Poverty and Plenty Affect Intelligent Decisions

Dear Friend,

I recently came across a fascinating article in Harvard Magazine. Its title, “The Science of Scarcity,” sums up an emerging topic among behavioral economists, the people who study why we make the economic decisions that we do.

What they find is that when any of us are poor—indeed when we face scarcity of any kind—we tend to make bad decisions. Poverty actually lowers our IQ by limiting what these economists call our “bandwidth.” When we are consumed with the problems of poverty—like where our next meal is coming from—we have less of our brain left over to think clearly in a long term fashion.

Ibrahim Nadashi, 66 years old, participates in a reading and writing class in Ruwawuri, Nigeria. The class is helping people learn these skills so they can earn a living with dignity. Photo by Michael Stulman/CRS

Ibrahim Nadashi, 66 years old, participates in a reading and writing class in Ruwawuri, Nigeria. The class is helping people learn these skills so they can earn a living with dignity. Photo by Michael Stulman/CRS

Did you know that in this country high school students’ SAT scores correlate consistently with only one measurement: household income? The higher the income, the higher the score, and vice versa. Some say this shows that the wealthy can afford test prep tutors. Others say it proves that our capitalist meritocracy works, that the smart are rewarded.

But it’s clear to me that students living in poverty do not score lower because they are inherently less intelligent. They score lower because the stress of poverty robs them of their intelligence. As the article states, people aren’t poor because they sometimes make bad decisions; people sometimes make bad decisions because they are poor.

Studies show that people who make intelligent decisions when not dealing with scarcity make less intelligent decisions when scarcity is an issue. So, if those same wealthy, high-SAT teenagers were plunged into poverty, their scores would decline.

In this harvest month—October 16 is World Food Day—these insights help bring into focus so much of the work we do in agriculture at Catholic Relief Services.

Our basic strategy is summed up in what we call the Pathway to Prosperity, a step-by-step approach that helps subsistence farmers, who grow what they eat and eat what they grow, transition into agribusiness entrepreneurs. This way, their crops can feed more people and they can have the resilience to feed their own families, should they face a drought or other hardship.

This article on scarcity makes clear why more successful farming is not simply a matter of providing better seeds or fertilizer or information on local markets. If you are a poor farmer who knows that what your family eats depends on what you harvest, you are not just making calculations about the cost of fertilizer compared to the increase in production, or how much profit you will get when you sell those extra crops on the market. You must also consider where your family’s next meals will come from.

This realization makes me fully appreciate a CRS program in Nigeria that’s helping 42,000 households. Sure, it provides improved varieties of seeds and new technologies to increase farmer productivity, but there’s also vocational training, cash grants, even basic literacy classes.

Take Ibrahim Nadashi, a 66-year-old father of 9, grandfather of 23. Like his father, Ibrahim is a farmer.

“I had no access to school when I was a youth,” says Ibrahim, explaining why he didn’t have the chance to learn to read and write before joining a CRS literacy class a few months ago. It was the science of scarcity in action: If you were a subsistence farmer, would you be more worried about your children’s future education, or their immediate need to eat?

Now, because of this program, Ibrahim’s new skills will put him in a better position to access financial resources and to understand and use new technologies and products that can improve his harvests. And, as he points out, it will help him act as a role model for the children of his village.

Then there’s Kulu Asarara, a farmer who used a cash grant from CRS to expand her farm and set up a business selling herbs and spices. With the economic empowerment that the grant and her business gave her, she began to improve her farming, buying fertilizer. Her yield improved. She had crops to sell along with her condiments. Her profits went up. And now she is building a new house.

What are the lessons these hardworking people teach us? When we reduce scarcity, people start thinking more clearly. We don’t have to lead them up the Pathway to Prosperity, they start taking those steps themselves toward the life that God intended for them.

As supporters of CRS, you are taking that journey with them.

May blessings overflow,

Dr. Carolyn Y. Woo
President & CEO

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