Matthew Effect: How the Rich Gets Richer and Poor Gets Poorer — Layman's Terms Skip to content
Matthew Effect Explained

Matthew Effect: How the Rich Gets Richer and Poor Gets Poorer


The saying goes that “the rich get richer and the poor get poorer.” This is often attributed to a phenomenon known as the Matthew Effect, which states that those who have more advantages in life (money, power, etc.) will continue to accumulate even more advantages, while those who start off with fewer advantages will eventually fall further and further behind.

There’s a lot of truth to this idea, and it has been borne out by numerous studies over the years. For instance, one study found that “children from higher social class backgrounds tend to have better outcomes in life than children from lower social class backgrounds.” Another found that “the poorest 20% of Americans have only 14% of the nation’s wealth, while the richest 20% control 86% of it.”

The Matthew Effect helps to explain why inequality has been on the rise in recent years, and it’s a major reason why poverty is so difficult to escape. Those who start off with less are constantly fighting an uphill battle, while those who start off with more just keep getting ahead.

Let's take a closer look at the Matthew Effect and some of the ways it exacerbates inequality.

Definition of the Matthew Effect

Matthew 25:29

The Matthew Effect is named after a passage from the Bible (Matthew 25:29), which reads:

“For unto every one that hath shall be given, and he shall have abundance: but from him, that have not shall be taken away even that which he has.”

In other words, those who already have a lot will be given even more, while those who have nothing will lose what little they have.

This idea was later popularized by American sociologist Robert K. Merton, who used it to explain how people of different social backgrounds tend to fare in life. Merton argued that there are two types of capital that lead to success: human capital (skills, education, etc.) and social capital (connections, networks, etc.).

Those who have more of these resources, to begin with, are more likely to succeed in life, while those who have less are more likely to fail. This is because the rich have more opportunities and can better take advantage of them, while the poor often lack the resources they need to get ahead.

The Matthew Effect is often used to explain why poverty is so difficult to escape. Those who are born into poverty tend to have fewer opportunities and less capital, which makes it harder for them to get ahead. As they fall further behind, they become even more likely to stay in poverty.

This vicious cycle is known as the “poverty trap,” and it’s one of the reasons why poverty is so difficult to break out of.

The Matthew Effect is a major contributor to inequality because it exacerbates the differences between those who have advantages and those who don’t.

The Rich Really Do Get Richer

Rich Get Richer

It’s not just a saying – studies have shown that the wealthy tend to accumulate even more wealth over time. One reason for this is that they can afford to invest their money in ways that will generate even more income, such as stocks, bonds, and real estate. They can also afford to hire financial advisors who will help them make even more money.

But it’s not just about making more money – it’s also about hanging on to what you have. The wealthy are much less likely to experience job loss or income decline than the poor, and they’re more likely to have health insurance and other protections that shield them from financial hardship.

All of this means that the rich are constantly widening the gap between themselves and the poor. And as the gap grows, so does inequality.

The Poor Get Poorer

Poor Get Poorer

While the rich are getting richer, the poor are falling further behind. This is due in part to the fact that they don’t have the same opportunities to make money and accumulate wealth. But it’s also because they’re more likely to experience financial setbacks that can push them even further into poverty.

For example, a job loss can be devastating for someone who lives paycheck to paycheck. If they don’t have any savings, they may have to turn to credit cards or payday loans just to make ends meet. This can put them in a cycle of debt that is very difficult to escape.

And if they do manage to find another job, it’s likely that it will pay less than their previous one. This is because they’re now considered to be “high-risk” employees, and companies are less likely to offer them good salaries or benefits.The Matthew Effect is a Major Contributor to Inequality. It is a clear example of how the rich get richer and the poor get poorer. It’s not just a saying – it’s a real phenomenon that exacerbates inequality and makes it harder for people to escape poverty.

How to Overcome the Matthew Effect

There’s no easy solution to the Matthew Effect, but there are some things that can be done to mitigate its effects. For instance:

  • Providing opportunities for people to get ahead: When people have a chance to improve their skills or get training for better-paying jobs, they can start to close the gap between themselves and the wealthy.
  • Reducing financial hardship: Programs like food stamps and Medicaid help to reduce the financial burden on those who are struggling. This can give them a bit of breathing room to get back on their feet and start to climb the economic ladder.
  • Addressing the root causes of inequality: Structural changes, like increasing the minimum wage or providing paid family leave, can help to reduce inequality and give everyone a fair shot at success.

It’s important to remember that the Matthew Effect is just one part of a larger system of inequality. But by understanding how it works, we can start to develop solutions that will help to level the playing field.

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