“Who agrees that poor people make bad decisions?” Southern District of New York Judge Shelley Chapman asked to crowded room on Monday, Feb. 17. Only a couple hands expressed concurring opinions.
“But everyone makes bad decisions,” Judge Chapman continued. “There is a tremendous amount of empirical data that shows if you put a non-poor person in a situation of scarcity, they will make bad decisions.”
This data is especially revealing because women find themselves in more dire financial constraints more frequently and more quickly. There is also a double standard with corporate and consumer financial responsibility. Judge Chapman offered American Airlines as an example. Before declaring bankruptcy, American Airlines did not pay its creditors while it had billions sitting in the bank. Analysts considered this to be business-savvy behavior, but if a consumer did something like this it would be considered immoral.
The United States was founded on debt, and could not have succeeded without people who were willing to take enormous risk. The bankruptcy system is designed to allow people to take risks and recover from those risks. Kate Nicholson, associate with Parker & Assoc., and HLS graduate, commented that we are seeing people taking risks and not recovering—and one of the most negatively affected populations is women. Professor Lauren Willis agreed that debt for the purposes of fueling risk is good, but we do not want people to be taking on risk to pay for groceries this week.
To effectively tackle this issue, the panelists encouraged looking at debt from the point of view of feminism and structural inequality. Nicholson used statistics from the 2009 Census to convey just how dire the situations women face are—22 percent of divorced women live below the poverty line, and 50 percent of custodial parents have child support agreements but only 41 percent of those people receive the full child support they are due. Even more strikingly, 89.5 percent of the people depending on child support agreements are women. In short, women are relying on an income stream that is extremely unreliable to make ends meet.
So what can we do? Judge Chapman recommends putting a stop to predatory lending, shutting down payday loans, making credit documents understandable, and making behavior in the banking industry rational. Professor Willis added that there is evidence that the current financial literacy programs are actually harmful. She advocates for a simpler marketplace where people could learn the lessons that matter.
The Women’s Law Association and Unbound, Harvard’s Journal of the Legal Left, hosted the panel.
“I’m thrilled that WLA and Unbound are working together to promote feminist analysis of legal issues at HLS,” said Rebecca Chapman, editor of Unbound. “And this is just the beginning.” Chapman is referring to feminist legal theory reading group, and is planning conferences, film screenings, and more panel discussions.