It’s the cruel cycle of poverty. The many challenges that come with being poor can sap people’s ability to think clearly, according to a new study. The findings suggest that governments should think twice before tying up social-assistance programmes in confusing red tape.
Sociologists have long known that poor people are less likely to take medications, keep appointments, or be attentive parents. “Poor people make poorer decisions. They do. The question is why,” says Timothy Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin-Madison. But does bad decision-making help cause poverty, or does poverty interfere with decision-making?
To explore this question, psychologist Eldar Shafir at Princeton University and his colleagues took advantage of a natural experiment. Small-scale sugar-cane farmers in Tamil Nadu in southern India receive most of their year’s income all at once, shortly after the annual harvest. As a result, the same farmer can be poor before harvest and relatively rich after. And indeed, Shafir’s team found that farmers had more loans, pawned more belongings, and reported more difficulty paying bills before the harvest than after.
The researchers visited 464 farmers in 54 villages both before and after harvest. At each visit, they gave the farmers two tests of their cognitive ability: a multiple-choice pattern-matching test, and one in which they had to declare the number of digits shown rather then their value: seeing “5 5 5” but saying “three”, for example.
The farmers scored significantly lower on the tests before the harvest, when money was tight, suggesting that their worries made it harder to think clearly. In fact, worrying about money impaired the farmers’ thinking almost as much as going without sleep for a full night, and was the equivalent of a 13-point drop in IQ.
Looking at the same individuals before and after they received their pay packet meant that the team controlled for other factors that likely contribute to cognitive abilities, such as family background, childhood nutrition, limited education and exposure to lead or other toxins.
The most likely explanation for the results is that people have a limited amount of “mental bandwidth”, and financial worries leave less available for other cognitive tasks, says Shafir. If so, then poor people’s bad decision-making may be at least partly a result of their circumstances, not due to any intrinsic lack of intelligence, says Smeeding, who was not involved in the study.
Shafir’s study is an important advance, says Ann Stevens, an economist who directs the Center for Poverty Research at the University of California, Davis. If poverty makes people think less clearly, then even small social programmes to improve their lot may let them devote more attention to staying healthy, being better parents and the like. That could bring social benefits that are not usually counted in cost-benefit analyses of welfare programmes, she says.
Limited mental bandwidth also means governments should be careful not to add too much paperwork to poor people’s burden. “A typical poor citizen comes to you poor in money and poor in bandwidth,” says Shafir. “When you give them a 30-page application form [for social assistance], you’re putting a pretty massive charge on their bandwidth.”
Journal reference: Science, DOI: 10.1126/science.1238041
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