The Cognitive Cost of Poverty

It’s a common trope that most poor people are poor because they’re lazy or just inherently bad with money. But a new study (abstract) makes a fascinating find: being poor actually reduces your cognitive capabilities when thinking about money. ‘In a series of experiments run by researchers at Princeton, Harvard, and the University of Warwick, low-income people who were primed to think about financial problems performed poorly on a series of cognition tests, saddled with a mental load that was the equivalent of losing an entire night’s sleep.

Put another way, the condition of poverty imposed a mental burden akin to losing 13 IQ points, or comparable to the cognitive difference that’s been observed between chronic alcoholics and normal adults.’ This makes the difficulty in climbing out of poverty much easier to understand. The researchers also demonstrated causality by showing that thinking about a very small expense led to no impairment, while thinking about a very large expense did. They confirmed this by looking at a group of farmers in India who tend to receive most of their income at one time — immediately following their harvest. Shortly before that payment, when the farmers had very little money, their scores dropped as well.

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