Some poverty traps are connected to a person's circumstances, such as lack of access to healthy food or education. Others affect entire nations, such as cycles of a corrupt government. The irony of welfare traps is that they are the result of policies designed to fight poverty. Governments provide subsidies for housing, food, energy, and healthcare for those who fall below a certain income level.  But it also means people lose the subsidy as soon as they earn just above the threshold regardless if they are financially stable enough to stay there.

Financial stability is overlooked

Mainstream economic models assume people are rational. If those in poverty know they won't gain any advantage from working, they're incentivised to continue with government assistance.  When fewer people take on new jobs, the economy slows down, keeping people in poverty.

Poverty traps reinforce themselves

Imagine you're out of work and a government benefit program helps you with your basic needs, such as rent, utilities and food.  When you finally get a job, you feel things are turning around, except that you are now disqualified from the benefit program and don't earn enough to cover the same costs. Moreover, you have to pay for transportation to work and childcare. Now you have even less than when you were unemployed. Economists call this the welfare trap.

Government benefit programs unwittingly produce poverty traps 

Countries have tried various ways to circumvent the problem. <ul><li>Some allow an overlap of benefits after finding a job, while others phase out benefits gradually as income increases.  These policies remove some financial incentives to work but the risk of the welfare trap is lower.</li><li>Other governments provide benefits like education, childcare or medical care equally across all their citizens.</li><li>Others proposed a universal basic income to all members of society. Additional wages would supplement the benefit.</li></ul>

Attempts to remove the feedback loop

Governmental welfare programs inadvertently reinforce generational poverty. Here’s how they attempt to fix it.

Explore the paradox of welfare programs, and learn how they inadvertently reinforce generational poverty, and what we can do to fix them. -- 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. Lesson by Ann-Helén Bay, directed by Avi Ofer. Support Our Non-Profit Mission ---------------------------------------------- Support us on Patreon: http://bit.ly/TEDEdPatreon Check out our merch: http://bit.ly/TEDEDShop ---------------------------------------------- Connect With Us ---------------------------------------------- Sign up for our newsletter: http://bit.ly/TEDEdNewsletter Follow us on Facebook: http://bit.ly/TEDEdFacebook Find us on Twitter: http://bit.ly/TEDEdTwitter Peep us on Instagram: http://bit.ly/TEDEdInstagram ---------------------------------------------- Keep Learning ---------------------------------------------- View full lesson: https://ed.ted.com/lessons/why-is-it-so-hard-to-escape-poverty-ann-helen-bay Dig deeper with additional resources: https://ed.ted.com/lessons/why-is-it-so-hard-to-escape-poverty-ann-helen-bay#digdeeper Animator's website: https://aviofer.com ---------------------------------------------- Thank you so much to our patrons for your support! Without you this video would not be possible! Sid, Kent Logan, Alexandra Panzer, John Hellmann, Poompak Meephian, Chuck Wofford, Daniel Erickson, frank goto, Jayson Hauschild, J D Wallace, Marq Short, Chen Jun Xiang, Adam Pagan, Paul Schultz, Behzad Farhanieh, Anders Sørheim, Wes Winn, Conder Shou, BrushReads, Matt Kennedy, Jonah Dobbs, ntiger, Noname, Hansan Hu, Cameron Burkle, Dhanwanth Varadhan, David D, Zuko Gameplays, Jonathan Bates JBZ, Aria Smith, Mac Hyney, Keith Ellison, robin valero walters, Camehira, Lynne Truesdale, Gatsby Dkdc, Matthew Neal, Jayson Gasper Ayson, Maxwell Ramsby, Dmitry Yuryev, Denis Chon, Julian Oberhofer, Monte Carroll, Eddy, Jay M, Constantino Victor Delgado, Andrea Galvagni, Andrew Tweddle, Laurel-Ann Rice and Fernando A. Endo.

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Explore the paradox of welfare programs, and learn how they inadvertently reinforce generational poverty, and what we can do to fix them.

--

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.

Lesson by Ann-Helén Bay, directed by Avi Ofer.

Support Our Non-Profit Mission
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Check out our merch: http://bit.ly/TEDEDShop
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Keep Learning
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View full lesson: https://ed.ted.com/lessons/why-is-it-so-hard-to-escape-poverty-ann-helen-bay
Dig deeper with additional resources: https://ed.ted.com/lessons/why-is-it-so-hard-to-escape-poverty-ann-helen-bay#digdeeper

Animator's website: https://aviofer.com
----------------------------------------------

Thank you so much to our patrons for your support! Without you this video would not be possible! Sid, Kent Logan, Alexandra Panzer, John Hellmann, Poompak Meephian, Chuck Wofford, Daniel Erickson, frank goto, Jayson Hauschild, J D Wallace, Marq Short, Chen Jun Xiang, Adam Pagan, Paul Schultz, Behzad Farhanieh, Anders Sørheim, Wes Winn, Conder Shou, BrushReads, Matt Kennedy, Jonah Dobbs, ntiger, Noname, Hansan Hu, Cameron Burkle, Dhanwanth Varadhan, David D, Zuko Gameplays, Jonathan Bates JBZ, Aria Smith, Mac Hyney, Keith Ellison, robin valero walters, Camehira, Lynne Truesdale, Gatsby Dkdc, Matthew Neal, Jayson Gasper Ayson, Maxwell Ramsby, Dmitry Yuryev, Denis Chon, Julian Oberhofer, Monte Carroll, Eddy, Jay M, Constantino Victor Delgado, Andrea Galvagni, Andrew Tweddle, Laurel-Ann Rice and Fernando A. Endo.

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