Bad Decisions Don’t Make You Poor. Being Poor Makes for Bad Decisions

Matthew Yglesias in Slate:

A study published last week in the journal Science shows that 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.

These findings complement the already extensive literature of the negative physical impacts of low socioeconomic status, reinforcing the point that the harms of poverty extend beyond the direct consequences of material deprivation.

More here.