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Why do the poor remain poor?

Poverty is traditionally defined as the state or condition in which a person or a community lacks the financial or physical resources to maintain a minimum standard of living. Despite an abundance of programs that attempt to tackle poverty, the phenomenon continues to perplex. The existence of poverty traps may explain why poverty has persisted for sustained periods of time but how one gets sucked into this trap still remains blurry. This prompts the need to explore poverty through the alternative lens of cognitive function. Understanding individual thinking is crucial in explaining how people are sucked into the trap of poverty and can help policymakers craft effective solutions that can uplift them better. 


I feel that you have assumed that our economic decisions directly affect our socioeconomic situation. Which may be true in some cases, but isn’t necessarily so. I might just have been born poor or been unable to earn a living wage due to injury or disability. There might be a multitude of factors apart from my cognitive functioning that could have led to me to be poor. So to claim a direct and strong correlation between the two would be misleading, simply due to multiple missing factors in this equation. 


There is a huge cognitive and subsequently a behavioural component to poverty. To understand that clearly, one would need to define cognitive or executive functions.  This is a set of functional areas initiated by the brain’s prefrontal cortex in a top-down approach to facilitate economic decision-making. It refers to the set of mental processes that control one’s attention, dictate one’s ability to work with information, and are required for deliberate activity. Cognitive functions are crucial for performing tasks and making decisions, and also have long- term impacts in terms of literacy, employment, healthcare and overall well-being. These phenomena impact every single individual, regardless of their socioeconomic status, by governing almost all voluntary actions. 


The prefrontal cortex is the centre governing human rationality and conscious (and thus, economic) decision-making. Poverty and cognitive function closely influence one another. Human cognitive state is affected by our socioeconomic conditions. Stable socioeconomic conditions place less pressure on our cognitive capacities as opposed to distressing conditions that may tax and overwork one’s cognitive functions. This is likely to induce suboptimal choices (spending money on alcohol, drugs or gambling instead of saving or investing them appropriately) and further deteriorate existing socioeconomic conditions. Thus, our prefrontal cortex and socioeconomic status may very easily be pushed into the negatively reinforcing cycle of growth that is the poverty trap. The cognition-poverty cycle eventually leads to suboptimal behavioural and lifestyle choices such as: reduced sleep patterns, poor eating habits and raised susceptibility to addiction, mood and anxiety disorders. For example, research published by the Massachusetts Institute of Technology shows that the poor in Chennai, India, sleep just over five hours per night, with more than twenty disruptions on average. Moreover, the majority of male low- income workers in Chennai drink alcohol daily, consuming an average of over five standard drinks per day and spending over 20 percent of their daily labour incomes on alcohol. Each of these correlates of poverty tax human cognitive resources and end up exacerbating their impoverishment. Poor people often lack access to appropriate facilities that ensure healthcare and nutrition. Given their limited income, they do not consume a balanced diet at least twice a day either. This deteriorates their cognitive health, disrupts rational decision-making and pushes them deeper into the poverty trap. 

Economics is a study of choices and the subsequent trade-offs that humans make to ensure scarce productive resources satisfy multiple human needs. These concepts are applicable even in cognitive functioning. Attention, for instance, is a scarce resource that mandates trade-offs and whose absence in any situation creates many ramifications. With too many things to fret about, the average poor person feels burdened and overwhelmed and becomes unable to focus on one task correctly, leading to lower productivity and thus, lower income. This is compounded by the fact that attention is a selective process which may prevent one from paying attention to those government schemes or opportunities that may benefit them. In this process, rational inattention or the inefficient allocation of limited attention amongst competing stimuli, may take place. 


Attention is closely related to inhibitory control. Inhibitory or cognitive control refers to our ability to withdraw attention from unnecessary sources and channel them into relevant ones. Addiction is a disease that stems from the lack of inhibitory control due to continued exposure to drugs, alcohol, gambling, etc. The male low-income workers of Chennai are a testament to this. But why do poor people lack inhibitory control? Because they are just like us. Their impoverishment does not extinguish their desires and they too make irrational choices like wasting money for instant gratification instead of saving or investing it. Policymakers often assume that poor people always make rational choices and make use of aid if offered but that is not the case. The lack of inhibitory control is not specific to one socioeconomic class but there is a strong positive correlation between socioeconomic status and inhibitory control, with exceptions obviously. 

Apart from their lack of inhibitory control, intelligence and reasoning also deprives poor people from accessing aid. Intelligence is classified into crystallised and fluid components, which function together to facilitate reasoning and decision-making, and thus only partly responsible for one’s socioeconomic status. The latter refers to our ability to solve problems with quick and flexible cognitive processes in novel situations without relying on accumulated knowledge. The former refers to our ability to use and hone our knowledge and experience to solve problems. Both these types work together cohesively- while solving a mathematical problem, we use our fluid intelligence to unveil patterns in the problem and use our crystallised intelligence to recall the process to find its solution. Poor persons lack access to good quality education which restrains a portion of their crystallised intelligence. They end up depending largely on their fluid intelligence but herein lies the issue. Our fluid intelligence may sometimes create faster cognitive processing, which are typically based on quick and unconscious decision rules or heuristics. Since they are quick, they are very susceptible to biases in processing. Such biases often negatively colour the economic decisions of the impoverished and hinder their escape from poverty. Poor people do not have access to technology or social networks to counter their cognitive biases and their desperate and ‘on-the-edge’ lifestyle almost always forces decisions under a rapidly ticking clock and with almost no information to consult. Heuristics thrive in such scenarios and further mislead the poor. 


Poverty also affects other cognitive processes such as the working memory, cognitive flexibility and goal-oriented behaviour. These processes, along with those mentioned above, together facilitate higher-order thinking and behaving, like planning. A deficit in any one of these will impede higher-order functioning. Poor people do not and cannot live their lives on a schedule, some of which rest on the reasons given above. The poorest of the poor are unable to plan because everyday they jump through new hoops that have been set ablaze. Another reason why they cannot plan is the unpredictability of the environment they are in- changing political, economic, social and environmental scenarios does not give impoverished communities enough time to catch up with the privileged sections of society. Moreover, our economic activity is not the sole indicator of our socioeconomic position. There are multiple factors like injury/ disability or even mere luck that influence our socioeconomic. This is where good policy making helps. A strong policy recognises the problem, its stakeholders, its causes and ramifications objectively. A strong policy is focussed on achieving its objectives and disassociates itself from political favours or inherent biases (of the policy maker concerning the beneficiary). The world is in dire need of such policies- ones that do not view poor persons in a lopsided manner as mere objects to evoke pity or those who value their rights and needs the same as others. While we focus on the structure of our economy and socioeconomic living, it is imperative that we, laymen and policymakers, remember that there lies an individual who deserves both prosperity and peace of mind and it is our duty to ensure uphold the same.

Shreedaya Arvind

Shreedaya Arvind is a first year, intending to major in economics and minor in psychology. She is also a Bharatnatyam dancer and a filter coffee connoisseur interested in applied research in the social sciences

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