A person preoccupied with chronic money problems exhibits a drop in cognitive function similar to a 13-point dip in IQ, or the loss of an entire night's sleep. (Credit: Aldo Cavini Benedetti/Flickr)

Poverty does bad things to your brain

Poverty and the worry that goes with it uses up so much mental energy that the poor have little room in their brains for anything else.

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.

A new study suggests that being poor may keep some people from concentrating on ways that would lead them out of poverty. 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.

So a person is left with fewer “mental resources” to focus on complicated, indirectly related matters such as education, job training, and time management.

A series of experiments show that pressing financial concerns have 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.

Poverty’s revolving door

When their concerns were benign, low-income individuals performed competently, at a similar level to people who were well off, says corresponding author Jiaying Zhao, who conducted the study as a doctoral student in the lab of co-author Eldar Shafir, professor of psychology and public affairs at Princeton University.

“These pressures create a salient concern in the mind and draw mental resources to the problem itself. That means we are unable to focus on other things in life that need our attention,” says Zhao, who is now an assistant professor of psychology at the University of British Columbia.

“Previous views of poverty have blamed poverty on personal failings, or an environment that is not conducive to success. We’re arguing that the lack of financial resources itself can lead to impaired cognitive function. The very condition of not having enough can actually be a cause of poverty.”

The mental tax that poverty can put on the brain is distinct from stress, Shafir says. Stress is a person’s response to various outside pressures that—according to studies of arousal and performance—can actually enhance a person’s functioning.

In the new study, published in Science, researchers instead describe an immediate rather than chronic preoccupation with limited resources that can be a detriment to unrelated yet still important tasks.

“Stress itself doesn’t predict that people can’t perform well—they may do better up to a point,” Shafir says. “A person in poverty might be at the high part of the performance curve when it comes to a specific task and, in fact, we show that they do well on the problem at hand.

“But they don’t have leftover bandwidth to devote to other tasks. The poor are often highly effective at focusing on and dealing with pressing problems. It’s the other tasks where they perform poorly.”

Costly mistakes

The fallout of neglecting other areas of life may loom larger for a person just scraping by, Shafir says. Late fees tacked on to a forgotten rent payment, a job lost because of poor time-management—these make a tight money situation worse. And as people get poorer, they tend to make difficult and often costly decisions that further perpetuate their hardship.

“They can make the same mistakes, but the outcomes of errors are more dear,” Shafir says. “So, if you live in poverty, you’re more error prone and errors cost you more dearly—it’s hard to find a way out.”

The first set of experiments took place in a New Jersey mall between 2010 and 2011 with roughly 400 subjects chosen at random. Their median annual income was around $70,000 and the lowest income was around $20,000.

Researchers created scenarios wherein subjects had to ponder how they would solve financial problems, for example, whether they would handle a sudden car repair by paying in full, borrowing money, or putting the repairs off.

Participants were assigned either an “easy” or “hard” scenario in which the cost was low or high—such as $150 or $1,500 for the car repair. While participants pondered these scenarios, they performed common fluid-intelligence and cognition tests.

Subjects were divided into a “poor” group and a “rich” group based on their income. The study showed that when the scenarios were easy—the financial problems not too severe—the poor and rich performed equally well on the cognitive tests. But when they thought about the hard scenarios, people at the lower end of the income scale performed significantly worse on both cognitive tests, while the rich participants were unfazed.

To better gauge the influence of poverty in natural contexts, between 2010 and 2011 the researchers also tested 464 sugarcane farmers in India who rely on the annual harvest for at least 60 percent of their income. Because sugarcane harvests occur once a year, these are farmers who find themselves rich after harvest and poor before it. Each farmer was given the same tests before and after the harvest, and performed better on both tests post-harvest compared to pre-harvest.

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.

It’s not about being poor

“These findings fit in with our story of how scarcity captures attention. It consumes your mental bandwidth,” Zhao says. “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.”

“We documented similar effects among people who are not otherwise poor, but on whom we imposed scarce resources,” Shafir says. “It’s not about being a poor person—it’s about living in poverty.”

Many types of scarcity are temporary and often discretionary, Shafir says. For instance, a person pressed for time can reschedule appointments, cancel something, or even decide to take on less.

