Attention Scarcity, Ego Depletion and Poverty

Marginal Revolution: Attention Scarcity, Ego Depletion and Poverty

Poor people often do things that are against their long-term
interests such as playing the lottery, borrowing too much and saving too
little. Shah, Mullainathan and Sahfir have a new theory
to explain some of these puzzles. SMS argue that immediate problems
draw people’s attention and as people use cognitive resources to solve
these problems they have fewer resources left over to solve or even
notice other problems. In essence, it’s easier for the rich than the
poor to follow the Eisenhower
rule–”Don’t let the urgent overcome the important”–because the poor
face many more urgent tasks. My car needed a brake job the other day –
despite this being a relatively large expense I was able to cover it
without a second’s thought. Compared to a poorer person I benefited from
my wealth twice, once by being able to cover the expense and again by
not having to devote cognitive resources to solving the problem.

SMS test the theory with small experiments in which people are asked
to play simple games. Poverty is simulated by giving some players fewer
game resources. Players in the “poverty” conditions are then shown to
devote more attention to the current round and less attention to future
rounds, including borrowing more from future rounds. …