Bad decisions by "the poor" and others, interesting podcast

[lemanfan]

In some threads here, there are discussions of why others make so bad decisions.  A few weeks back, the podcast Hidden Brain had an interesting episode where this was discussed.  Basically the idea presented is that under many circumstances (including poverty), the decision bandwidth is not enough to make the rational decisions.

Check out "Episode 65: Tunnel Vision" here: http://www.npr.org/podcasts/510308/hidden-brain

Toughts?

[Laura33]

I have heard this theory and believe it is legit; I know I make worse decisions when I've had a horrible, long, exhausting day, so it just seems logical that someone who is commuting two hours each way by bus, working irregular hours, not eating the healthiest foods or getting much exercise, etc., would as well.

I also think that what is a "good" and "bad" decision may vary depending on the context.  E.g., I read about a re-do of the marshmallow study that evaluated brain waves, and IIRC, the brain waves of the poor kids when choosing to eat the marshmallow were the same as the brain waves of the wealthier kids when choosing to wait for two.  IOW, if you live in a world of scarcity, you learn that if you don't eat the marshmallow now, someone else will, and you won't get any, so the logical solution is to eat the one now.  Unfortunately, since the ability to delay gratification seems to be highly correlated with long-term success, I suspect those early life lessons just create another obstacle (mindset) these kids need to overcome. 

[qval]

I'm listening, and I like the idea that much consumption is done for psychological needs rather than material needs. There is value (maybe not economic) that comes into play in all our spending decisions, and consumers are mostly rational, except when they're not. Like Boarder42 and not paying off the mortgage, I did the irrational thing because of virtues of being debt free meant something to me...

[Systems101]

Basically the idea presented is that under many circumstances (including poverty), the decision bandwidth is not enough to make the rational decisions.

I agree.  A powerful read on the topic is "Scarcity" by Sendhil Mullainathan.  This has supporting information including information about A WWII experiment on starvation (that as a side effect gives some implications to mental capabilities under scarcity.  The study is summarized here: https://en.wikipedia.org/wiki/Minnesota_Starvation_Experiment

[RWD]

Very interesting. That shows that there are good psychological reasons to recommend building an emergency fund as the top priority for someone trying to get control over their finances. It's a buffer that gives you mental breathing room so you don't have to have to spend so much bandwidth worrying about how you'll pay for things.


As a side note, that company that fired the woman in the beginning for accidentally using the company credit card for a $12 charge is really inflexible. I have a company credit card and every month I'm supposed to log in and provide receipts for company stuff. If there are personal expenses then I would be expected to pay that portion. There can be split charges too (part personal, part company expense). It's not like she was trying to pass it off as a company expense. It sounds like that company needs a better system for handling company cards.

[clarkfan1979]

Everyone has a limited amount of brain power. Most people pour all of it into their jobs. Then there is nothing left over for personal growth. This is for both rich and poor people. However, poor people tend to work more hours and are more at risk.

[WhiteTrashCash]

Thanks for sharing this podcast. I'm going to listen to it when I have a little free time.

In my own personal experience with poverty, bad decision making came as a product of a few different factors, chief among which was lack of information/financial education, constant fear and stress triggering instant gratification, and immediate needs being prioritized over long-term goals. I always tell people that there's a difference between reasons and excuses. There are often reasons for why poor people behave the way they do and it's important to understand those reasons if you want to help them. However, poor people also make a lot of excuses for themselves and it's important to help them accept their own agency.

The problem is that most people don't live under the same life conditions as the poor, so they have trouble understanding why poor people make decisions that seem obviously counterproductive. These people end up trying to make things worse for the poor out of frustration over the situation.

[lemanfan]

Thanks for sharing this podcast. I'm going to listen to it when I have a little free time.

Your journal was one of the contributing factors in the realization of how fundamentally different (parts of) the USA is to what I'm used to from Scandinavia. Someone in my network held a lecture recently in "invisible culture differences" and this is clearly a field where this applies. Probably within the USA too. 

While I've never had real financial hardships, I certainly do recognize the limited bandwidth experience.  When work and the realities of life gets on to me, I just make worse and worse decisions in the food and drink department.  The local steakhouse / pub has made good money of me trying to land from a stressful week, even though I really know that beer and fries is not always whats best for me.