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Disrupting the Poverty Cycle

We had an amazing BBG Innovation session with Anne Marie Elias on “innovation – disrupt or be disrupted “ on Thursday.

Anne Marie’s passion is “social justice” and over the years helped  developed a social enterprise incubator at “New Horizons@ called “unboxd”

New Horizons specialise in supporting people with disability, mental health concerns, those who are aged, people at risk of homelessness, humanitarian entrants, youth, and Indigenous Australians with advice connections and services. 

The discussion led to the pain of many indigenous communities around Australia and how we can help “break the cycle” of poverty and generational abuse.

A little bit of digging and research on linked in brought me to a post by Gayatri Agnew who shares the 5 qualities that make the world a “more high opportunity place” 

  1. good schools, 
  2. greater levels of social cohesion, 
  3. many two-parent families, 
  4. low levels of income inequality, 
  5. and little residential segregation, by either class or race. 

The list is suggestive, but hard to interpret he says. 

The post took me to a link by a fascinating fellow called Raj Chetty who has found that opportunity does not correlate with many traditional economic measures, such as employment or wage growth. 



It’s about “social capital” he says . 

“#socialcapital is about the set of connections that ease a person’s way through the world, providing support and inspiration and opening doors.”

So who is this Raj Chetty ?

A fascinating story of how the “poverty cycle was broken” which has guided Cherry to his life’s work.

A man whose mum Anbu, came from a family of 5 siblings in the southern tip of India – Tamil Nadu, constrained by her poverty ridden community, where men would travel to earn a living for their stay at home mums and families. 

As she was finishing high school – a local tycoon in the village decided to open up a college in his house, to educate his children . 

Anbu attended, learned English , excelled, travelled to a nearby college every day by bus to learn Chemistry – starting her trajectory to medicine and become a Doctor.

“Why do you send her there? What use would a medical degree be to a stay-at-home mother?” Said her father 

In 1962, Anbu married Veerappa Chetty, a brilliant man from Tamil Nadu whose mother and grandmother had sometimes eaten less food so there would be more for him. 

Anbu became a doctor and supported her husband while he earned a doctorate in economics. By 1979, when Raj was born in New Delhi, his mother was a pediatrics professor and his father was an economics professor who had served as an adviser to Prime Minister Indira Gandhi.

Raj (the 9) and his family moved to the USA, topped his class, moved to Harvard, earned a doctorate in economics and at 28 was offered tenure. 

In 2012, he was awarded the MacArthur genius grant and a year later the John Bates Clark Medal, awarded to the most promising economist under 40. (He was 33 at the time.) 

In 2015, he launched  his own research and policy institute at Harvard “opportunity Insights” , with funding from the Bill & Melinda Gates Foundation and the Chan Zuckerberg Initiative.

Chetty now  40 is considered to be the most  influential social scientists of his generation. “The question with Raj,” says Harvard’s Edward Glaeser, one of the country’s leading urban economists, “is not if he will win a Nobel Prize, but when.”

Chetty’s work on breaking the poverty cycle 

Chetty’s work using big data and millions of data points – is about how one can break the cycle of poverty and “generational abuse” in America. 

Some insights (or “Chetty bombs” ) from his studies include 

  • Children born in 1940 had a 90 percent chance of earning more than their parents, but for children born four decades later, that chance had fallen to 50 percent – why? 
  • Chetty created a map of the USA  showing the people’s financial prospects depend on where they happen to grow up. 
  • In Salt Lake City, a person born to a family in the bottom fifth of household income had a 10.8% chance of reaching the top fifth. In Milwaukee, the odds were 5% 
  • Dozens of the nation’s elite colleges have more children of the 1 percent than from families in the bottom 60 percent of family income. 
  • A black boy born to a wealthy family is more than twice as likely to end up poor as a white boy from a wealthy family. 

The objective of the Institute is to break the “poverty cycle” – (and hopefully Australia and Africa can learn and benefit from this research).

Despite the  dismal  track record, Chetty is optimistic that social scientists can fix the problems they articulate in journals. 

“If a phenomenon like upward mobility can be measured with enough precision, then it can be understood; if it can be understood, then it can be manipulated. 

Chetty’s big-picture goal is to revive the American dream. 

I believe that this research will be far more pervasive than the USA – and be valuable to the planet Earth. 

Here’s the link that inspired this article https://www.linkedin.com/feed/update/urn:li:activity:6557629557644546048







Posted on July 19, 2019

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