The Causes of Poverty (59): Stress

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causes of poverty / economics / health / poverty

stress

(source)

Stress is often a consequence of poverty, but it can also make poverty worse. Esther Duflo and Abhijit Banerjee have noted in Poor Economics that

[t]here is a strong association between poverty and the level of cortisol produced by the body, an indicator of stress. Conversely, cortisol levels go down when households receive help. The children of the beneficiaries of PROGRESA, the Mexican cash transfer program [later renamed Oportunidades], have, for example, been found to have significantly lower levels of cortisol than comparable children whose mothers did not benefit from the program. (source)

Cortisol is a hormone, and high levels of it can cause brain dysfunctions which in turn make it difficult for affected individuals to escape their economic predicament.

The prefrontal cortex, for example, which is vital for suppressing impulsive responses, is rendered less effective by high cortisol levels, making us more likely to take hasty, ill-considered decisions. “When experimental subjects are artificially put under stressful conditions,” Duflo and Banerjee note, “they are less likely to make the economically rational decision when faced with choosing among different alternatives.” (source)

This poverty cycle or poverty trap can only be broken when external interventions reduce stress levels. For example, poor people can be given easier access to credit or insurance, which will reduce their fear of the future. They can be given a basic income. Etc. Perhaps cortisol-reducing medication is also an option.

More here on the way in which brain dysfunctions can cause poverty. And more here on the link between poverty, self-control and willpower. More posts in this blog series are here.

2 Comments

  1. Pingback: The Causes of Poverty (63): Stress, Ctd. | P.a.p.-Blog, Human Rights Etc.

  2. Pingback: The Causes of Poverty (69): Self-Destructive Behavior | P.a.p.-Blog, Human Rights Etc.

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