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How poverty affects people’s minds, abilities

Posted Sept. 18, 2013, at 12:24 p.m.

Suppose you had 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 exam. Now suppose you are struggling with poverty and have to take the same intelligence test. How, if at all, will your test 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 that being poor and having to manage serious financial problems can be a lot like going through life with zero 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 endeavors. This claim has important implications for how we think about poverty and how we select policies designed to help poor people.

In one experiment, Mullainathan and Shafir 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 $1,500 to fix the car). In the “easy” version, the cost was low ($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 “math anxiety” on the part of the poor? Evidently not. Mullainathan and Shafir conducted a second experiment in which they began not with a financial problem but with arithmetic questions, using the same sets of numbers as in the first experiment. In this version of the experiment, greater difficulty in the initial question didn’t produce differences between rich and poor on subsequent intelligence tests.

What’s going on here?

Mullainathan and Shafir have a straightforward answer in that if you are poor and are trying to manage a hard financial situation, your mental resources will be strained, and you are less likely to perform well on other tasks.

To be sure, an experiment with people at a shopping center is pretty artificial. The authors created a similar test in the field, involving sugar cane farmers in India. What made the test possible is that sugar cane farmers face serious financial pressures before harvest; after harvest, they are far more comfortable. Mullainathan and Shafir administered an intelligence test to hundreds of farmers pre-harvest and the same test to hundreds of others post-harvest.

The result? After harvest, the farmers looked a lot smarter.

Here again, Mullainathan and Shafir suggest that if you are in the midst of economic struggles, your mind will be occupied, and you won’t be able to perform so well on other tasks. (They controlled for nutrition and stress, and found that those factors didn’t matter.)

In their experiments, Mullainathan and Shafir found that the effect of being poor and having to manage a hard financial problem is equivalent to the loss of 13 IQ points — comparable not only to the loss of a full night’s sleep but also to that of being a chronic alcoholic, or being 60 years old rather than 45. Their conclusion is that poor people “are less capable not because of inherent traits, but because the very context of poverty imposes load and impedes cognitive capacity.”

This claim casts a new light on some important findings with respect to the behavior of poor people, including the difficulties they face in complying with drug regimens, keeping appointments and managing their finances. In all these cases, the problem isn’t adequately described as a deficient sense of responsibility. It reflects, at least in part, the cognitive demands created by poverty itself.

There are also important implications for government policy. Even more than the rest of us, poor people can greatly benefit from frequent reminders, as well as from sensible default rules, which establish what happens if they do nothing at all. With respect to forms and applications, simpler is usually better. If we are trying to design educational, training and employment programs for the poor, that is a critical lesson to keep in mind.

Cass R. Sunstein, the Robert Walmsley University professor at Harvard Law School, is a Bloomberg View columnist. He is the former administrator of the White House Office of Information and Regulatory Affairs, the co-author of “Nudge” and author of “Simpler: The Future of Government.”

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