Poverty Causes Poor Decision-Making

A growing body of evidence shows that stress and fatigue impair our thinking. No surprise there; this is only what most people would expect. Poverty is stressful. There is already a lot of data showing that poverty makes people sick and shortens their lives, by at least a decade in the US. A new study just published in Science is the first I know to show specifically that the stress of poverty impairs reasoning:

 the stress of worrying about finances can impair cognitive functions in a meaningful way. The authors gathered evidence from both low-income Americans (at a New Jersey shopping mall) and the global poor (looking at farmers in Tamil Nadu, India) and found that just contemplating a projected financial decision impacted performance on spatial and reasoning tests.

Among Americans, they found that low-income people asked to ponder an expensive car repair did worse on cognitive-function tests than low-income people asked to consider cheaper repairs or than higher-income people faced with either scenario. To study the global poor, the researchers looked at performance on cognitive tests before and after the harvest among sugarcane farmers. Since it’s a cash crop rather than a food one, the harvest signals a change in financial security but not a nutritional one. They found that the more secure postharvest farmers performed better than the more anxious preharvest ones.

This is not a new idea; it was advanced in the eighteenth-century by the defenders of aristocracy. Aristocrats never have to worry about petty concerns like paying tradesmen or doing the laundry, so, the argument went, they were better equipped to handle the complex decisions required of statesmen. It is very important to keep this in mind when asking why poor people do stupid things, and it explains why an anti-poverty strategy that boils down to "poor people need to make better decisions" will never work.