Speakers
Overview
This MDM lunch explores poverty and decision-making from three complementary perspectives: the neuroscience of how chronic stress impacts the brain's response systems, the economics of how scarcity creates a “bandwidth tax” that impairs cognitive function, and a large-scale randomised controlled trial testing whether simply giving people money improves their decision-making and wellbeing. Together the three talks challenged the common assumption that poor decisions cause poverty, suggesting instead that poverty may systematically alter the very processes people rely on to decide.
Key Points
Under acute stress, the prefrontal executive control network is suppressed and the salience network takes over, promoting fast, reactive responses. With chronic stress exposure, this shift actually becomes structural: the brain adapts to the level of adversity it has grown up in, tuning toward more reactive, rather than proactive responses.
Cortisol reactivity doesn't increase with chronic stress exposure, but it decreases. This is an adaptation, where the stress response recalibrates to match the environment in which it developed, with lasting consequences for how people perceive controllability and agency.
Debt cancellation in Singapore produced rapid improvements in cognitive functioning (Flanker test) and large reductions in anxiety symptoms within three months, and the number of debts cleared mattered more than the total amount cancelled. Clearing many small debts helped more than reducing one large one, suggesting that mental accounting load is a key mechanism.
People in poverty show higher “cognitive uncertainty”, inconsistent choices under similar conditions, which leaves them vulnerable to exploitation (buying and selling the same lottery at a loss). This effect persists after controlling for cognitive ability, suggesting neurological pathways not yet fully understood.
The Gewoon Geld Geven RCT in the Netherlands gives €150/month unconditionally to 600 households across Amsterdam, Tilburg, and Zaanstad for two years. Participants spend it on essentials (i.e., medicines, transport), not luxuries, and qualitative interviews suggest the effects feel significant for the receivers, even though the amount is modest relative to the poverty gap.
Open question: Are the cognitive and neural changes associated with poverty adaptive, tuned to genuinely low-controllability environments, or maladaptive mismatches when people move into more resource-rich settings? And can interventions designed to increase perceived controllability work independently of increasing actual income?
Next Steps
Possible collaborations: linking neuroscientific stress measures (including cortisol from hair samples) to large field studies like Gewoon Geld Geven, and developing a more integrated account of when cognitive changes under poverty reflect adaptation versus impairment.
If you are interested in poverty, stress, and decision-making and would like to connect with the speakers or suggest a speaker for another session, contact us at centerfordecisionscience@ru.nl.