Part I: Where I’m From

 

I am the subject of my own thesis research. This realization dawned on me last year, in the gap between defending my PhD thesis on the economics of education under inequality and intersectional discrimination conditions and navigating the historically hampered academic job market. More specifically, it came to me in the aisles of a grocery store at 9 p.m., having spent several hours triple-checking proofs and running simulations, as I held a package of dried pasta in one hand and a jar of alfredo sauce in the other. I knew I could only afford to pick one.

My thesis research includes an original paper on the job market, “Delaware’s Desegregation, School Choice, and Dynamic Complementarity Policies Under Disequilibrium.” In plain English, it was an applied microeconomics paper measuring how policy changes affecting students, such as school desegregation, an increased focus on STEM education, and the use of social safety net programs like Medicaid, SNAP, and Head Start, could alter life outcomes for children born into economic scarcity and segregated neighborhoods with worse quality schools. I modeled and measured the machinery of opportunity, or lack thereof. Now, I found myself a subject in that machinery’s output, without the basic needs to make more beneficial decisions for myself and my partner.

I was, demographically, the paper’s target beneficiary: a product of the system it studied, aiming for the upward mobility it quantified. A second-generation college student from a working-class background, I had majored in economics, a discipline advertised to prospective students as a ladder to a high-earning career. Yet here I was, a PhD holder and AmeriCorps service member alumnus, relying on SNAP and Medicaid. My income as a PhD student, and then as an AmeriCorps apprentice conducting labor economics research, was roughly $23,000 - $26,000 a year after my earlier two-year funded fellowship period ended. That placed me among the “underserved” workers my research studied: those for whom even a full-time wage failed to meet the basic cost of survival in Delaware without social insurance programs (misleadingly referred to as “government assistance”). I insist on referring to these programs as public social insurance because the phrase “government assistance” does not capture their full meaning or importance.

These programs insure workers against the certain suffering that awaits if they did not exist. The Government Accountability Office (GAO) has found that 12 million wage-earning adults enrolled in Medicaid and 9 million wage-earning adults in households receiving SNAP share a striking common profile: approximately 70 percent worked full-time hours of 35 or more per week, about half worked full-time hours annually, and 90 percent worked in the private sector, compared to 81 percent of non-participants. Additionally, 72 percent were concentrated in just five industries. This is the number that makes the “deserving poor” framing of conditionality policies analytically incoherent: the typical beneficiary is a full-time private sector worker, not someone outside the labor market. There is plenty of research showing that the capitalist or “free market” economic organization does not guarantee basic needs for workers. Alas, I too found myself living the economic insecurity my research hoped to understand and erase.

 

In the United States, there are pervasive stereotypes that poor or low-income workers are irrational in their decision-making with regard to budgeting—and so, if you give these poor people money, they’ll just waste it. But while these narratives may be useful for those hoping to dodge tax contributions, they are not based on empirical evidence or modern behavioral economic theory. Scarcity does not breed recklessness. Rather, it enforces a level of budgetary precision and rational decision-making that those with financial room for error can scarcely imagine. This means that defending non-means-tested public social insurance programs like CHIP, Medicaid, Social Security, etc, isn’t just about charity. It’s about respecting the autonomy and dignity of those navigating an economy designed to accumulate capital, maximize profits, and utilize the labor of workers without any room for error in their decisions.

Forthcoming research from me and my co-authors makes this case more convincingly by showing that public social insurance programs, rather than entitlements or handouts, are necessary for the United States’ chosen organization of economic production, exchange, and distribution: in short, our current iteration of capital accumulation with mainly privately owned goods markets, along with some poorly funded and supplied state-provided public goods.

Ultimately, though, the most striking lesson I learned about rational choice did not come from a graduate seminar or an econometrics textbook. It came from a plastic Electronic Benefits Transfer (EBT) card in Wilmington, Delaware. In the fall of 2025 when my AmeriCorps term service ended and I did not have employment secured, I stood in a grocery line: a PhD trained labor and public economist and recipient of Supplemental Nutrition Assistance Program benefits. As I swiped my EBT card, I felt the silent, familiar judgment in the air, a cultural assumption that this transaction was a sign of personal failure. But my training compelled me to observe a different reality. I was not witnessing a lapse in judgment; I was operating under strict restraints, induced by scarcity, that required me to carefully optimize my decisions in real time.

