Money in the Mental Lives of the Poor

Abstract

Recent research has studied how resource scarcity draws attention and creates cognitive load. As a result, scarcity improves some dimensions of cognitive function, while worsening others. Still, there remains a fundamental question: how does scarcity influence the content of cognition? In this article, we find that poor individuals (i.e., those facing monetary scarcity) see many everyday experiences through a different lens. Specifically, thoughts about cost and money are triggered by mundane circumstances, they are difficult to suppress, they change mental associations, and they interfere with other experiences. We suggest that the poor see an economic dimension to many everyday experiences that to others may not appear economic at all.

Young adults’ borrowing to purchases of desired consumer products related to present‐biased temporal discounting, attitude towards borrowing and financial involvement and knowledge

“…A new approach has been proposed to explain irrational economic behaviours as resulting ‘simply from having less’ (Shah, Mullainathan, & Shafir, , p. 682). This research shows that feeling a resource deficit alters how information is processed (Mani, Mullainathan, Shafir, & Zhao, ; Shah et al, ; Shah, Shafir, & Mullainathan, ; Shah, Zhao, Mullainathan, & Shafir, ). A felt financial deficit may likewise alter information processing preceding purchases of desired consumer products.…”

“…Effects of feelings of financial deficits have been demonstrated in laboratory experiments employing video games (Shah et al, ) and scenario studies of cognitive biases (Shah et al, ) or money concern (Shah et al, ). In contrast, Cook and Sadeghein () directly investigated borrowing to consumption.…”

How Financial Constraints Influence Consumer Behavior: An Integrative Framework

“…Nearly all participants mentioned at least one emotion‐related thought (e.g., they would feel scared or relieved). Notably, though, financially constrained participants were more likely than nonconstrained participants to spontaneously mention cost even when nothing in the experiment explicitly mentioned money (Shah et al., ).…”

“…Poor and rich participants did not differ in their ability to suppress thoughts about the amount of driving they did each month. However, poor participants found it harder to suppress thoughts about the cost of driving than rich participants (Shah et al., ). These findings echo classic research showing that when people try to suppress thoughts about a topic, that topic can actually become more top‐of‐mind (Wegner, Schneider, Carter, & White, ).…”

“…Classic work by Bruner and Goodman (1947) shows that poor children were more likely to overestimate the size of coins than rich children even though they were equally accurate in estimating the size of cardboard discs. In more recent work, participants were asked to imagine that they went to a doctor and were told that they were seriously ill, but would make a full recovery (Shah, Zhao, Mullainathan, & Shafir, 2018). Participants were then asked to name the first three thoughts that came to mind.…”