Choosing Poorly

One of the obstacles that keeps the poor from rising out of poverty is the tendency to make costly financial decisions – like buying lottery tickets, taking out high interest loans, and failing to enroll in assistance programs – that only make their situation worse. In the past, these poor decisions have been attributed either to low income individuals’ personalities or issues in their environment, such as poor education or substandard living conditions. New research published this month in Science by Booth Assistant Professor of Behavioral Science Anuj Shah points to a new answer: living with scarcity changes people’s psychology.

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