Institute for Money, Technology & Financial Inclusion

In November 2012, Anuj K. Shah, Sendhil Mullainathan, and Eldar Shafir published a paper titled "Some Consequences of Having Too Little" in Science magazine. One of the key findings was that poor people make bad decisions not because they are stupid, but because they get overwhelmed. The study attempted to discover why people who are poor seem to exist in a vicious cycle of poverty. The authors concluded that the poor don't have the mental bandwidth needed to handle some other life challenges.

What consumed the bandwidth? Financial pressures! So what should a policymaker interested in alleviating poverty do with this information? “One thing you want to do is facilitate bandwidth. You want to think of ways to make things easier,” the report says.