A New Theory of Poverty: The Overtaxed Brain

Between a vacation and house selling, I've been in a bubble for a weeks and am just starting to emerge. Some of the following posts may not be the most timely. Oh, well. You know, it is really sad that information becomes stale after two weeks. 

I know that David Brooks has been writing some good stuff this month, because my Facebook friends have been furiously linking to them. I'm finally getting around to reading his last month's columns.

Last week, Brooks wrote about a new theory of poverty coming out of Harvard using behavioral research.

There are two traditional understandings about why poor people are poor. The first theory is that poor people are poor, because they are lazy and they would rather collect welfare than find a job. The second theory is that people are poor, because they grow up in a culture of poverty. They grew up in isolated and stressed families, and the bad habits of the mom are passed on to the child. 

Brooks describes the research of Eldar Shafir of Princeton and Sendhil Mullainathan of Harvard, which has created a whole new explanation for poverty. Shafir and Mullainathan believed that scarcity produces its own cognitive traits.

A quick question: What is the starting taxi fare in your city? If you are like most upper-middle-class people, you don’t know. If you are like many struggling people, you do know. Poorer people have to think hard about a million things that affluent people don’t. They have to make complicated trade-offs when buying a carton of milk: If I buy milk, I can’t afford orange juice. They have to decide which utility not to pay.

These questions impose enormous cognitive demands. The brain has limited capacities. If you increase demands on one sort of question, it performs less well on other sorts of questions.

So, people are poor, because they need to keep track of all sorts of stupid shit that you and I don't have to deal with. Because they must use up brain space remembering that beans are on sale, then they can't remember to do the bigger stuff that would actually help them get out of poverty. 

I like this theory in some ways. Because I remember the dumb shit, like birthday presents and shopping lists, Steve doesn't have to keep track of that stuff. He has the brain capacity to figure out mortgage rates and refinancing and all sorts of stuff that actually leads to a bigger financial return. The dumb shit in life really does wear you down.

When you're poor, you're not only keeping track of dumb shit, like I do, but you're also making tough and depressing decisions. If you haven't paid your phone bill, then you're not much in the mood to study for GEDs.  

On the other hand, I know some extremely poor grad students and writers who do actually produce books and dissertations, despite their poverty. Maybe they aren't poor enough to count.