More on Poverty Causes Bad Decision-Making

Here is Cass Sunstein's take on the research I wrote about last week showing how the stress of poverty interferes with rational planning. He starts with a discussion of bureaucratic language:

If a project must be abandoned or put on hold because of competing demands on people’s time and attention, the problem is one of “bandwidth.” . . . The central idea is that public officials have the capacity to focus on, and to promote and implement, only a subset of the universe of good ideas. . . .Within government, some good ideas fail to go anywhere, not because anyone opposes them, but because the system lacks the bandwidth to investigate them.

This leads him to the research of behavioral economist Sendhil Mullainathan and cognitive psychologist Eldar Shafir on the psychological effects of scarcity. Although the word covers a wide variety of situations, they find that

across all of those categories, the feeling of scarcity has quite similar effects. It puts people in a kind of cognitive tunnel, limiting what they are able to see. It depletes their self-control. It makes them more impulsive and sometimes a bit dumb. What we often consider a part of people’s basic character—an inability to learn, a propensity to anger or impatience—may well be a product of their feeling of scarcity. If any of us were similarly situated, we might end up with a character a lot like theirs. An insidious problem is that scarcity produces more scarcity. It creates its own trap.

Because they lack money, poor people must focus intensely on the economic consequences of expenditures that wealthy people consider trivial and not worth worrying over. Those without a lot of time have to hoard their minutes, and they may have trouble planning for the long term. The cash-poor and the time-poor have much in common with lonely people, for whom relationships with others are scarce. When people struggle with scarcity, their minds are intensely occupied, even taken over, by what they lack.

Mullainathan and Shafir compare the effects of poverty to experiments on food deprivation, which cause the subjects to become completely obsessed with food. When the lack of something takes over the mind, there just isn't "bandwidth" to do things like plan for the long-term future. More:

A depletion of bandwidth also reduces people’s capacity for self-control. After being asked to try to remember eight-digit numbers, people are more likely to be rude in difficult social situations. The general lesson is that when people’s attention is absorbed by other matters, they are more likely to yield to their impulses.

Poverty is a state of mind much more than just a temporary lack of money, and this is why asking poor people to do more for themselves will never end poverty.