This is amazing. Freakonomics guest blogger Sudhir Venkatesh has been working for the past few months with Michael, a trust-fund baby with $78 million to donate over the next few years. After paying 20 grand to a few consultants to help him direct his funds and getting a lot of hogwash about “embracing the inner you” in return, Michael asked Sudhir to spend a year helping him understand what living in poverty is really like. Last weekend, Sudhir took him to the South Side of Chicago to meet his friend Curtis, a squatter who lives on $5,000 a year. This was no handshake photo-op: Sudhir actually made Michael spend the entire weekend with him.

At noon on Saturday I asked Michael and Curtis: “With only $20, how will you survive for the weekend — from now, until Monday morning?” (Curtis and I agreed to exempt rent. It was hard enough using $20 to meet food and personal needs — Michael would never figure out how to squat.) Michael wouldn’t sleep at Curtis’s place — he stayed at the Four Seasons, but to his credit, he hung out in Curtis’s neighborhood.

It’s not long before Michael finds himself flummoxed with the realities of life below the poverty line. In particular, he is incredulous at the dearth of options for healthy eating (fruit comes in cans because people don’t always have access to a fridge, for example). Throughout the course of the weekend, Curtis dispenses street wisdom in a similar vein:

“Why not stay at a shelter?” Michael asked.

“Not enough of them around,” Curtis replied. “And you have to be out by 6 a.m. If you got kids, you can’t take them out in the cold. So you stay in a store, or you stay in a vacant building. And no more food kitchens since the projects went down. Not a lot for poor people.”

Curtis then took out a cigarette. “See this? Always have a loose cigarette. You can always use a bathroom in somebody’s house — maybe even get a shower — for one. Maybe your kid took a dump in his pants. Maybe you need some toilet tissue. Always keep a cigarette for emergencies.”

I grew up in what I would characterize as a lower middle class household. My family always had everything we needed, but rarely everything we wanted. Thanks to generous financial aid programs and good test scores, I was able to attend two outstanding private schools from 7th grade through college for a tiny fraction of the cost of tuition. In both of these institutions, I was among a minority of students who received any financial aid at all. Following graduation, I worked several nonprofit arts jobs in Philadelphia and New York, going for a period of time without health insurance, and never achieving more than a break-even budget. In 2005 and 2006, I was supporting a very active performing ensemble that drained, even after donations and grant support, up to $5,000 a year from my already meager coffers. I learned how to avoid social situations that required me to buy drinks at a bar, or involved eating out at a restaurant more than once a month. I took girls on dates to pizza places. I enjoyed living in New York, but it was an incredibly draining experience, principally because I couldn’t really afford it. At any given time, I felt excluded from about 90% of what the city had to offer because of my financial situation. So I made do with the remaining 10% as best I could and tried to smile.

Though my upbringing was modest in comparison to many of those around me, I am well aware that I have lived the lifestyle of a king by Curtis’s standards. In New York, I lived in safe neighborhoods with easy access to public transportation, amenities, and entertainment. I managed to avoid any long-term credit debt and paid down some of my student loans. I had a computer and furniture and clothes and a roof over my head. And I always knew that no matter what happened, even if things got really bad, there were many, many people I could turn to for help.

Michael met Lena, a 45-year-old woman with three children who works part-time at a fast-food restaurant. She agreed to let Michael observe her strategies to put food on the table and keep her family together. Michael offered to pay her a fee for a week of conversation. Lena said, “How about we exchange our paychecks for one month.” Michael turned bright red.

So I’m not surprised at Michael’s shock and discomfort while immersed in Curtis’s living environment. I feel that I can say with some confidence that it’s not possible to truly understand what it’s like to be resource-constrained until one has experienced it oneself. There’s a reason why Knowing what’s best for poor people is #62 on the list of Stuff White People Like. At the end of the weekend, Michael’s brilliant solution for how to survive for 48 hours on $20 was “buy $20 of Yahoo stock. Hope for the best.”

It’s certainly worth reading the entire blog post over at Freakonomics, but be sure to read the comment thread as well. I particularly enjoyed this gem:

Great post Dr. Venkatesh.

Also you have to give the consultants some credit. Michael asked them about philantropy, and they took $ 20,000 without giving him much of anything in return. Michael asked Curtis, and Curtis took/had $ 20 and shared food and coffee with Michael.

I think Michael has learned that there’s more to charity than giving your money away and not expecting anything in return 😉

— Posted by Jaap

Touché!