Why the poor do better on these simple tests of financial common sense (WaPo)

[eppur_se_muova]

By Max Ehrenfreund January 22 Follow @MaxEhrenfreund

If you spend all your time thinking about money, chances are, you're going to get pretty good at thinking about money. Indeed, new research suggests that the poor -- for whom concerns about cash are inescapable -- are not as prone to certain financial mistakes often made by the affluent.

"The poor spend a lot more time on mundane, everyday expenses. They're focused on money," said Anuj Shah, a psychologist at the University of Chicago and one of the authors of the research, which was published last year and presented earlier this month at the American Economic Association's annual meeting.

The group's findings are an interesting caveat to the conventional wisdom about poverty. Conservative experts on poverty often argue that it is a result of personal failings and bad choices, including financial choices, on the part of the poor. The liberal counterargument is typically that poverty itself causes intense stress that impairs sound decision-making.

Shah's collaborators on this project, Princeton University psychologist Eldar Shafir and Harvard University economist Sendhil Mullainathan, have produced compelling evidence for the liberal view. Their latest work, by contrast, suggests that poverty actually forces people to become better with money, at least in some respects.

[Being poor changes your thinking about everything]

"Having to focus on everyday expenses is an exhausting thing," Shah said. Yet perhaps because of that focus, Shah and his colleagues found that the poor performed better on tests they administered to participants in a series of studies.
***
more: https://www.washingtonpost.com/news/wonk/wp/2016/01/22/why-the-poor-do-better-on-these-simple-tests-of-financial-common-sense/

[Person 2713]

1. Oscar Wilde

There is only one class in the community that thinks more about money than the rich, and that is the poor. The poor can think of nothing else. Oscar Wilde

[eppur_se_muova]

2. Nice quote, saving ! nt

[jwirr]

3. Been poor most of my life and have often had discussions

with my friends and family about who could survive best in a sudden economic disaster that hit all of us. It was a general consensus that the poor could if the playing field was level.

But I think there is another element to why the poor understand economics - other than the use of money. What we learn very early is to set priorities. What are the important items to spend your money on. From there we move to what to do with money. My budget always makes sure that I have paid my rent, utilities and have food first before I spend anything else. I would guess that healthcare would be in that list for most of us if we were not eligible for Medicaid or Medicare.

Hopefully education would come next.

If we did not think this way we would all be starving on the streets.

To be honest this did not work for me - about 10 years ago the person I was sharing rent with walked out on me and I have been technically homeless ever since. I have been living with various members of my family since then. But I still help to pay the rent. So I am not sure that I qualify as knowing much about economics.

[Person 2713]

4. You are still making it work with what u got .So yes qualify IMO some would be a complete lost

mess dealing with hsving to make it with less .
In the great Chicago Fire 1800s it destroyed most of the city, the city as a whole choose to get the quite wealthy set in to shelter quickly because they were simpering souls and hysterical and helpless on their own. The citizens were in the way of the need to set in motion some emergency actions of extreme large scale by the rest of the people. The city had been burned to the ground So just like debris , the rich were taken care of so they as an obstacle could be out of the way of disaster relief . Yes level playing field those who knew how to survive with less were more adept

[jwirr]

5. Thank you. Interesting about Chicago Fire. In recent years

I have encouraged my family to grow gardens, raise small animals and other activities to help them in their budgets. Housing is a harder issue. Once upon a time I would have built a hogan but I doubt they are even legal anymore.