The psychological effects of poverty

I’ve never been a big fan of free market ideologies, largely I think that ideas like the “invisible hand” and “trickle down theories” fail to account for the very real individual differences in circumstances that nothing more than birth or bad luck forces on people.  It also fails to account for the impact that the economy has on individuals.

That’s why this recent study, about how poverty negatively taxes individuals mental capacities, and literally lowers IQ.  Wallace and I talked about the implications of this study and how it challenges some people’s stereotypes about those less fortunate, on his Radio Live show this week.  (Click here to listen to audio of the interview)

You don’t have to go very far, or read too many blogs, to see the thinking that basically those who are “poor” are struggling due to their own laziness, lack of initiative, or due to the fact that they simply prefer it that way.  This thinking underlies many of the more conservative right wing ideologies, and seems to have become a cornerstone of the ways that the current National government has chosen to deal with social welfare policy.

The study itself was a simple one:  test the effects of scarcity and financial strain on cognitive capacity…

“In the first [study] they approached around 400 people at random in a shopping mall in New Jersey and asked them to think about how they might solve a financial problem.  Volunteers were given an “easy” scenario, where the cost of a car repair was around $150, and a “hard” scenario, where the repair would cost more like $1,500.  While they thought about this, the volunteers took part in puzzle-based IQ tests and tasks that measured their attention.  The researchers compared the change in performance in the tests for rich and poor people across the two scenarios, with rich and poor defined as being either side of the median US household income of $70,000 per year.” (Click here for the whole article)

The outcome was a 13 point drop on average in IQ for the “poor” sample, a change equivalent to losing an entire nights sleep or being a chronic alcoholic.  The same researchers then replicated these results by measuring the differences in farmers who relied on a single annual harvest for all their outcome, measuring their IQ right before harvest, when they were at their “poorest” and right after harvest, when they were at their “richest”.  This study showed a smaller, but still significant drop of about 9 – 10 IQ points.

Importantly, this research confirms this is not about those in poverty being less smart, but that scarcity decreases anyone’s cognitive capacity.  And whilst this research is in it’s infancy, it has some profound implications for social policy.

A well accepted idea in sociology is “social drift theory”, namely that those who struggle with mental illness or sickness tend to “drift” to the bottom of the socioeconomic ladder.  This, and many ideas like it, seek to explain “poverty” as a result of individual factors, and that as a result social welfare should focus on only just providing enough financial support so as to motivate people to seek work, or improve their health.  More heartless commentators can tend to see welfare dependency as a result of negative intrinsic factors, and blame people for their own circumstances.

These results, in my view, flip this thinking on it’s head and make a scientific argument, as opposed to an ideological one, for improved welfare assistance.  It also makes instinctive sense.

If all your mental capacity is taken up literally surviving day to day, worrying and juggling the finances because their is chronically never enough to pay rent, feed the kids, or fix the car, it’s pretty had to find the time, energy and cognitive capacity to think about and engage in the kinds of things that may very well work to improve your situation.

“Stress itself doesn’t predict that people can’t perform well — they may do better up to a point,” Princeton professor and [poverty study] co-author Eldar Shafir says. “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.”  (Click here for the whole article)

Shockingly in New Zealand 27{1b812f7ed7a77644fff58caf46676f6948311bf403a3d395b7a7f87010507f87} of children live in poverty, as defined by statistics New Zealand: “…the poverty line $15,780 or $303 a week after tax and housing costs…. …the poverty line is about one-and-a-half times this for two adults, or $24,300, and is $34,240 for two adults and two children.” (Click here for the whole article).

It is understanding, compassion and targeted help that will make a difference for those children.  And science can help us with that far more than ideology.

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  • Geoff March 10, 2014, 1:53 am

    Ideology of “only themselves to blame” is certainly a global phenomenon. After all who are the easiest target for bullies. Here is a recent Australian example: Pathetically, since 2009 the Worlds elite have been the largest recipient of Government sanctioned welfare via the shift of tax money away from the middle and lower classes via reserve currency ($US) money printing that appears to have no end. Reinhart and others directly benefited greatly from both US and Chinese QE (Welfare). Of course this is not seen as welfare, as it is couched in many Euphemisms. The Conservative majority have been well trained by the illusionists in Government,who manipulate them like lab rats, to salivate like Pavlovs dogs and nod their collective head at the mention of the welfare recipient, all of whom are unworthy, breaking the countries economic back. Lets take money off these undeserving scoundrels and put it to more important work = like a referendum to change the flag and appointing NZ’s first President.

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