How Poverty Takes Over the Mind

Sept. 17 (Bloomberg) -- Suppose you got no sleep last nightand you have to take an intelligence test today. If you’re likemost people, you’re not going to do so well on that test. Nowsuppose you are struggling with poverty and you have to take thesame intelligence test. How, if at all, will your test score beaffected?

Harvard University economist Sendhil Mullainathan andPrinceton University psychologist Eldar Shafir offer a clearanswer: You will probably do pretty badly. In a series ofstudies, they found that being poor, and having to manageserious financial problems, can be a lot like going through lifewith no sleep. The reason is that if you are poor, you arelikely to be preoccupied with your economic situation, and yourmind has less room for other endeavors. This claim has importantimplications for how we think about poverty and for how weselect policies designed to help poor people.