Every choice in that store was subjected to a calculus of brutal precision: price per calorie, nutritional density per dollar, shelf stability. There was no “impulse buy” aisle for me. My budget, combining a graduate instructor’s stipend with SNAP, formed a binding constraint with virtually zero slack. A single error, such as a missed bus forcing a costly ride-share, or a co-pay for an unexpected doctor’s visit, would become a genuine crisis, forcing a choice between food and another basic need. This lived experience presented a jarring contradiction to the economic models that make up the curriculum in many economics departments. As scholars, we often theorize about “rational actors” with disposable income making marginal trade-offs. Here, I was living as a rational actor for whom the margin for error in decision making had been erased by design. It emphasized for me the questions that originally shaped my research in economics: in what ways, based on the evidence and experience of those living with economic insecurity, is the “blame the victim” story (a term from psychology brought to economics by William Darity Jr. and Darrick Hamilton and solidified in argument with Loury here) not merely ethically questionable, but economically false?

Part II. The Narrative to Debunk: “Welfare Queens”

The narrative is old, resilient, and politically potent: people in poverty, particularly those receiving government assistance, are there because of poor character and worse choices. They are, in this telling, financially reckless, prone to wasting resources on luxuries, and lacking the basic discipline to manage money. This gross, inaccurate caricature, which originated from President Reagan’s fabricated “welfare queen” to modern rhetoric demanding drug tests for aid recipients, serves a useful and cruel function. It moralizes economic conditions which are inevitable based on the design of our economy. These policy decisions are often referred to as collective, “democratic” choices. To be frank, corporations and shareholders benefit from these choices and individual billionaires exert disproportionate influence on policy. Truthfully, how democratic or collective is this? Nonetheless, these policies, driven by large corporations’ profits, transform poverty from a systemic outcome into a personal failing punishable by incarceration or death.

The implicit economic model behind this worldview or ideological schema is one of abundance and efficient rationality. It assumes that everyone, regardless of income, operates with a cushion of “error slack,” or money left over after true necessities are met. In this worldview, falling into or remaining in poverty is a choice born of misallocating that slack. If you are poor, you have chosen a flat-screen TV over vegetables, or you have chosen laziness over work. This logic justifies non-credible (see the research of Charles Manski) policy decisions driven by suspicion, punishment, and austerity: strict work requirements, means testing and paternalistic oversight which denies the dignity of those whose labor is the source of corporate profits. For example, many U.S. lawmakers want to place restrictions on what kinds of food SNAP and EBT recipients can eat, as if they are children who can’t be trusted not to spend their allowance on candy. The goal becomes not to alleviate scarcity, but to police the supposedly poor decisions it engenders. It is a convenient story for those who benefit from wide-scale low wages and a minimal social safety net, while their companies are subsidized by the same labor they exploit. It is also a story that collapses under the irrefutable weight of evidence and experience.

III. Dreadful Social Arithmetic: Optimal Budgeting Under Duress

To understand the reality, we must start with the stark arithmetic of survival. Take Delaware, where I lived. In 2025, a full-time worker required an hourly wage of $26.39 to afford a modest one-bedroom apartment and food without being cost-burdened. Someone earning minimum wage, or $15, would need to work 70 hours per week to afford the same. This isn’t a luxury budget; it’s a needs budget. Let’s call this annual cost. It is the financial ground zero for survival. Now, introduce the concept of “Error Slack.” It is simple: for any annual income, error slack is the money remaining after covering the survival basics. It is your margin for error, the necessary buffer against life’s uncertainties.

