By Bryce Covert
on August 30, 2013
The mental strain of living in poverty and thinking constantly about tight finances can drop a person’s IQ by as much as 13 percent, or about the equivalent of losing a night of sleep, according to a new study. It consumes so much mental energy that there is often little room to think about anything else, which leaves low-income people more susceptible to bad decisions.
One of the study’s authors, Harvard economist Sandhil Mullainathan, told the Washington Post, “Poverty is the equivalent of pulling an all-nighter. Picture yourself after an all-nighter. Being poor is like that every day.”
The researchers came to this conclusion after conducting two separate experiments. The first gave low- and moderate-income shoppers at a mall in New Jersey a number of tests that measure IQ and impulse control, but half of the participants were first given a question about finances: what they would do if they needed to make $1,500 worth of repairs on their car, putting financial concerns at the forefront of their minds. They found that it reduced cognitive performance among the poor participants but not those who are well-off.
The second experiment looked at the cognitive functions of farmers in India before the harvest, when they are poor, and after the harvest, when they have much more money. The same farmer performs lower on cognitive ability before than he does after — which researchers say “cannot be explained by differences in time available, nutrition, or work effort” nor by stress. Instead, it appears to be poverty reducing their mental capacity.
A past study came to a similar conclusion: It found that scarcity can sap mental capacity and lead to short-term decision-making over long-term considerations.