Beyond Behavior: Prevalences, Penalties, and Ethno-racial Inequalities in Poverty

Abstract

Ethno-racial differences in poverty are substantial and persistent in the US. To explain these differences, scholars have relied largely on behavioral explanations, which argue that poverty is the result of high prevalences of problematic behaviors or “risks.” Given substantial differences in the prevalence of risks, scholars intuit that ethno-racial differences in poverty are explained by disproportionately high prevalences of risks in Black and Latino populations. However, these approaches rely heavily on untested assumptions regarding the relationship between risks and poverty rates. Using the 1993-2016 Current Population Survey and the Urban Institute’s TRIM3 model to derive high-quality estimates of income and poverty, I confirm persistent and substantial ethno-racial differences in poverty. Next, I employ a prevalences and penalties framework to compare risks in Black, Latino, and white-lead households. This framework is then leveraged to estimate counterfactual models to predict Black and Latino poverty rates given alternative prevalences of risks. The findings demonstrate that if the prevalence of risks for Black and Latino Americans was equal that of whites, poverty rates would remain over twice as high for Black and Latino individuals compared to whites. Furthermore, even when risks are eliminated for Black and Latino Americans, poverty remains substantially higher compared to whites. These findings undermine behavioral approaches to understanding poverty and point to the need for scholars to pursue alternatives, including structural and political explanations.