This simple concept reveals the problem with the idea that those paid low wages are irrational. Consider a graduate research assistant or instructor in Delaware, earning $23,000-$26,000 annually, a common salary for early-career academics. Their income is approximately equal to, or even less than, the survival cost. Therefore, their Error Slack is zero. Their budget is a physiological and financial cliff’s edge. There is no room for a budgeting “mistake” because any deviation from the optimal allocation for food and housing results in deprivation. Contrast this with a professional earning $70,000–$75,000. Their survival cost is the same. Their error slack, however, is between $255 and $672 per month. This is the realm of discretionary spending: a streaming subscription forgotten on a credit card, an unplanned dinner out, a slightly higher electricity bill. They can afford to be inattentive. They can afford “waste.”

This divergence leads to my central claim: scarcity enforces precision, while abundance permits laxity. We can formalize this with a Budgeting Precision Index (BPI), defined as the inverse of error slack. The lower your income above the survival threshold, the higher your BPI, and the tighter the requirement for perfect or “optimal” budgeting. The SNAP-eligible worker, with an error slack of zero, has a near-infinite BPI. The higher earner has a low BPI. This isn’t a difference in virtue or innate skill. It is a systemic property of scarcity. When your feasible consumption set is bounded precisely at the survival frontier, your “rational choice” collapses to a single, non-negotiable point: meet needs first, and there is nothing left. This is the decision making for survival under scarcity, discussed by economists such as Anwar Shaikh, Herbert Simon, and Michael Mandler: a hierarchy of choice where food and shelter are solved before any other good is even considered.

This explains the behavior often mislabeled as irrational. Why does a low-income parent meticulously track grocery prices yet seem to forget other salient details? The answer lies in cognitive bandwidth. My research models bandwidth as a scarce cognitive resource devoted to optimization. It diminishes endogenously under scarcity. As disposable income shrinks toward zero, so does cognitive bandwidth. The mind’s computational power is forcibly reallocated from long-term planning to the acute, all-consuming problem of surviving the present. The linked article, published in Science, provides seminal work by Anandi Mani et al., presenting two studies: one using induced financial stress in a mall setting, and one tracking sugar cane farmers in Tamil Nadu, India across the harvest cycle, finding that the same farmer performs worse on cognitive tests before harvest (when cash-poor) than after (when flush). The authors rule out time pressure, nutrition, and work effort as confounds, and also find that stress alone does not account for the cognitive gap, indicating instead that poverty-related concerns consume mental bandwidth.

This is rational inattention under conditions of scarcity. The individual is not incapable of planning; their minds’ resources are optimally, and rationally, being deployed to the most immediate concern relevant for survival. They exhibit hyper-precision in the domain of survival goods (high BPI) and apparent inattention elsewhere. They are not making poor decisions. They are making the most rigorously rational decisions possible within a system that has stripped them of any margin for error or cognitive peace.

Consider a home health aide who earns $1,400 per month. Her rent is $950, leaving $450 for everything else, including the necessary food, transit, phone, and utilities. There is essentially no slack. One Thursday, her car needs a $300 repair to pass inspection or she loses her job. She has $180 in her account and payday is 10 days away. The short-term rational decision is to take a payday loan for $300 at a fee of $45 per $100 borrowed, effectively a 391 percent APR. She gets the car fixed, keeps her job, and can survive at least another week. Given her constraints at that moment, this is the rational decision that prevents her from becoming unemployed and even more destitute.

When payday arrives, though, she must repay $345 out of her $1,400 check. This recreates the same deficit she started with, but now compounded. She is again below the threshold of basic solvency. So she rolls the loan, or takes another. The mechanism that scholars Sendhil Mullainathan and Eldar Shafir described in their Science article kicks in at two levels:

1. Via tunneling: So her cognitive bandwidth is almost entirely consumed by the immediate crisis. Long-horizon thinking (building a $500 emergency fund over six months, investigating credit union loans, enrolling in an employer savings match) is not available to her psychologically in the same way it would be to someone with $5,000 in a savings account. These options are not unknown to her; they are simply not salient in the tunnel.

 

2. Bandwidth tax on unrelated decisions: Because her mental resources are depleted managing the budget crisis, she is measurably worse at other executive-function tasks. Critical decisions such as negotiating a raise, evaluating a lease renewal, and remembering a recertification deadline for her health aide license are neglected due to restricted bandwidth.. The scarcity in one aspect of the worker’s life affects others.

