News / Science & Technology

Study: Poverty Worsens Decision-making

Indian sugar cane farmers performed worse on cognitive tests when they were poorer, right before the harvest,  than when they were richer, after the harvest. (File photo)
Indian sugar cane farmers performed worse on cognitive tests when they were poorer, right before the harvest, than when they were richer, after the harvest. (File photo)
New research suggests the stress of being poor drains the brain power needed to make important decisions. The study may help explain why the poor tend to make bad choices that perpetuate their condition.

Earlier studies have found that poor people do worse with their finances, pay less attention to their children than richer people, and are less likely to take care of their health, all of which ultimately make them less likely to escape poverty.

But there has been little research on why the poor make decisions that make their lives harder. Until recently, economists, not psychologists, studied poverty.

“In the last few years, the two disciplines sort of combined forces," said Princeton University psychologist Eldar Shafir. "And we just became interested in cognitive function and its impact when people struggle with not having enough.”

Shafir and colleagues conducted two sets of experiments, one in a mall in suburban New Jersey, and one among sugar cane farmers in rural India.

In the New Jersey experiment, middle and low-income test subjects were asked what they would do if their cars needed repairs. They then performed tasks that test cognitive function, such as choosing which shape fits in a pattern of shapes.

They were given two scenarios. In the first, the car repairs cost $150, an unpleasant but affordable amount for the average mall shopper. In the second, the repairs cost $1,500.

“When we looked at the cases where the financial scenario in the background was not too challenging, the poor and the rich performed equally well on all the cognitive tests,” Shafir said.

But that wasn't the case when the researchers raised the stakes.

“Once we tickled their minds with financially more challenging problems, now the poor performed significantly worse,” he said.

They lost about 13 IQ points on average, about the same impact on brain function as losing a full night’s sleep.

The scientists wondered if they would see the same impact outside the controlled environment of a New Jersey mall. And they wanted to know if the same person responded differently when he was rich and when he was poor.

That's where the Indian sugar cane farmers came in. They get most of their income for the year all at once, when the harvest comes in. But the money often does not last through the year.

“So they find themselves basically rich after the harvest when the income comes in, and poor just before the harvest,” Shafir said.

The researchers gave them tests of cognitive function similar to the ones the mall shoppers took. They tested the farmers before the harvest and after. And the results were much the same as with the mall shoppers.

“They performed much more slowly and with many more errors when they were poorer than when they were richer,” Shafir said.

Shafir said these results fit with a half-century of research showing we all have a limited amount of mental bandwidth to devote to all the things life throws at us.

One experiment found that exercising the willpower needed to resist irresistible chocolates made it harder for people to control their emotions or perform difficult mental tasks afterward.

And struggling to pay the bills has a similar effect, he added.

“So the insight here is that, experiencing scarcity, having not enough of something in a way that weighs on your mind, leaves less for everything else,” he said.

There’s a message here for policymakers, Shafir said. “If you care about it and you want to help the poor do better, you need to help them maintain more bandwidth.”

That means that making aid programs easy to use, not adding a lot of bureaucratic burden, and timing programs to when the recipients can make the best use of them may free up the brainpower the poor need to get ahead.

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