“When you’re poor you can’t say, ‘I’ve had enough, I’m not going to be poor anymore.’ Or, ‘Forget it, I just won’t give my kids dinner, or pay rent this month.’ Poverty imposes a much stronger load that’s not optional and in very many cases is long lasting. It’s not a choice you’re making—you’re just reduced to few options. This is not something you see with many other types of scarcity.”

Services for the poor should accommodate the dominance that poverty has on a person’s time and thinking. Such steps would include simpler aid forms and more guidance in receiving assistance, or training and educational programs structured to be more forgiving of unexpected absences, so that a person who has stumbled can more easily try again.

“You want to design a context that is more scarcity proof,” says Shafir, noting that better-off people have access to regular support in their daily lives, be it a computer reminder, a personal assistant, a housecleaner, or a babysitter.

“There’s very little you can do with time to get more money, but a lot you can do with money to get more time. The poor, who our research suggests are bound to make more mistakes and pay more dearly for errors, inhabit contexts often not designed to help.”

Anandi Mani, an associate professor of economics at the University of Warwick, and Sendhil Mullainathan, a Harvard University economics professor, contributed to the study.

Source: Princeton University

chat8 Comments

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8 Comments

  1. Andrea R

    I am sorry to have to be the bearer of bad news, but this article is a bunch of BS. Seriously, we can’t make excuses for everything ugly in the world. We just have to accept the fact that there are ugly things in the world and people who have lost hope and have no desire to improve their life to society’s standard of “normal”. Anything has and can be achieved when one truly wants it and has the will power, determination and common sense to do so.

  2. kathi

    Isn’t this just proving Maslow’s hierarchy of needs? The biological needs will consume your attention until filled and you can turn to the next need on the ladder.

  3. patathomasfuturity

    Methodology? What methodology? Any wonder the social sciences are considered less than rigorous? The agenda is the most “rigorous” aspect of the study and results, but is not stated.

  4. Ann

    This article is so on target. It is difficult to focus on ANYTHING when you are impacted by lack of funds for just everyday needs. Poverty is not necessarily a lack of funds, its the lack of resources needed to have a healthy balance in this [capitalistic] society we live in. People who don’t have these issues or obstacles can’t even begin to understand an article such as this. That doesn’t mean that things can’t be accomplished and i don’t think that is what was being said. It just explains the impact of such conditions.

  5. Tony - KS

    Those who have ears to hear, let them hear:
    the valleys will be lifted up and the mountains made low. Poverty will become extinct, riches more balanced.

  6. Neil Lewis

    Growing up in early years of poverty has had a profound meanings in my life. I learned very early that I could make use of ‘directive thinking’ abilities. I had to be aware of making choices. I learned to be able to do without, to devoid my feelings of “I have it coming”, “I need it and now”, “I would be better off if I had it”, and other distractive desires. I acquired the notion that satisfaction in my life meant more to me when I saw that I could be accountable to myself and develop acquired skills for managing my life and move on making good choices, finding my own potentials, and grow to be the person that I envisioned I desired my life to be. I suggest that “directive thinking” is to be a higher level of development than to be living in a state of “arrestive thinking.”

  7. Jerry

    Sorry Andrea, but that is just an uninformed opinion. There are individuals in our society who realistically are not going to be able to get out of their situation and they rely on the assistance of those of us who have been blessed to assist. As one example of many, lets talk of an unemployed grandmother in her 60’s caring for several grandchildren. How is she supposed to obtain a job that will provide sufficient income to maintain a home? She can’t even afford daycare for the grandchildren. Luckily, most people recognize that everyone can’t get out of their situation alone and will need some level of support.

  8. Nathaniel

    Andrea you seem to have a very narrow sight on the truth of poverty. It is true in a sense that some of these people living in poverty have either lost hope for coming out of poverty, but for those which are most of the people living in poverty are really trying to get out of that. It’s structural. Impoverished people have a thumb pressed to the top of their heads. Like a glass ceiling if you will. It’s not an excuse, but the only way we could start to solve the poverty issue is to begin on a corporate level. This might mean people should vote more. There’s too any solutions we could come up with, but in reality what we need is a realistic solid action plan to set it in motion.

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