WASHINGTON — People worrying about having enough money to pay bills tend to lose temporarily the equivalent of 13 IQ points, scientists found when they gave intelligence tests to shoppers at a New Jersey mall and farmers in India.
Dealing with financial strain consumes so much mental energy that people struggling to make ends meet often have little brainpower left for anything else, leaving them more susceptible to bad decisions that can perpetuate their situation, according to the new study.
The idea is that financial stress monopolizes thinking, making other calculations slower and more difficult, sort of like the effects of going without sleep for a night.
“Past research has often blamed (poverty) on the personal failings of the poor. They don’t work hard enough; they’re not focused enough,” said Jiaying Zhao, a University of British Columbia professor and one of the authors of the study, published in the new issue of the journal Science. “What we’re arguing is it’s not about the individual. It’s about the situation.”
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The money-and-brain crunch applies to about 100 million Americans who face financial squeezes, say the team of economists and psychologists that wrote the study published in the new issue of the journal Science.
“Our paper isn’t about poverty. It’s about people struggling to make ends meet,” said Sendhil Mullainathan, a Harvard University economist and study co-author. “When we think about people who are financially stressed, we think they are short on money, but the truth is they are also short on cognitive capacity.”
If you are always thinking about overdue bills, a mortgage or rent, or college loans, it takes away from your focus on other things. So being late on loans could end up costing you both interest points and IQ points, Mullainathan said.
The study used tests that studied various aspects of thinking, including a traditional IQ test, getting the 13 IQ point drop, said Zhao, a professor of psychology and sustainability at the University of British Columbia.
The scientists looked at the effects of finances on the brain in the lab and in the field. In controlled lablike conditions, they had about 400 shoppers at Quaker Bridge Mall in central New Jersey consider certain financial scenarios and tested their brain power. Then they looked at real life in the sugar-cane fields of India, where farmers only get paid once a year. Before the harvest, they take out loans and pawn goods. After they sell their harvest, they are flush with cash.
Mullainathan and colleagues tested the same 464 farmers before and after the harvest and their IQ scores improved by 25 percent when their wallets fattened.
In the New Jersey part of the study, the scientists tested about 400 shoppers, presenting them with scenarios that involved a large and a small car-repair bill. Those with family incomes of about $20,000 scored about the same as those with $70,000 incomes on IQ tests when the car bill was small. But when the poorer people had to think about facing a whopping repair bill, their IQ scores were 40 percent lower.
The study’s authors and others say the results contradict long-standing conservative economic social and political theory that say it is individuals — not circumstances — that are the primary problem in poverty. In the case of India, it was the same people before and after, so it wasn’t the person’s fault.
“For a long time we’ve been blaming the poor for their own failings,” Zhao said. “We’re arguing something very different.”
The Washington Post contributed to this report.