Does Poverty Erode Free Will?

Psychologists and economists have been exploring one particular source of stress on the mind: finances. The level at which the poor have to exert financial self-control, they have suggested, is far lower than the level at which the well-off have to do so. Purchasing decisions that the wealthy can base entirely on preference, like buying dinner, require rigorous tradeoff calculations for the poor. As Princeton psychologist Eldar Shafir formulated the point in a recent talk, for the poor, “almost everything they do requires tradeoff thinking. It’s distracting, it’s depleting... and it leads to error.”

...This suggests that we need to rethink our approaches to poverty reduction. Many of our current anti-poverty efforts focus on access to health, educational, agricultural, and financial services. Now, it seems, we need to start treating willpower as a scarce and important resource as well.

Well-off societies, Holmes notes, use various "commitment products" to keep "willpower costs" low. Educational savings accounts are good examples: they take away the cognitive costs of trade-off decisions -- you don't have to agonize about whether you should buy a new washing machine or save for college. The real insight here is that the lowering of willpower costs in one place enables you to exert more willpower in other places. In the rich world, we enjoy willpower liquidity. In the poor world, people suffer from willpower scarcity. More here, from behavioral economists Abhijit Banerjee and Sendhil Mullainathan.