in Life

Giving Money to the Poor Helps the Economy

Who’d have thunk it? But apparently economists do:

Actually, most economists—make that all economists—disagree with Shadegg. Give an unemployed person a dollar, and she tends to spend it, because she needs to. (By definition, she has no other source of income.) Give a rich person a dollar via a tax break, she tends to save it. (By definition, she has a lot of other assets.) Mark Zandi, chief economist at Moody’s, has found that $1 in unemployment benefits generates $1.61 in economic activity. (That’s the second most-stimulative form of government spending, behind food stamps.) A dollar in tax cuts—not just to the rich, but to everyone—generates about 32 cents.