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On Poverty and Decision Making

Source. Intro/conclusion below, study in article.

We make a mistake when we look at poverty as simply a question of financial constraint. Take what happened with my request for an extension. It was granted, and the immediate time pressure was relieved. But even though I met the new deadline (barely), I'm still struggling to dig myself out from the rest of the work that accumulated in the meantime. New deadlines that are about to whoosh by, a growing list of ignored errands, a rent check and insurance payment that I just realized I haven't mailed. And no sign of that promised light at the end of the tunnel.

When we think of poverty, we tend to think about money in isolation: How much does she earn? Is that above or below the poverty line? But the financial part of the equation may not be the single most important factor. "The biggest mistake we make about scarcity," Sendhil Mullainathan, an economist at Harvard who is a co-author of the book "Scarcity: Why Having Too Little Means So Much," tells me, "is we view it as a physical phenomenon. It's not."

When Mr. Shafir first began to study poverty, he came in with an overarching assumption: The poor made the same mistakes in judgment as everyone else, except theirs ended up being more costly. He soon learned he was wrong. "They were making mistakes that were different. They weren't the typical decision errors. They were worse," he recalls. "When you don't have enough, you focus on the little you have, and it leaves you with less attention." And the "little you have," he found, didn't have to come from financial hardship.


the point

Ultimately, Mr. Mullainathan suggests, we need to reimagine our perception of poverty completely. The focus now is on poverty as a fixed, immutable entity. We should view it instead as something far more malleable.

"That's what I feel is missing in this whole debate," he says. "In neuroscience, they understand plasticity," that the brain changes in response to the external environment. "But the poverty field is stuck in 40 years ago," he said. "I don't understand why people haven't grasped that. Even if you're poor, you have a brain with all the majesty of any human brain. It's just subject to different pressures."

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