Dec 122013

Not long ago, we put out a podcast that asked the question “Would a big bucket of cash really change your life?” That episode looked at whether winning a land lottery in antebellum Georgia significantly altered a given family’s financial future. University of Chicago economist Hoyt Bleakley, who studied that 1832 lottery, told us this:

Stephen J. DUBNER: On a recent podcast, we asked this question: “Would a big bucket of cash really change your life?” The episode was about a 19th century land lottery in Georgia. For the winners of this lottery it represented a substantial windfall. We wanted to know how that windfall affected the winners – and, more specifically, how it affected the winners’ children and grandchildren. In other words, did the winners just spend the windfall or did they invest it somehow, helping their future generations live better? Here’s Hoyt Bleakley, one of the economists who studied the Georgia land lottery:
Hoyt BLEAKLEY: We see a really huge change in the wealth of the individuals, but we don’t see any difference in human capital. We don’t see that the children are going to school more. If you father won the lottery or lost the lottery the school attendance rates are pretty much the same, the literacy rates are pretty much the same. As we follow those sons into adulthood, their wealth looks the same, you know, in a statistical sense. Whether their father won the lottery, lost the lottery, their occupation looks the same. The grandchildren aren’t going to school more, the grandchildren aren’t more literate.
DUBNER: So what we learned was that future generations of the winners didn’t really benefit. Now this was just one case-study from antebellum Georgia; it can’t definitively answer the larger question, which is this: what’s the best way to help poor people stop being poor? This is of course a timeless question but lately, thanks to a lot of new philanthropy and philanthropy research, it’s been discussed with a great intensity. And it’s given rise to even more questions, like: Is giving money directly to poor people perhaps the best thing you can do? What about giving them other stuff – free schooling or, if you’re a farmer in Africa, free animals or equipment? Or should you not focus on giving them anything at all, but rather try to build a better market economy to help them get better jobs?
Now as coincidence would have it, I recently had the opportunity to moderate a discussion on the very topic of how to best alleviate poverty, this was presented by a nonprofit called Innovations for Poverty Action. It took place in front of a live audience, here in New York City. So on this episode of Freakonomics Radio, we invite you to listen in.


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