Financial Insecurity Causes Temporary IQ Drop Of 13 Points

moneyHow poverty impacts people, via the Seattle Times:

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.

Mullainathan and colleagues tested the same 464 farmers in the sugar-cane fields of India before and after the harvest and their IQ scores improved by 25 percent when their wallets fattened. Before the harvest, the farmers take out loans and pawn goods. After they sell their harvest, they are flush with cash.

In the New Jersey part of the study, the scientists tested about 400 shoppers at Quaker Bridge Mall, 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.

7 Comments on "Financial Insecurity Causes Temporary IQ Drop Of 13 Points"

  1. Anarchy Pony | Sep 4, 2013 at 11:24 am |

    Severe stress often negatively impacts reasoning and decision making skills.

  2. emperorreagan | Sep 4, 2013 at 11:59 am |

    How much science would it take to convince people to abandon unfounded assertions and thought experiments that underpin current economic thinking?

    • Cortacespedes | Sep 4, 2013 at 12:43 pm |

      About as much science as it would take to make people abandon religion.

      One and the same.

  3. Cortacespedes | Sep 4, 2013 at 12:19 pm |

    Wow, science is now catching up on what RAC, Payday loans, pawn shops, title loans and banks with excessive overdraft fees have known for decades.

  4. BuzzCoastin | Sep 4, 2013 at 1:22 pm |

    money is a technology
    technology has an effect on human consciousness
    some effects are services & some disservices
    it would behoove humans to take an inventory of effects
    so as to maximize the services & minimize the disservices
    as opposed to the converse of that
    which is now the norm

  5. Microhero | Sep 5, 2013 at 8:15 am |

    Now I can call my poorly payed cleaning lady stupid and have the evidence to back it up..

Comments are closed.