Portfolios of the Atlanta Poor
The goal of PAP is to improve the understanding of preferences that poor and low-income households hold over various aspects of prosperity, including economic and financial, health and nutrition, safety and security, family and social networks, and self-fulfillment and personal growth. A particular focus is on how these preferences depend on the risk and uncertainty that is inherent in these domains. We want to know how people manage different types of risks, since they interact. One cannot claim to be managing financial risks well if mismanagement of health risks impacts financial planning. In many respects these domains have been studied in isolation: one is the business of financial planners, and the other is the business of health care providers. Our objective is to extent the tools and logic of risk management from the financial domain to other non-financial domains, such as health. How do “background risks” affect the management of “foreground risk”?
PAP also seeks to better understand the social, economic and institutional environments of poor and low-income households. These environments contain the opportunities and constraints facing households as they take actions to prosper, including the extent of risk. PAP will focus on not only economic and financial environments, but also on those relating to other aspects of prosperity such as health and nutrition, safety and security, family and social networks, and self-fulfillment and personal growth.
Another goal of PAP is to collect data on households to characterize the heterogeneous ways in which these households meet these opportunities and constraints. Households and household members will vary in many psychological and cognitive attributes, and also have various experiences that all impact how they meet opportunities and constraints.
Finally, PAP seeks to identify constraints that can be lifted through interventions such as institutional change or new products or services. It will also develop and test such policy interventions.
The PAP project will start by identifying populations in Atlanta that will be included in the study. This will be done through collaboration with research groups from across campus who are already engaged in research in the community, and with community action groups who have proven themselves sustainable in the Atlanta area.
The data collection methodology will mix longitudinal population studies that will allow identification of effects that take place over generations, with population studies that are more limited in scope with effects that are more immediate. The observation methods will consist of a mixture of surveys, diaries and experiments. The surveys are intended to gather data on observable characteristics such as household size and economic, health and social circumstance. The diaries will collect frequent observations on daily activities related to the pursuit of prosperity, including financial transactions, health and nutrition habits, and information gathering activities, for example. The experiments will test individuals literacy levels and other cognitive skills relating to the aspects of prosperity, and will elicit important personal and household characteristics that define their perceptions and preferences, including risk attitudes, trust and cooperation propensities, and time preferences.
Generous support for components of the Project has been received from the GSU Second Century Initiative (2ci) of the Office of the Provost. The 2ci award was based on a proposal initially drafted by CEAR and Risk Management and Insurance (RMI) faculty members, and was submitted by the Department of Risk Management and Insurance and by the Department of Economics with RMI as the lead unit. Part of the overall 2ci award also includes generous support by the Robinson College of Business (RCB) and Andrew Young School of Policy Studies (AYSPS) for a staff position for the Project. Funding from the Office of the Provost consists of permanent base-salary support for three new faculty positions. Funding from RCB and AYSPS consists of supplementary salary-support for 2ci faculty and permanent salary support for the Program staff position.
CEAR is providing funding over a three year period to define the project, to pilot and demonstrate the approach, and to collect initial data and perform analysis as proof of concept. In addition CEAR is funding workshops that will bring international researchers together to exchange ideas on both theory and empirical methods relating to the PAP research focus.