The Persistence of Poverty: Karelis’ Theory

Karelis says that persistent poverty-including behavior is the main cause of persistent poverty, that none of the other major theories can explain what’s going on, and that he can.  How?

He starts by attacking what initially seems like one of the most banal assumptions in all of economics: diminishing marginal utility.  If you could either have $500 for sure, or $1000 with 50% probability, you’d want the sure thing, right?  Economics aside, isn’t this just common sense?  Not according to Kar...