Short on cash? A new study shows that it might keep you from saving for the future.
A series of experiments released in Science magazine took students from Harvard, Princeton and the University of Chicago and asked them to play games — Angry Birds, Wheel of Fortune and Family Feud. The students were divided into two groups — “poor”, where players were given less opportunity and less time to play the game, and “rich”, where players had more.
The experiments showed that the “poor” kids got shortsighted — more focused on the present problem and less on the future, and more willing to borrow from their future selves in order to make it in the present.
“It’s kind of striking that when you take people from the Princeton University community and put them in a situation where there is a shortfall of resources, they behave just like people who have been out of work for some time,” said Anuj Shah, a behavioral science professor at the University of Chicago. “Is it something about being poor? Or is it something about being in a situation of scarcity?”
Shah says the results could explain why people use payday loans, even though they end up costing more in the long run, or don’t save a little bit of money or even make time to read to their child everyday. Compared to the demands of the present, investing in the future is vague and intangible. And for some, Shah says, current problems demand so much of their attention that there’s just no resources left when it comes to thinking about the future, even if they wanted to.
It’s an interesting study, especially in light of the common admonishment that poor people should just learn to save, just like the rich. Read more about the study in the Post-Gazette, or get the full study from Science Magazine.
Photo credit: Shutterstock/Piggy bank with cash and coins