By way of catching up on my popular social science, I have been reading Daniel Kahneman’s Thinking Fast and Slow and Esther Duflo and Abhijit Banerjee’s Poor Economics. Among the most arresting revelations in the latter is the following:
There 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.
One of the problems with producing excess cortisol is that the hormone impedes the functioning of important parts of the brain. 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.’
When I was in Guinea-Bissau a couple of years back, I remember being horrified that an impoverished local housewife who complained that she could not afford her daughter’s $10-a-month school fees was nevertheless able to buy regular top-up cards for her expensive mobile phone. At the time I blamed consumerism and the foreign aid workers who paraded their own phones so brashly, but it may be that biology played a part too, and that high cortisol levels were impeding the woman’s judgement and encouraging her to make impulsive and seemingly irrational investments. Indeed, Duflo and Banerjee report that women who had access to a microcredit program in India drastically reduced their purchases of impulse products such as tea and snacks; the two economists postulate that this occurred both because the women’s cortisol levels declined in line with the reduction in stress and because their increased confidence that plans would come to fruition gave them a stronger incentive to restrain themselves.
But it is not just short-term decision-making that is affected by cortisol – people who are unable to control their impulses as children are at a serious disadvantage later in life. In Thinking Fast and Slow, his wonder-strewn study of the brain’s reasoning powers, Daniel Kahneman describes a famous psychological experiment wherein a group of four-year-old children were given a choice between eating one biscuit now or two if they could wait for fifteen minutes. Each child was left alone in a room, with just the single biscuit and a bell for company. If the child could not resist the temptation, she was to ring the bell and the experimenter would come in and give her the biscuit.
Only half the children managed to endure for the full fifteen minutes and receive the larger prize, mainly, as Kahneman notes, ‘by keeping their attention away from the tempting reward.’ But although succumbing to the lure of the biscuit might seem a trivial matter, in the long-term stark differences emerged between those children who held out and those who didn’t. Ten or fifteen years after the experiment, Kahneman reports, ‘the resisters had higher measures of executive control in cognitive tasks, and especially the ability to reallocate their attention effectively. As young adults, they were less likely to take drugs. A significant difference in intellectual aptitude emerged: the children who had shown more self-control as four-year-olds had substantially higher scores on tests of intelligence.’
The possession of self-control, then, affects our life chances. And the high levels of cortisol associated with poverty are a contributor to diminished self-control. It may not be far-fetched to predict, therefore, that unless their stress levels can somehow be reduced, those unfortunate children whose mothers were not part of Mexico’s PROGRESA program are condemned over the coming years to make decisions that dim forever their prospects of advancement. As well as all the other disadvantages poor people face in terms of reduced access to schooling, healthcare and so on, they are stuck in a biological poverty trap.
So how to get cortisol levels down, and free people from this trap? Duflo and Banerjee suggest that microcredit programs, insurance against health and weather disasters, and social safety nets in the form of a minimum level of income support can give the poor the serenity they need to set themselves on the right path. In a 2008 paper I wrote with LSE’s Tony Barnett on how people are more likely to protect themselves against HIV infection if they have hope for the future (or at least if despair is absent), we argued that a focus on individual behaviour change – the traditional approach to HIV prevention – may be less useful than considering the wider environment within which decisions that affect HIV transmission are made (‘where people have little hope and little aspiration,’ we wrote, ‘they discount the longer-term future and take risks’). We recommended cash transfers as a means of reducing despair and, by adding value to the future, extending decision horizons.
There are no doubt other means of lowering stress levels (might cortisol-reducing medication, for example, give adults the composure needed to make more rational decisions? Or could the negative effects of stress be overcome by building self-control training into school curricula?). Asking poor people themselves what is needed to reduce the stress in their lives is another, radical option, and one that is likely to throw up unforeseen answers. Poor Economics is in large part a call for a deeper understanding of how poor people take decisions. To the outside observer these decisions sometimes appear irrational, and more likely to do harm than good, but looking to biology provides a more nuanced perspective, and thereby increases the chance that policy responses will be appropriate.