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Table of Contents Show
- Poverty stress: what it is
- The effects of poverty on the brain
- How poverty affects decision-making
- Dealing with the consequences of poverty
- Here’s how to worry less about money
Changing one’s attitude is often seen as a necessary step in addressing poverty, as many believe that adopting a sound financial mindset can lead to increased wealth. However, poverty is not always the result of financial mismanagement, and is often a complex and entrenched issue that cannot be solved solely through individual effort. In many cases, poverty is a self-perpetuating cycle that cannot be overcome even with a strong will, as the human body and brain can be deeply impacted by the effects of resource deprivation.
What will be discussed:
- Defining poverty stress
- The effect of poverty on the brain
- Decisions affected by lack of money
- Dealing with the stress of poverty
- Worry less about money
Poverty stress: what it is
Despite earning an annual salary of over $700,000 and recently publishing internationally-acclaimed books on quantitative finance, Christian Cooper, a member of the American Council on Foreign Relations, explains in an essay on poverty as a disease that he still feels financially insecure. The constant stress of returning to a time when he didn’t have enough to eat prevents him from feeling comfortable, and as a result, he has decided not to have children.
Cooper grew up as the oldest child in a large family that frequently went without dinner. He attended an illegal Christian school with no teachers, where the preacher’s wife occasionally provided instruction. Many of his classmates passed away from heroin overdoses. Despite these hardships, Cooper was able to survive with the help of a local college professor who mentored him, helped him receive an education, and find a job.
Cooper’s experience is not uncommon, as many people struggle with financial anxiety, which can sometimes resemble post-traumatic stress disorder (PTSD).
Resolving financial issues may not alleviate anxiety, as poverty’s effects extend beyond the lack of resources. Poverty can impact various bodily processes due to the stress it generates. The stress response mobilizes the nervous system by increasing cortisol levels, blood pressure, and heart rate, resulting in tense muscles that can respond to threats more effectively.
However, this constant stimulation of the nervous system depletes the body and over time leads to chronic stress. Poverty can be particularly harmful because it never seems to relent, and the stress never goes away. If financial issues are not addressed, they can become even more overwhelming and worrisome.
Poverty is linked to an increased risk of nearly every disease, including obesity, diabetes, cancer, depression, anxiety, heart disease, dementia, loneliness, and premature death. In some cases, the risk can be as much as ten times higher. Even if the individual’s financial circumstances improve, these risks may not completely disappear and can be passed down to future generations.
For example, a study of survivors of the Leningrad siege found that their grandchildren and great-grandchildren have a higher risk of obesity, osteochondrosis, heart disease, and dental pathologies. Similarly, researchers who investigated the impact of the famine winter of 1944-1945 in Holland found that children who were carried during this period had a higher risk of developing various diseases during their lifetime and, on average, had lower career success than those carried during a quieter period.
Hunger is a severe manifestation of poverty, but the health effects of poverty can manifest even before birth. It only takes a lack of resources for poverty to start impacting an individual’s health.
The effects of poverty on the brain
Poverty can harm a person’s health and mental well-being even before they become aware of their economic status. Research has shown that chronic stress during pregnancy can negatively impact the development of a baby’s brain. Prolonged stress can affect the secretion of hormones that regulate emotions, cognition, and behavior, leading to lifelong consequences such as anxiety, depression, aggression, hyperactivity, and low stress tolerance. If the deficient environment continues after birth, it can further worsen the problem.
Neuroscientist Kimberly Noble of Columbia University published a study in 2015 analyzing MRI scans of over 1,000 children. The study found that children from low-income families had a 6% smaller cortical area than those from wealthier families. This area is crucial for cognitive functions such as concentration, memory, and reading, and children from impoverished backgrounds may have lower vocabulary skills as well. The study also found that by the age of two, differences in brain development between children from rich and poor families were already apparent, with children from impoverished families scoring 60% lower on cognitive tests.
