ to buy themselves a short term reward. They don't get an allowance they can use to save up for a bike. They get no allowance and no bike. However, the direction of the causality doesn't really matter for the current discussion. Whether the poor's higher rate of risky and harmful decision making was the cause or byproduct of their poverty, it is now part of their psychological makeup that doesn't change overnight just because they got a big check overnight. Either way, they are more likely than the non-poor person to blow through their windfall and to do so in a self destructive manner, even if that likelihood is not close to the cited 70% figure.
