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Anandi Mani (Economics Department)

Poverty & Cognitive Function

The poor often behave in less capable ways, which can further perpetuate poverty. We hypothesize that poverty directly impedes cognitive function, and present two studies that test this hypothesis. First, we experimentally induce thoughts about finances, and find that this reduces cognitive performance among poor but not in well-off participants. Second, we examine the cognitive function of farmers over the planting cycle. We find that the same farmer shows diminished cognitive performance before harvest when poor, compared to after harvest, when rich. This, we find, cannot be explained by differences in time available, nutrition or effort. These studies demonstrate that poverty reduces cognitive capacity. We suggest that poverty-related concerns consume mental resources, leaving less for other tasks. This provides a novel perspective, and helps explain a spectrum of behaviors among the poor. We discuss some implications for poverty policy.