The precise mechanism behind the observed brain differences between children from poor and wealthy families remains unclear to scientists. According to neuroscientist Kimberly Noble, there are two theories to explain the findings. First, wealthy families may invest more in creating an enriched educational environment for their children. Second, financial stress can strain family relationships, leaving less time for parents to spend with their children.
The impact of poverty is not limited to the cerebral cortex, as financial pressure has also been shown to reduce gray matter and disrupt coordinated brain function. Chronic stress can also impair the hippocampus and amygdala, which are responsible for memory and emotion.
However, Noble acknowledges that poverty’s effects on the brain can vary. While poor individuals are at greater risk of cognitive decline, some manage to avoid it. Language development may be one factor contributing to this variation, as children who are spoken to more frequently have been shown to exhibit better cognitive performance in adulthood. It is recommended that parents talk to their children more often and engage in meaningful discussions with them.
How poverty affects decision-making
Experiencing financial difficulties can lead to making highly irrational decisions, as stress can cause attention to narrow and fixate on one issue, causing other important details to be overlooked. Although a specific financial problem may be solved, a person may use an insufficient amount of resources, leading to the creation of new problems.
A series of experiments conducted by researchers from Harvard and Princeton illustrate how this phenomenon occurs.
In a study, participants played a game resembling Angry Birds and were divided into two groups: the “rich” with a large number of attempts, and the “poor” with only a few. Initially, it was expected that the “rich” group would perform better due to having more opportunities to practice accuracy. However, the opposite was observed as the “poor” group hit the target more accurately, despite taking longer to calculate each shot. However, when the “poor” group was given the option to borrow attempts, their accuracy decreased, and many borrowed disproportionate amounts.
The researchers also noted that insufficient resources increase cognitive load significantly. Despite having more attempts, the “rich” players were less mentally exhausted than the “poor” players, who expended a lot of energy on each step. In real life, when faced with financial difficulties, even the smallest decisions like going to the grocery store require a lot of thought, as snap decisions can have terrible consequences. Furthermore, the cognitive load increases when solving hypothetical financial problems.
The researchers surveyed mall shoppers in the United States, including those with upper-middle incomes and those with barely enough money to purchase basic items. Each person was asked what they would do if they needed to spend $150 to fix their car, whether they would pay the full price, borrow money, or not fix it at all.
In the initial stage of the experiment, the participants underwent cognitive assessments through computer games, and there were no discernible performance differences between those who were financially well-off and those who were not.
However, when asked the same question with a higher repair price of $1,500, the less financially secure participants performed significantly worse and had an average IQ drop of 13 points, compared to their affluent counterparts who performed similarly. This group’s entire focus was on solving the financial problem, leaving little room for other thoughts.
This phenomenon was also observed in Indian farmers, who were tested before and after harvest, with the majority demonstrating better cognitive results after receiving their payment.
Professor Ildar Shafir of Princeton University explains that people with financial difficulties are burdened with significant cognitive loads, leading to suboptimal decision-making. The constant pressure of solving pressing financial issues can be exhausting and leave little time and energy for everyday tasks and work, eventually leading to poor decisions and health issues.
Dealing with the consequences of poverty
According to the researchers, the implementation of centralized programs with government support is crucial to alleviate poverty, although there is disagreement on the most effective approach.
Professor Ildar Shafir suggests that the government should focus on reducing the cognitive burden on low-income individuals. For instance, social services that offer support to parents with limited means, such as spending time with their children, could be beneficial. In addition, the process of obtaining financial aid from the government should be straightforward, as lengthy applications and waiting times only exacerbate the problem.
Meanwhile, Kimberly Noble advocates for regular financial assistance to be provided to those in poverty, which could lead to a reduction in related health problems. Currently, she is involved in the First Years of Life research program.
Several pregnant women living below the poverty line have been enticed to participate in a study, which aims to determine how an increase in their monthly income by 20-25% within five years of their child’s birth would affect their children’s development and stress levels. Shafir and Noble, the researchers behind the study, do not provide advice on how to break free from poverty. However, according to Christian Cooper, a prosperous financier who experiences financial anxiety, success stories are often a result of luck rather than remarkable self-improvement. He suggests that financial literacy, a commitment to saving even a small amount, and the ability to handle the stress of poverty are essential to overcoming it.
