Poverty and all its related concerns require so much mental energy that the poor have less remaining brainpower to devote to other areas of life, according to research based at Princeton University. As a result, people of limited means are more likely to make mistakes and bad decisions that may be amplified by — and perpetuate — their financial woes.
Published in the journal Science, the study presents a unique perspective regarding the causes of persistent poverty. The researchers suggest that being poor may keep a person from concentrating on the very avenues that would lead them out of poverty. A person's cognitive function is diminished by the constant and all-consuming effort of coping with the immediate effects of having little money, such as scrounging to pay bills and cut costs. Thusly, a person is left with fewer "mental resources" to focus on complicated, indirectly related matters such as education, job training and even managing their time.
In a series of experiments, the researchers found that pressing financial concerns had an immediate impact on the ability of low-income individuals to perform on common cognitive and logic tests. On average, a person preoccupied with money problems exhibited a drop in cognitive function similar to a 13-point dip in IQ, or the loss of an entire night's sleep. But when their concerns were benign, low-income individuals performed competently, at a similar level to people who were well off, said corresponding author Jiaying Zhao, who conducted the study as a doctoral student in the lab of co-author Eldar Shafir, Princeton's William Stewart Tod Professor of Psychology and Public Affairs.
The cognitive effect of poverty the researchers found relates to the more general influence of "scarcity" on cognition, which is the larger focus of Shafir's research group. Scarcity in this case relates to any deficit — be it in money, time, social ties or even calories — that people experience in trying to meet their needs. Scarcity consumes "mental bandwidth" that would otherwise go to other concerns in life, Zhao said.
"These findings fit in with our story of how scarcity captures attention. It consumes your mental bandwidth," Zhao said. "Just asking a poor person to think about hypothetical financial problems reduces mental bandwidth. This is an acute, immediate impact, and has implications for scarcity of resources of any kind."
Morgan Kelly. "Poor concentration: Poverty reduces brainpower needed for navigating other areas of life". News at Princeton, August 29, 2013.
The poor often behave in less capable ways, which can further perpetuate poverty. We hypothesize that poverty directly impedes cognitive function and present two studies that test this hypothesis. First, we experimentally induced thoughts about finances and found that this reduces cognitive performance among poor but not in well-off participants. Second, we examined the cognitive function of farmers over the planting cycle. We found that the same farmer shows diminished cognitive performance before harvest, when poor, as compared with after harvest, when rich. This cannot be explained by differences in time available, nutrition, or work effort. Nor can it be explained with stress: Although farmers do show more stress before harvest, that does not account for diminished cognitive performance. Instead, it appears that poverty itself reduces cognitive capacity. We suggest that this is because poverty-related concerns consume mental resources, leaving less for other tasks. These data provide a previously unexamined perspective and help explain a spectrum of behaviors among the poor. We discuss some implications for poverty policy.
Mani et al. "Poverty Impedes Cognitive Function". Science, 2013.