How Poverty Brings Costs into Focus
Research suggests that people with less money think more clearly in terms of costs and tradeoffs.
How Poverty Brings Costs into FocusPaper Scarcity Frames Value
Economic models of decision making assume that people have a stable way of thinking about value. In contrast, psychology has shown that people’s preferences are often malleable and influenced by normatively irrelevant contextual features. Whereas economics derives its predictions from the assumption that people navigate a world of scarce resources, recent psychological work has shown that people often do not attend to scarcity. In this article, we show that when scarcity does influence cognition, it renders people less susceptible to classic context effects. Under conditions of scarcity, people focus on pressing needs and recognize the trade-offs that must be made against those needs. Those trade-offs frame perception more consistently than irrelevant contextual cues, which exert less influence. The results suggest that scarcity can align certain behaviors more closely with traditional economic predictions.
Published in: Psychological Science
- Authored by
- 2015
- Economic Mobility
Read the Research in Chicago Booth Review