Poverty May Tax Thinking Skills
Study found that mental energy needed to survive left poor with less ability to make good financial decisions
THURSDAY, Aug. 29, 2013 (HealthDay News) -- People living in poverty may face more than a shortage of money: A new study suggests it might also drain brain power.
A team of international researchers found that poverty and its related concerns consume so much mental energy that the poor have less remaining thinking skills to devote to decision-making, leaving them more apt to make mistakes that both trigger and perpetuate financial woes.
"The human cognitive system is limited. When you don't have enough resources -- money, time and other ways to deal with problems -- there's a trade-off in thinking," said study co-author Jiaying Zhao, an assistant professor of psychology at the University of British Columbia in Vancouver. "What we're arguing is that these poverty-related concerns consume mental resources and affect problem-solving skills ... and, as a result, the poor have fewer mental resources for other problems."
The study was published Aug. 29 in the journal Science.
About 20 percent of the global population faces poverty, and about 15 percent of Americans fit the classification in 2010, according to the National Poverty Center at the University of Michigan. Prior research linked poverty and counterproductive behavior, such as poor financial management, but the new study is the first to suggest that poverty actually causes diminished mental function.
Zhao and her colleagues performed a series of experiments on two continents, finding that people preoccupied with money problems demonstrated a drop in mental function equivalent to a 13-point loss in IQ. The study authors said the results help explain why the poor often are seen as less capable at certain tasks.
The first set of experiments involved about 400 people in a New Jersey mall who had an average annual income of about $70,000, with the lowest income level at about $20,000. Participants were asked to ponder how they would solve financial problems such as a sudden car repair, being randomly assigned to a scenario in which the cost was low or high -- such as a $150 repair or a $1,500 repair.
Split into "poor" and "rich" groups based on income, the study indicated that the poor and rich performed equally well on cognitive tests when the scenarios were "easy," as in the $150 car repair. But when they pondered the "hard" scenario of the $1,500 car repair, those at the lower end of the income scale performed significantly worse on fluid intelligence and cognition tests, while rich participants performed just as well with the more difficult decision.
The second set of experiments involved about 500 sugarcane farmers in India who rely on the annual harvest for at least 60 percent of their income, finding themselves poor before the harvest and rich after it. Given the same thinking tests before and after the harvest, the farmers performed better on both tests after the harvest compared to pre-harvest.
The study authors ruled out stress as the cause of poor participants' cognitive diminishment, noting that stress often can prompt better mental performance. Rather, they said, the brain drain -- which is reversible -- occurs because poverty-related concerns simply consume mental abilities, leaving less capacity for other tasks.
"The idea is that people only have a certain amount of energy toward making decisions ... and overcoming temptations," said Kathleen Vohs, a professor of marketing at the University of Minnesota. Vohs wrote a commentary that accompanies the new study.
"It makes perfect sense," Vohs said. "Those facing poverty are constantly having to battle temptations and make choices."
Although the study found an association between poverty and reduced thinking skills, it did not establish a cause-and-effect relationship.
Zhao, who took part in the research while studying for her doctoral degree at Princeton University, said policy makers can use the findings to help poor people use social programs such as Medicare and food stamps more effectively.
"Having to fill out long forms, prepare for a long interview or decipher the rules of a program all consume cognitive resources, and these are resources the poor don't have," she said, noting that forms should be simplified and reminders offered to boost recipients' mental resources. "Reducing the 'cognitive taxes' of the poor is one immediate implication for public policy."
The University of Michigan's National Poverty Center offers more facts about poverty.