Over a year, our home health aide worker may pay $800–$1,200 in rollover fees on what was originally a $300 need, more than she would have needed to save to avoid the crisis entirely. But the saving strategy required slack she didn’t have and bandwidth she didn’t have. Each individual decision in the sequence was defensible given her information and constraints at the time it was made. The irrationality is a systemic property of the situation, not a personal failing of the worker in question.

This is what makes the Mani-Mullainathan finding so consequential for economics and optimal policy design to benefit less fortunate workers: it breaks the standard assumption that workers have a stable, context-independent preference ordering from which they maximize utility. If cognitive capacity is itself a function of material resources, then the revealed preferences of the poor are endogenous to their poverty. This creates a serious, paradigm-shifting problem for any social choice or welfare theory that grounds redistribution claims in preference satisfaction. The worker’s “choice” of the payday loan cannot be cleanly read as revealing a preference in the Samuelsonian sense, because the preference-formation process was itself distorted by the resource constraint being evaluated.

IV. From Judgment and Punishment to Public Options and Guarantees

The evidence dismantles the foundational logic of punitive government assistance policy. Work requirements, asset tests, and mandatory financial literacy classes are solutions to a problem that does not exist: the myth of the irrational poor. They are designed to correct poor character, when the data shows the true character of low-income people is one of remarkable resilience and precision. These policies add complexity, stress, and cognitive cost to lives already operating at the limit, further depleting the very bandwidth needed to escape poverty. A dollar transferred to someone in deep scarcity does more than purchase calories. It purchases cognitive bandwidth. It relaxes the most binding constraint on human decision-making. By raising post-needs income, a SNAP benefit or a cash transfer increases slack. It literally expands a person’s capacity for rational choices that benefit them. The welfare return on this dollar is multiplicative, improving not just material welfare but agency itself. This insight is one of the main results from combining the research of John Maynard Keynes, Richard Kahn, and cutting-edge empirical work in behavioral economics.

Keynes and Kahn theorized a “multiplier”: that is, that government spending on public welfare programs caused knock-on benefits multiple times greater in value than the spending itself. Their multiplier is a macroeconomic spending mechanism and operates through consumption rounds in aggregate demand, not through individual cognitive restoration. The bandwidth multiplier introduced here is a microeconomic welfare mechanism operating through decision-quality. What I am contributing to the welfare economics literature is the result that the welfare return on a transfer dollar is multiplicative along two independent channels at the same time: the Kahn-Keynes spending multiplier on the demand side, and the Mullainathan-Shafir cognitive multiplier on the agency side of workers.

Therefore, the policy implications are as clear as they have been for workers for some time now: we must move from a paradigm of suspicion to one of slack-creation. Our goal should be to engineer robust error slack for every citizen. This means policies that attack the cost of basic needs: universal healthcare, together with high-quality, guaranteed public housing such as proposals in New York and efforts in California and Newport News, Virginia. It also means providing unconditional, cash-based supports that directly increase the margin for error for workers, like an expanded Child Tax Credit and a non-means tested Guaranteed Universal Basic Income. These are not utopian luxuries. They are the foundational programs for a truly functional and free market, where rational choice is not a privilege reserved for those with disposable income.

The lesson of my research and experience is one of profound respect. The SNAP recipient is not a passive recipient of charity, a fool, or lazy. She is an expert econometrician, solving a brutal optimization problem every day with a precision that would stagger most budget analysts. Defending and expanding the guaranteed basic needs such as climate change resilient housing, healthcare, pollution-free air, and resilient land can provide relief for millions of struggling laborers. In short, a social safety net or public social insurance to insure workers’ well-being and protect labor from unbridled private capital accumulations, intrinsic cyclical chaos, and uncertain risks is not an act of pity. It is an act of recognition, a demand that we stop punishing people for the expertise they develop in surviving an economy that fails to pay a living wage. We must build a society where financial genius is no longer a forced adaptation to scarcity, but a liberated capacity for human flourishing.