Poor people often do things that are against their long-term interests such as playing the lottery, borrowing too much and saving too little. Shah, Mullainathan and Sahfir have a new theory to explain some of these puzzles. SMS argue that immediate problems draw people’s attention and as people use cognitive resources to solve these problems they have fewer resources left over to solve or even notice other problems. In essence, it’s easier for the rich than the poor to follow the Eisenhower rule–”Don’t let the urgent overcome the important”–because the poor face many more urgent tasks. My car needed a brake job the other day – despite this being a relatively large expense I was able to cover it without a second’s thought. Compared to a poorer person I benefited from my wealth twice, once by being able to cover the expense and again by not having to devote cognitive resources to solving the problem.
SMS test the theory with small experiments in which people are asked to play simple games. Poverty is simulated by giving some players fewer game resources. Players in the “poverty” conditions are then shown to devote more attention to the current round and less attention to future rounds, including borrowing more from future rounds. In perhaps the most surprising experiment, SMS have players play a family feud game with and without hints:
Experiment 5 offers more direct support for
the notion that scarcity creates attentional neglect.
One hundred thirty-seven participants played
Family Feud. Some participants could see previews
of the subsequent round’s question at the
bottom of the screen; others could not. We expected
that poor participants would be too focused
on the demands of the current round to
consider what comes next, whereas rich participants
would be able to consider future rounds
and whether moving on was beneficial. All participants
could borrow with R = 3. As predicted,
poor participants performed similarly with previews
(–0.02 T 0.87) and without (0.02 T 1.11),
while rich participants performed better with previews
(0.32 T 0.98) than without (–0.35 T 0.92)
[scarcity × borrowing interaction, F(1, 133) =
4.29, P < 0.05, hp
2 = 0.03; for unstandardized
scores, see table S5].
One concern might be that
the poor did not have enough time to consider
the previews. But the experiments above found
that the poor were using too much; they were
overborrowing. Their performance in the nopreview
condition left substantial room for improvement.
Even if poor participants had used
some of the borrowed time to consider the previews
and move on sooner, they could have improved.
That is, the previews benefited the rich
by helping them save more; they could have benefited
the poor by helping them borrow less. But
it appears they were too focused on the current
round to benefit.
Thus, SMS show that poverty (over)-stimulates attention to urgent problems which results in less attention given to important problems–thus, reduce some day to day urgencies and people may become more open to devoting attention to important problems like deworming or hygiene or paying the rent which would in the not-so-long-run result in greater benefits.
Crucially, notice that SMS’s experiments are about the effect of poverty not about the poor. In other words, at least some of our discussion of the poor may suffer from the fundamental attribution error.