The poor are their own worst enemies, people often argue. People living in poverty often make decisions that make their lives even harder — they fail to show up to work on time; they eat too many unhealthy foods; they don't plan ahead. The reason for this, a new study shows, is that poverty robs people of the mental bandwidth they need to make better decisions.

Being poor places an enormous burden on people's mental resources, locking them into a set of circumstances from which it can be hard to figure a way out. When you don't have enough time, you can usually find a way to reschedule or skip a commitment. But if you don't have enough money, skipping a bill or not feeding your child is not an option.

Imagine you're sitting in front of a computer, and it's just incredibly slow. But then you realize that it's working in the background to play a huge video that's downloading. It's not that the computer is slow, it's that it's doing something else, so it seems slow to you. I think that's the heart of what we're trying to say.

Even the options that do exist are mentally challenging. The bigger bag of potatoes is a better deal, but you might need the extra cash it costs later in the month. Should you short your rent a few dollars this month to cover your daughter's overdue dental bill with its heavy finance charges?

The High Cognitive Costs of Being Poor

These sorts of choices demand mental resources that might otherwise be “spent” somewhere else, according to a recent study in the journal, Science. “…[W]hen you're poor, money is not the only thing in short supply. Cognitive capacity is also stretched thin,” one of the study's authors, Harvard economist Sendhil Mullainathan, said in a statement.

The difference in poor people's scores when concern about money was high was equivalent to 13 IQ points and roughly the same as the drop in performance seen in people who have lost a night's sleep.

“Imagine you're sitting in front of a computer, and it's just incredibly slow. But then you realize that it's working in the background to play a huge video that's downloading. It's not that the computer is slow, it's that it's doing something else, so it seems slow to you. I think that's the heart of what we're trying to say,” Mullainathan said.

The researchers, from Princeton, the University of Warwick in Britain, and Harvard demonstrated the mental toll poverty takes in a series of studies, first in a shopping mall in New Jersey and then among rural sugar cane farmers in India.

The Study
In New Jersey the researchers presented low- and middle-income shoppers with several scenarios designed to get them thinking about their own finances. “Your car is having some trouble and requires $X to be fixed. You can pay in full, take a loan, or take a chance and forego the service at the moment... How would you go about making this decision? ”

In one set of questions, the money issues were substantial (for example a car repair of $1500); in another considerably less (a car repair of $150) money was involved. Afterward, shopper-participants took a standardized test of cognitive ability.

A person in poverty might be at the high part of the performance curve when it comes to a specific task and, in fact, we show that they do well on the problem at hand. But they don't have leftover bandwidth to devote to other tasks.

The results of those tests offer a picture of the cognitive load poverty places on people.

When the sum of money involved in the scenarios was small, both rich and poor people performed similarly. But when poor people who had been asked to consider a problem involving a large sum of money turned their attention to the cognitive test, they scored far lower.

In fact, the study found that the difference in poor people's scores when concern about money was high was equivalent to losing 13 IQ points and roughly the same as the drop in performance seen in people who have lost a night's sleep.

A second part of the study was meant to test these effects in a more real-world setting: among sugar cane farmers in India. The farmers have plenty of money right after the harvest, but just before the next harvest, they are often financially strapped.

The farmers' scores declined during the period just before a harvest. But when tested just after the harvest, when they had plenty of money, they had more correct answers, faster times, and fewer errors.

“Stress itself doesn't predict that people can't perform well — they may do better up to a point,” said co-author Eldar Shafir, a professor of psychology at Princeton in a news release. “A person in poverty might be at the high part of the performance curve when it comes to a specific task and, in fact, we show that they do well on the problem at hand. But they don't have leftover bandwidth to devote to other tasks. The poor are often highly effective at focusing on and dealing with pressing problems. It's the other tasks where they perform poorly.”

Late fees tacked on to a forgotten rent payment, a job lost because of poor time-management, excessive borrowing — these make a tight money situation worse, according to Shafir. As people get poorer, they tend to make difficult and often costly decisions that further perpetuate their hardship. The lack of mental resources can also mean that willpower suffers, making the poor less likely to adhere to treatment regimens for diabetes and other chronic health problems.

Beyond Financial Assistance: Programs to Ease The Cognitive Load of Poverty

The researchers propose that services for the poor should be designed to reduce or at least accommodate the strain that poverty places on a person’s mind. For example, simpler aid forms and more guidance to receiving assistance, improved access to affordable childcare, or training and educational programs structured so that missed classes have fewer negative repercussions and can be more easily made up.

The findings, Mullainathan said, suggest that the solutions to the problems associated with poverty are not merely about offering more money, but also targeting the cognitive load people are forced to carry to give them back some bandwidth. “If you isolate those periods and address the issues that are causing that cognitive load, you can really get a big bang for your buck.”