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Showing posts from March, 2017

Poverty Impedes cognitive function

It is well documented that poor people have poor well-being. Children who experience poverty have lower rates of school completion and lower cognitive ability than others. While some theories claim that the lower cognitive ability of the poor is due to lower levels of formal education, others believe that the characteristics of the poor people are at play. A study by Mani, Mullainathan, Shafir and Zhao (2012) takes a different approach and suggest that a sense of scarcity of money leaves the poor with fewer cognitive resources to guide their action. In a lab experiment, they found that when people with lower incomes were induced to think about their daily financial troubles, they performed much worse on subsequent tasks measuring cognitive ability, than those who were not induced to think about financial troubles. For people with higher incomes, however, inducing thoughts of financial scarcity had no effect. While the lab study is fascinating, a quasi-experimenta...