When you have very little

Why are we poor? This is one of those questions that are there along with “why do people suffer?” There is simply no one way to answer those questions.

To explain why people are poor, studies upon studies have identified root causes in terms of politics, economics and culture and the interplay among all these. In politics, we have pointed to unfair laws and policies biased against the poor, not to mention the political processes that could reinforce these biases. In economics, they point to the depleted starting point of the poor in terms of resources and how this limits their economic mobility and thus repeating the cycle for themselves and for further generations. In culture, they give a rundown of values and practices that make the poor stay poor like spending extravagantly for fiestas, weddings and other ceremonies that move other people’s perception of your social mobility (presumably upward). But what about what goes on in your brain when you simply do not have enough money? What goes on in this private, yet common, domain we all cradle inside our heads when we have to take on the world with very limited amount of resources, whoever you are? This is the question that Anuj Shah, a behavioral economist from the University of Chicago, asked with his colleagues Sendhil Mullainathan from Harvard and Elder Shafir from Princeton and they published their study entitled “Some Consequences of Having Too Little” in the journal Science this November.

The researchers got 60 subjects and made them play versions of Family Feud and Angry Birds. They gave them differentiated “resources” in terms of tokens or time or chances to play more. They also threw in scenarios where subjects would be allowed to borrow from the future. Observing these little lab worlds of human behavior, they have come up with these findings about what happens when we have too little:

1. When people have less resources, they spend more brain power making those resources stretch for them than people who have more. This means that per unit of resource, whether time or token, the poor are getting more out of their money.

2. If those who have less are given the chance to borrow from the future, they over-borrow as a consequence of focusing too much on getting what they focused on. They fail to think that the sum is negative if they over-borrow.

Anuj Shah, in an interview in Science podcast that I listened to, said that this study “demystified” poverty in the sense that it brought out striking similarities as to what happens not only when we have too little money but also when we have too little time or chances to do what we want or have to. I found it interesting that they found that people who have very little aim for specific things to save for. They do save, but they save not for some vague future of desires but very specific goals — a wedding, a trip, a school bag — which I have observed and seemed to make a lot of sense. What was surprising to me was their finding that it is more mentally exhausting to think of the most ways you can do with very little. I thought it was easier to make choices if you had little resources because there was not much of an array of choices with very little “capital” to start with. 

But poverty is really a lack of not mere money but choices. If you do not have much money as a child but your government has done its share of leveling the starting field in terms of things like basic vaccinations, free quality primary and secondary education, then your choices would widen. And if we really focus so much brain power on making our money stretch as far as it could, then it should be made to stretch for things that are beyond the basics so that starting point of “poor” would not start there. And that perhaps could help in their upward mobility.

But this happened in a lab, in a “pretend” world. It cannot give you the answer to why we are poor but it gave part of the answer that we act the same way whether we are short of time or money. Our brain hardly distinguishes. Time is indeed, gold. 

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