Poverty reduces brainpower

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. Zhao and Shafir worked with Anandi Mani, an associate professor of economics at the University of Warwick in Britain, and Sendhil Mullainathan, a Harvard University economics professor.

“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,” said 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,” she said. “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 explained. 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, he said. In the Science study, Shafir and his colleagues 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 said. The fallout of neglecting other areas of life may loom larger for a person just scraping by, Shafir said. 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, Shafir said. He and Mullainathan were co-authors on a 2012 Science paper that reported a higher likelihood of poor people to engage in behaviors that reinforce the conditions of poverty, such as excessive borrowing.

“They can make the same mistakes, but the outcomes of errors are more dear,” Shafir said. “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. The 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.

Source: sciencedaily.com