Work

The Psychology of Poverty: Evidence from the Field

Year: 2020

Type: article

Abstract: Individuals living in poverty are less likely to save and plan for the future, behaviour traditionally attributed to liquidity constraints and the associated need to address immediate consumption. Recent work on the behavioural consequences of poverty suggests that poverty induces stress and negative affect, which themselves directly influence economic decisions. We test this hypothesis using evaluation data from a national cash transfer program in Malawi in which some eligible households were randomly assigned to receive the transfer before others. We find that cash transfer reduces stress and improves positive affect, and positive affect has a direct effect on economic decisions.

Source: Journal of African Economies

DOI: 10.1093/jae/ejaa010

Authors: Adria Molotsky, Sudhanshu Handa

Institutions: American Institutes for Research, University of North Carolina at Chapel Hill

Language: English

Topic: Poverty, Education, and Child Welfare

Subfield: Safety Research

Field: Social Sciences

Domain: Social Sciences

SDG: No poverty

Open Access status: hybrid

Estimated APC paid: $4,687