RESEARCHARTICLE Poverty Impedes Cognitive Function

1 Poverty Impedes Cognitive FunctionAnandi Mani,1 Sendhil Mullainathan,2*Eldar Shafir,3*Jiaying Zhao4 The poor often behave in less capable ways, which can further perpetuate Poverty . We hypothesizethat Poverty directly Impedes Cognitive Function and present two studies that test this , we experimentally induced thoughts about finances and found that this reduces cognitiveperformance among poor but not in well-off participants. Second, we examined the Cognitive functionof farmers over the planting cycle. We found that the same farmer shows diminished cognitiveperformance before harvest, when poor, as compared with after harvest, when rich.

2 This cannot beexplained by differences in timeavailable, nutrition, or work effort. Nor can it be explained withstress: Although farmers do show more stress before harvest, that does not account for diminishedcognitive performance. Instead, it appears that Poverty itself reduces Cognitive capacity. We suggestthat this is because Poverty -related concerns consume mental resources, leaving less for other data provide a previously unexamined perspective and help explain a spectrum of behaviorsamong the poor. We discuss some implications for Poverty of studies point to a correlationbetween Poverty and counterproductivebehavior.

3 The poor use less preventivehealth care (1), fail to adhere to drug regimens (2),are tardier and less likely to keep appointments(3,4), are less productive workers (5), less atten-tive parents (6), and worse managers of theirfinances (7 9). These behaviors are troubling intheir own right, but they are particularly troublingbecause they can further deepen Poverty . Someexplanations of this correlation focus on theenvironmental conditionsof Poverty . Predatorylenders in poor areas, for example, may create high-interest-rate borrowing, and unreliable transpor-tation can cause tardiness and absenteeism.

4 Moregenerally, Poverty may leave less room for errorso that the same mistake can lead to worse out-comes (10,11). Other explanations focus on thecharacteristics of the poor themselves. Lower lev-els of formal education, for example, may createmisunderstandings about contract terms, and lessparental attention may influence the next gen-eration s parenting propose a different kind of explanation,which focuses on the mental processes requiredby Poverty . The poor must manage sporadic in-come, juggle expenses, and make difficult trade-offs. Even when not actually making a financialdecision, these preoccupations can be present anddistracting.

5 The human Cognitive system has lim-ited capacity (12 15). Preoccupations with press-ing budgetary concerns leave fewer cognitiveresources available to guide choice and as an air traffic controller focusing on a po-tential collision course is prone to neglect otherplanes in the air, the poor, when attending tomonetary concerns, lose their capacity to giveother problems their full suggests a causal, not merely correla-tional, relationship between Poverty and mentalfunction. We tested this using two very differentbut complementary designs (16,17).

6 The first is alaboratory study: We induced richer and poorerparticipants to think about everyday financial de-mands. We hypothesized that for the rich, theserun-of-the-mill financial snags are of little con-sequence. For the poor, however, these demandscan trigger persistent and distracting concerns(18,19). The laboratory study is designed to showthat similarly sized financial challenges can havedifferent Cognitive impacts on the poor and therich. But, the study cannot fully capture our hy-pothesis that in the world, the poor face morechallenging demands.

7 In principle, the cognitiveimpact in situ may be different given that thescale of the problems can vary between the richand the poor. Perhaps the rich in the world facelarger monetary problems that also cause greaterload. Perhaps the poor manage to restructure theirlives so that they do not face as many cognitivelychallenging problems. Put simply, the laboratorystudy, although illustrating the mechanism, doesnot show its relevance in natural second study takes a different approachand allows us to assess what happens when in-come varies naturally.

8 We conducted a field studythat used quasi-experimental variation in actualwealth. Indian sugarcane farmers receive incomeannually at harvest time and find it hard to smooththeir consumption (20). As a result, they experi-ence cycles of Poverty poor before harvest andricher after. This allows us to compare Cognitive ca-pacity for the same farmer when poor (pre-harvest)versus richer (post-harvest). Because harvest datesare distributed arbitrarily across farmers , we canfurther control for calendar effects. In this study,we did not experimentally induce financial con-cerns; we relied on whatever concerns occurrednaturally.

9 We were careful to control for other pos-sible changes, such as nutrition and work , we accounted for the impact of effect on Cognitive performance then observedwould thus illustrate a causal relationship betweenactual income and Cognitive Function in situ. Assuch, the two studies are highly laboratory study has a great deal of internalvalidity and illustrates our proposed mechanism,whereas the field study boosts the external valid-ity of the laboratory note two observations about these , they sidestep the discussion on whether pov-erty is best defined in absolute or relative terms(21).

10 Because our hypothesis is about how mon-etary concerns tax the Cognitive system, we de-fine Poverty broadly as the gap between one sneeds and the resources available to fulfill this is based on subjective needs, it en-compasses low-income individuals both in the de-veloping and the developed world as well as thoseexperiencing sharp transitory income shocks, suchRESEARCHARTICLE1 Department of Economics, University of Warwick, Coventry CV47AL, of Economics, Harvard University, Cam-bridge, MA 02138, of Psychology andWoodrow Wilson School of Public and International Affairs,Princeton University, Princeton, NJ 08540, Psychology and Institute for Resources, Environment andSustainability, University of British Columbia, Vancouver, BritishColumbia V6T 1Z4, Canada.