{"id":1580,"date":"2015-07-22T16:40:52","date_gmt":"2015-07-22T21:40:52","guid":{"rendered":"http:\/\/huewhite.com\/umb\/?p=1580"},"modified":"2015-07-22T16:40:52","modified_gmt":"2015-07-22T21:40:52","slug":"behavioral-economics","status":"publish","type":"post","link":"https:\/\/huewhite.com\/umb\/2015\/07\/22\/behavioral-economics\/","title":{"rendered":"Behavioral Economics"},"content":{"rendered":"

Behavioral economics mixes the rationality of economics with the semi-rationality of the human brain. This Harvard Magazine <\/b><\/i>article<\/a> by Cara Feinberg covers the work of\u00a0Professor Sendhil Mullainathan<\/a>, who works on studies of how scarcity affects the mind:<\/p>\n

In 2008, Mullainathan joined Eldar Shafir, Tod professor of psychology and public affairs at Princeton, to write a book exploring these questions. Scarcity: Why Having Too Little Means So Much<\/em> (2013) presented years of findings from the fields of psychology and economics, as well as new empirical research of their own. Based on their analysis of the data, they sought to show that, just as food had possessed the minds of the starving volunteers in Minnesota, scarcity steals mental capacity wherever it occurs\u2014from the hungry, to the lonely, to the time-strapped, to the poor. …<\/p>\n

\u201cTo put it crudely,\u201d he explains, \u201cpoverty\u2014no matter who you are\u2014can make you dumber.\u201dTo prove it, they planned to administer Raven\u2019s Progressive Matrices tests (essentially IQ tests that measure skills without requiring experience or expertise) to their subjects. Just before taking the test, subjects were asked to consider a hypothetical scenario:<\/p>\n

Imagine you\u2019ve got car trouble and repairs cost $300. Your auto insurance will cover half the cost. You need to decide whether to go ahead and get the car fixed,or take a chance and hope that it lasts for a while longer. How would you make this decision? Financially, would it be easy or hard?<\/p><\/blockquote>\n

Using self-reported household income, the researchers split the subjects into groups of \u201crich\u201d and \u201cpoor.\u201d When they tallied their scores on the Raven\u2019s Matrices, there was no statistically significant difference in the groups\u2019 performance.<\/p>\n

But in a second version of the test, researchers raised the price tag for the repairs to $3,000. Although rich people\u2019s test scores showed no significant difference, the poor people\u2019s scores dropped the equivalent of about 14 IQ points: the difference between the categories of \u201csuperior\u201d and \u201caverage\u201d intelligence\u2014or more pointedly, from \u201caverage\u201d to \u201cborderline deficient.\u201d That\u2019s a greater deficit than subjects in sleep studies typically show after staying awake for 24 hours, Mullainathan and Shafir highlight. \u201cSimply raising monetary concerns for the poor,\u201d they explain, \u201cerodes cognitive performance even more than being seriously sleep deprived.\u201d …<\/p>\n

Scientists spend vast resources developing medications, water-purifying technologies, financial products, and social services designed to help people in need, he explains. But getting people to use<\/em> these technologies also requires understanding the psychology of the people using them. Policymakers, he says, must make this type of research a priority.<\/p><\/blockquote>\n

Great article. It would seem like good policy to use these findings when building programs to help the poor.\u00a0 But I have to consider this: sometimes these policies implement changes in the way these folks run their lives, and this may be resented.\u00a0 Regardless of the fascination of these findings, their implementation will be difficult simply because most folks like to run their lives their way.<\/p>\n

And apparently scarcity is not a particular synonym for poverty – a scarcity of time can also affect you, causing poor time management decisions to be made when the condition becomes chronic.<\/p>\n","protected":false},"excerpt":{"rendered":"

Behavioral economics mixes the rationality of economics with the semi-rationality of the human brain. This Harvard Magazine article by Cara Feinberg covers the work of\u00a0Professor Sendhil Mullainathan, who works on studies of how scarcity affects the mind: In 2008, Mullainathan joined Eldar Shafir, Tod professor of psychology and public affairs \u2026 Continue reading → <\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1580","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/posts\/1580","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/comments?post=1580"}],"version-history":[{"count":3,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/posts\/1580\/revisions"}],"predecessor-version":[{"id":1583,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/posts\/1580\/revisions\/1583"}],"wp:attachment":[{"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/media?parent=1580"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/categories?post=1580"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/tags?post=1580"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}