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. 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.

2 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. 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.

3 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. 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.

4 We tested this using two very differentbut complementary designs (16,17). 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. 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.

5 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. 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. 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.

6 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). 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.

7 *Corresponding author. E-mail: ( )AccuracyRaven s Matrices**AccuracyCognitive Control**Fig. 1. Accuracy on the Raven s matrices and the Cognitive control tasks in the hard and easyconditions, for the poor and the rich participants in experiment 1.(Left) Performance on theRaven s Matrices task. (Right) Performance on the Cognitive control task. Error bars bars show two-way interaction (poor versus rich hard versus easy). *P< ,**P< ,**P< AUGUST 2013 VOL on May 16, 2017 from as the unemployed. Second, existing theory anddata suggest a possibly cumulative long-term im-pact of Poverty on cognition (22,23): Childhoodpoverty may hinder brain development and even-tually reduce adult Cognitive capacity (24). Ourhypothesis and tests focus on an immediate im-pact of Poverty on cognition: Budgetary preoccu-pations can in real time impede Cognitive proposed mechanism does not operate throughbrain development at early childhood but throughan immediate Cognitive load caused by financialconcerns.

8 Whether this mechanism also contrib-utes to the long-term impacts is an open Laboratory StudiesThe first study consisted of four experiments,with shoppers at a New Jersey mall who partic-ipated for pay (details are available in the sup-plementary materials). This sample encompassesa diverse income range, with the median house-hold income at roughly $70,000 and a lower boundof roughly $20,000. This, broadly speaking,provides a cross-section of the United States, withthe poor in our sample roughly corresponding tothose in the lower quartile or third of the distribution. We computed effective in-come by dividing household income by the squareroot of household size (25) and defined rich and poor through a median split on this variable (26).In experiment 1, participants (n= 101) werepresented with four hypothetical scenarios a fewminutes apart. Each scenario described a finan-cial problem the participants might example: Your car is having some troubleand requires $X to be fixed.

9 You can pay in full,take a loan, or take a chance and forego the ser-vice at the How would you go aboutmaking this decision? These scenarios, by touch-ing on monetary issues, are meant to triggerthoughts of the participant s own finances. Theyare intended to bring to the forefront any nascent,easy to activate, financial viewing each scenario, and while think-ing about how they might go about solving theproblem, participants performed two computer-based tasks used to measure Cognitive Function :Raven s Progressive Matrices and a spatial com-patibility task. The Raven s test involves a se-quence of shapes with one shape missing (27).Participants must choose which of several alter-natives best fits in the missing space. Raven stestis a common component in IQ tests and is used tomeasure fluid intelligence, the capacity to thinklogically and solve problems in novel situations,independent of acquired knowledge (28,29).

10 Thespatial incompatibility task requires participantsto respond quickly and often contrary to their ini-tial impulse. Presented with figures on the screen,they must press the same side in response to somestimuli but press the opposite side in response toothers. The speed and accuracy of response mea-sures Cognitive control (30), the ability to guidethought and action in accordance with internalgoals (31). Both are nonverbal tasks, intendedto minimize the potential impact of literacy completion of these tasks, participants re-sponded to the original scenario by typing theiranswers on the computer or speaking to a taperecorder and then moved on to the next scenario(an analysis of participants responses to the sce-narios is available in table S1). We also collectedparticipants income information at the end of were randomly assigned either toa hard condition, in which the scenarios in-volved costs that were relatively high (for exam-ple, the car would require $1500 to fix); or to an easy condition, where costs were lower (for ex-ample, the car would require $150 to fix).