People in poverty tend to make worse decisions than those who are not in poverty — they eat less healthy foods, have weaker relationships, and tend to be late for appointments. While it would be easy to conclude that making bad decisions is the root cause of poverty, new research is showing that poverty itself may cause poor decisions.
In a recent study published in the journal Science, researchers found that people who normally function at the same level of cognitive ability make worse decisions when money is tight. The number of decisions the poor have to make to get by exhausts a finite resource of mental power that all people have, according to Eldar Shafir, co-author of the Science study and Scarcity: Why Having Too Little Means So Much.
“It is well-known the poor are disadvantaged in many ways,” Shafir said. “They might look like they make worse decisions, but it doesn’t have to do with lower intelligence. For every person where lower intelligence leads to poverty, poverty causes people to act less smart.”
Kathleen Vohs, a professor at the Carlson School of Management at the University of Minnesota who holds a doctorate in psychological and brain sciences, said that research has shown mental capacity for decision-making and self-control are finite resources that can be depleted. That is, after being forced to use self-control, people are more likely to make intuitive, often regrettable, decisions like spending all their cash or overeating.
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