This advice can also be applied to individuals who do not live in poverty but still worry excessively about money. Noble contends that a gloomy childhood does not have to define a person’s future, as the brain’s neuroplasticity allows it to change through new experiences at any age. Studies show that low-income individuals can alleviate their financial anxiety through psychotherapy sessions. Below are some exercises that may be beneficial.
Here’s how to worry less about money
Even in the face of financial difficulties, it is always possible to take steps to care for oneself. However, initiating self-care can be challenging, especially for those facing money-related concerns. When individuals with financial difficulties contemplate buying something for themselves, they often experience feelings of guilt. Rather than ignoring these emotions, it is advisable to take a break and approach the situation when in a more relaxed state. Resisting these negative emotions can amplify them, rendering subsequent methods ineffective.
Determine whether you are really poor.
To determine whether one is truly living in poverty, it is essential to be objective. Although poverty, characterized by a lack of access to basic necessities, is a significant and widespread issue, some individuals tend to overlook the benefits they possess. To gain a more accurate perspective, consider which of the following statements aligns best with your current financial situation:
- I only have enough money for food.
- I have the option to purchase slightly more expensive products.
- I can afford to purchase home appliances, and it will not cause undue financial strain.
- I have enough funds to buy a new car without obtaining a loan.
- I can afford to buy luxury items, an apartment, or a house.
Individuals facing financial difficulties typically relate only to the first statement on this list. Choosing any other statement suggests that one’s situation may not be as dire. Nevertheless, conflicting thoughts of “not enough” or “could be better” often arise. It is important to recognize and appreciate the good that one has in a material sense.
Consider the following question: what positive aspects did you gain from experiencing poverty in your childhood? Perhaps you learned valuable skills like sewing or became more independent, which can continue to benefit you today.
Examine the idea of wealth and poverty.
Explain your understanding of what it means to be poor, using specific examples. For instance, you might write “If I am poor, I cannot afford a car” when describing a desire to own a vehicle. Your list should contain more than three items, and once complete, set it aside for a day or two before reviewing it from an outside perspective, as though someone else created it. You may find some points to be irrelevant to your present situation.
Answer the question “who is a rich person?” with concrete examples, rather than abstract formulations like “a rich person can afford everything.” For instance, you might write “they buy expensive bread without concern for the cost.” Three points are sufficient.
Upon reflection, some of the points you generate may seem more attainable than previously thought. It may be worth considering how to turn these ideas into reality. This is the only way to realize that you can change your circumstances.
Calculate how much your time is worth.
Individuals who experience financial difficulties often underestimate the value of their time. However, even small amounts of time have a cost. When working under a contract with set monthly payments, it is easier to determine the cost of an hour. Freelancers may find it more difficult, but it is still possible.
Knowing the cost of your time can help you make more informed decisions. For instance, it can help you determine whether spending half a day traveling to another part of the city to save a few dollars on a purchase is worth it. Additionally, this method can help you objectively evaluate the benefits and risks of taking out a loan.
Establish a painless amount
Excessive frugality can quickly result in emotional fatigue. Allow yourself to indulge your senses. While losing a dollar may not be a major concern, identify an amount that you can part with without significant discomfort. This will enable you to experiment with small or large purchases. Spending should be a pleasurable experience, so prioritize choosing items that bring you joy rather than just functional utility.
- Stress as a mechanism for the adverse effects of poverty on children – American Psychological Association
- Families’ income, parenting, and brain development in children and adolescents – nature.com
- How income impacts children’s brin development – TED.com
- Language experience in the second year of life and language development in late childhood – pediatrics.aappublications.org
- The Effect of Poverty on Worldview – review.chicagobooth.edu
- Scarcity Psychology – American Psychological Association
- nytimes.com: Another attempt to understand how poverty impacts children’s brains