How poverty takes over the mind

Published: 4:02 AM, September 19, 2013
Updated: 10:20 PM, September 19, 2013
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Suppose you got no sleep last night and have to take an intelligence test today. If you’re like most people, you’re not going to do so well on that test. Now, suppose you are struggling with poverty and you have to take the same intelligence test. How, if at all, will your score be affected?

Harvard University economist Sendhil Mullainathan and Princeton University psychologist Eldar Shafir offer a clear answer: You will probably do pretty badly. In a series of studies, they found being poor and having to manage serious financial problems can be a lot like going through life with no sleep.

The reason is that, if you are poor, you are likely to be preoccupied with your economic situation and your mind has less room for other endeavours. This claim has important implications for how we think about poverty and for how we select policies designed to help poor people.

In one experiment, they went to a large shopping mall and paid numerous people, with a diverse range of incomes, to participate in a little test. They began by asking participants how they would solve a financial problem (for example, they might need to spend a certain sum of money to fix their car).

Participants were randomly assigned to one of two versions of the problem. In the “hard” version, the cost involved was pretty high (it might cost US$1,500, or S$1,900, to fix the car). In the “easy” version, the cost was low (US$150). After explaining how they would solve the problem, people were subjected to intelligence tests.


Here’s the remarkable result: When rich people and poor people were assigned to the easy version of the financial problem, they performed about the same on the intelligence tests. But when they were assigned to the hard version, with its larger financial stakes, poor people did a lot worse on the intelligence tests and rich people looked much smarter.

Was this a result of some kind of “maths anxiety” on the part of the poor? Evidently not.

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