Mental health

Poverty 'consumes' your mental capacity

“Poverty saps mental capacity to deal with complex tasks” reports The Guardian, saying that the effect is “equivalent to a loss of 13 IQ points”.

The paper reports on a study into whether financial worries due to poverty had an adverse effect on cognitive functioning.

The study consisted of two series of experiments; one involving US citizens, the second involving Indian sugarcane farmers.

The first series of experiments found that in those classified as ‘poor’, thinking about making financial decisions that could lead to hardship resulted in worse performances in IQ tests compared to the ‘rich’.

While among farmers in India, the researchers found that their cognitive performance was worse before the harvest when they were poorer, and better after the harvest when they were richer. Analysis suggested that nutrition, anxiety, and physical exertion did not explain these differences.

It is important to note that the study doesn’t suggest that poorer individuals have inherently (or permanently) lower cognitive ability. Rather, it suggests that while money worries are foremost in our thoughts, our minds may have less “cognitive capacity” for other issues such as an IQ test.

This explanation seems plausible, but the main limitation is that there are so many variables which could affect cognitive performance that are difficult to control for.

Overall, these findings may give policy makers another factor to consider when deciding how best to help those in poverty to make the best choices.

Where did the story come from?

The study was carried out by researchers from the University of Warwick and other research centres in the US. It was funded by the National Science Foundation, the John Simon Guggenheim Memorial Foundation, the International Finance Corporation, and the Institute for Financial Management and Research Trust.

The study was published in the peer-reviewed journal Science.

Overall, the UK media’s reporting on the study was of a good standard. The Guardian provided particularly detailed coverage of how the research was carried out as well as a discussion of some of its limitations.

What kind of research was this?

This was an experimental and observational study looking at whether poverty affects cognitive function.

The researchers say that a number of studies have suggested that poverty is associated with counterproductive behaviour, for example: taking fewer steps to maintain health, not adhering to prescribed drug regimens, poor timekeeping, being less productive workers and less attentive parents, and worse money management. This behaviour can often exacerbate pre-existing poverty, creating a kind of vicious downward cycle.

Some researchers have suggested that the environment experienced by those in poverty (for example less access to reliable transport, predatory money lenders) or their characteristics (such as lower education levels), may be responsible.

However, the researchers in the current study wondered if being preoccupied with their financial situation and making tough financial decisions means that those in poverty give other problems less consideration.

What did the research involve?

There were two parts to the researchers’ study – one carried out in the USA and one carried out in India.

The American study

In the first experiment, the researchers enrolled 101 adults (average age 35 years, 64% women) at a mall (shopping centre) in New Jersey. They were paid $5 (about £3.20) for taking part.

They were asked about their household income, which ranged from about $20,000 (about £13,000) to $70,000 (about £45,000). After taking into account the size of the household, the researchers classified participants as “rich” if they were in the top half of income range, and “poor” if they were in the bottom half.

Each person was given four financial scenarios to consider:

  • having a 15% pay cut and whether and how it would affect their current lifestyle and plans
  • having an immediate $2,000 (about £13,00) expense, whether and how they would be able to come up with the money at very short notice, and whether it would lead to long lasting financial hardship
  • being quoted $1,500 (about £970) for a car service of which 10% was covered by insurance, and thinking about three different options to deal with this (paying the full amount in cash, taking out a loan which could be repaid gradually but would end up having a higher total cost, or not having the service and risking the car breaking down and costing more to fix) and how they would make the decision
  • needing to buy a new fridge, and needing to decide whether to pay in full in cash ($999) or make monthly payments that cost more in the long run ($1,200)

Participants were randomly assigned to be given the scenarios using the high amounts stated above (“hard” scenarios) or the same scenarios with small cash sums instead (“easy” scenarios), to see if different sums had different effects.

After thinking about each scenario they were given two computer based non-verbal cognitive tests.

One test was a standard part of IQ tests to measure ability to think logically and problem solve in new situations. This test involved looking at a series of incomplete patterns and then choosing a piece from an offered selection to complete the puzzle.

This is known as the Raven's progressive matrices test, an example of which can be found online.

The other test involved a type of task known as a spatial incompatibility task that tested ability to think quickly and react in ways often contrary to initial impulses. This involved pressing one side of the screen in response to some figures, but the opposite side of the screen in response to others.

