Image of poor neighborhood

How poverty affects people's decision-making processes

Research from PBS

Attempts to reduce poverty need to recognise the powerful impact of the experience of low socioeconomic status on people’s decision-making processes.

Dr. Jennifer Sheehy-Skeffington's research on poverty and decision-making reveals the impact that our social and economic status can have on our behaviour. In early 2017, Dr. Sheehy-Skeffington along with Jessica Rea (Royal Holloway, University of London) produced this report summarising the most recent research on socioeconomic status and the connection between socioeconomic status and the psychological, social, and cultural factors that underpin our decision-making processes.

Key points from the findings report:

  • Childhood poverty: Experiencing or growing up in poverty affects people’s lifelong decision-making style. People living in poverty make decisions focused on coping with present stressful circumstances, often at the expense of future goals.

  • Inhibited performace: Low socio-economic status is associated with worse performance in tasks measuring academic ability, and also in measures of the underlying cognitive resources needed to perform well in school.

  • Lower confidence: People low in socio-economic status often see themselves as less able to learn new skills and succeed at tasks. They are also less likely to perceive that their actions will affect how their lives turn out. This has important consequences for academic performance and health behaviours; the less people feel that their actions matter, the less likely they are to make choices aligned to achieving future goals.

  • Higher risk aversion: People in poverty are less likely to take risks and more likely to conform to and value tradition. This is reflected in stricter parenting styles and career choices oriented towards job and financial security.

  • Social exclusion: Living in poverty is associated with feeling excluded from society, which may explain its link to increased levels of aggression at school and in neighbourhoods.

  • Policy impact: By shifting the focus from the specific kinds of decisions (e.g. education, family and financial) to the psychological, social and cultural processes informing decision-making in general (e.g. risk-taking or personal value orientations), policy-makers can address areas that affect people in poverty in a broad set of contexts.

  • Challenging stereotypes: For many individuals living in poverty, the choices made are not always bad ones, but are adapted to the constraints of life with very few resources. Public engagement and education can challenge stereotypes about those living in poverty, and reflect the functional nature of decision-making for those on low incomes.

See poverty findings

See full report

This work was funded by the Joseph Rowntree Foundation