How Poverty Makes Workers Less Productive

As Washington debates sending checks to Americans and increasing the minimum wage, a new study offers evidence for how such policies could help eliminate poverty. Obviously, giving more money to people without much money helps them with money problems. But the study adds to a growing body of research that says that money really does help workers earn more money.

Sendhil Mullainathan is a behavioral economist at the University of Chicago Booth School of Business, and he outlined early evidence for this theory in Scarcity: Why Having Too Little Means So Much, co-authored with Princeton psychologist Eldar Shafir. Poverty, they find, is like a parasite, consuming mental energy that could be put to more beneficial use. “Put simply, being poor is like having just pulled an all-nighter,” Mullainathan once told NPR. And that, he says, hurts their ability to escape poverty.

…

Read the whole story (subscription may be required): NPR