They were then asked to provide their response to the scenarios described above.

Other parts of this experiment:

  • gave four non-financial scenarios (for example a 15% reduction in vacation days and the effect this would have), and again tested cognitive performance after each scenario was thought about – this aimed to see if any effects of the hard scenarios might be related just to the large numbers being used in the scenarios rather than their financial effects – so essentially a result of “maths anxiety”
  • gave the same financial scenarios and gave a payment for each correct answer on the cognitive test – to test if giving an incentive to perform better would “override” any effects of the scenario
  • gave the same financial scenarios but asked participants to give their response to the scenario before they did the cognitive tests – to test if retaining the answer to the scenario in their head was affecting performance

The Indian study

In the second part of the study a random sample 464 sugarcane farmers in villages in two districts in Tamil Nadu in India participated.

The farmers receive their income annually after the harvests, which occur over a three to five month period in the year.

This means that their income can vary sharply over the course of the year – relatively rich after the harvest while often quite poor just before the harvest is due.

They were given two cognitive tests before and after the harvest, one of the tests used in the US study and another type of spatial incompatibility task using numbers that are appropriate for people with low literacy rates.

Researchers also carried out separate analyses to look at the effect of stress levels, nutrition, and work effort on test performance.

Some of these analyses were performed in separate sets of farmers at an earlier time point.

What were the basic results?

In their hypothetical financial scenario experiments, poorer and richer individuals performed similarly after thinking about the easy financial scenarios.

However, the poorer individuals performed significantly worse than the richer individuals after thinking about the hard financial scenarios. Poorer individuals tested after thinking about the hard financial scenarios also performed significantly worse than poorer individuals who had thought about the easy financial scenarios.

These differences in test performance were not seen in richer individuals after thinking about either the hard or easy financial scenarios.

Giving payments for correct answers on the cognitive test did not affect results, nor did getting participants to give their response to the scenarios before the tests rather than after. If these experiments were repeated using non-financial scenarios that used the same numbers there were no differences between harder and easier scenarios or between those with different income. This suggested that “maths” anxiety about problems with large numbers in them did not explain the findings.

Among the sugarcane farmers, their cognitive performance was worse before the harvest when they were poorer, and better after the harvest when they were richer. The worse they perceived their financial situation to be the worse they performed on the test. Separate analyses to assess the effects of stress levels, nutrition, work effort, and learning what was expected in the tests suggested that these did not explain the differences seen.

How did the researchers interpret the results?

The researchers concluded that “poverty-related concerns consume mental resources, leaving less for other tasks”.

They say that this possibility had not been examined previously, and it helps to explain a range of behaviours among people who are poor and has implications for poverty policy.

For example, they suggest that policy makers should consider reducing the cognitive burdens (a ‘cognitive tax’) imposed on poorer individuals. This could involve making forms or interviews shorter, or careful timing of educational interventions to fall at the appropriate time in the harvest cycles.


The current study provides intriguing findings which suggest that the mental drain of thinking about their financial circumstances could leave poorer individuals less cognitive capacity for other issues. The findings are strengthened by the fact that they come from experiments both in a controlled setting in a developed country using hypothetical scenarios, and also from observation of farmers experiencing real-life financial problems in a developing world setting.

The main limitation is that there are so many variables which could affect cognitive performance that are difficult to control for. The researchers did attempt to take some of these into account in their analyses but this may not fully remove their effect. For example, the researchers note that participants’ mood may also be affecting their performance, rather than the financial worries “taking up” their cognitive capacity.

It is important to note that the findings relate to short term performance on cognitive tests in certain real and hypothetical scenarios. They do not suggest that poorer people have an inherently different cognitive capacity. Also, the cognitive tests used were non-financial and not essential to the person’s livelihood or health. Performance on financial or essential decision making could well be different.

Some of the suggestions by the authors about potential implications for policy makers seem to make sense. For example, giving educational interventions about health related matters in farming communities in the developing world after the harvest may mean farmers have more time to devote to them, regardless of their cognitive capacity to absorb the information. Overall, these findings may give policy makers another factor to think about when deciding how best to help those who are in poverty to make the best choices.

NHS Attribution