Scarcity and Cognitive Function around Payday: A Conceptual and Empirical Analysis
Abstract
The ongoing demands around smoothing consumption with low and sporadic income flows in contexts of scarcity entail that minor changes in cash flows can have big psychological and behavioral effects. In this article, we examine the behavioral and cognitive impact of routine periodic fluctuations in financial status of the poor around paydays. In particular, we draw a link between a range of documented behaviors and an increase in scarcity-induced cognitive load, closer to payday. Our results, along with those of others briefly reviewed, illustrate the outsized role in scarcity contexts of otherwise trivial changes in income flows and highlight the importance of carefully structured research designs in studying the myriad challenges in scarcity contexts.
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Mani et al. (2020) found that executive control declined consistently as participants approached payday.
“Additionally, they found that executive control declined consistently as participants approached payday suggesting that facing financial scarcity causes cycles in executive control.”
From Poverty and economic decision making: a review of scarcity theory (2022) · cites this paper as Mani et al. (2020)
The results of Carvalho et al. (2016) are subject to debate due to methodological issues.
“However, the results of the latter study are subject to debate due to some methodological issues.”
From Poverty and economic decision making: a review of scarcity theory (2022) · cites this paper as Mani et al. (2020)
The payday research design might not have captured well the financial shocks around payday.
“Second, the payday research design might not have captured well the financial shocks around payday.”
From Poverty and economic decision making: a review of scarcity theory (2022) · cites this paper as Mani et al. (2020)
Facing financial scarcity causes cycles in executive control.
“Additionally, they found that executive control declined consistently as participants approached payday suggesting that facing financial scarcity causes cycles in executive control.”
From Poverty and economic decision making: a review of scarcity theory (2022) · cites this paper as Mani et al. (2020)
Reanalyzing the data, Mani et al. (2020) show that insufficient control of the time of survey completion (before vs. after payday) seems to explain the non-results.
“Reanalyzing the data, Mani et al. (2020) show that insufficient control of the time of survey completion (before vs. after payday) seems to explain the non-results.”
From Poverty and economic decision making: a review of scarcity theory (2022) · cites this paper as Mani et al. (2020)
Cites
Poverty impedes cognitive function.
Mani, A., Mullainathan, S., Shafir, E., & Zhao, J. (2013) · Science · doi:10.1126/science.1238041 · Cited by 2,967 · see citing works
Self-citationSome Consequences of Having Too Little
Shah, A. K., Mullainathan, S., & Shafir, E. (2012) · Science · doi:10.1126/science.1222426 · Cited by 1,567 · cited 1× · see citing works
“2378-1815 tention and executive control and, as a result, elicit a range of counterproductive behaviors such as attentional neglect, forgetting, impulsive spending, anxiety, and poor planning (Shah et al. 2012; Zhao and Tomm2018; Ong, Theseira, and Ng 2019).”
BackgroundSelf-citationA Self‐Regulatory Model of Resource Scarcity
Cannon, C., Goldsmith, K., & Roux, C. (2019) · Journal of Consumer Psychology · doi:10.1002/jcpy.1035 · Cited by 280 · see citing works
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Poverty and economic decision making: a review of scarcity theory
de Bruijn, E.-J., & Antonides, G. (2022) · Theory and Decision · doi:10.1007/s11238-021-09802-7 · Cited by 277 · see citing works
“In designing field studies, researchers should consider the size and timing of the financial shock (Mani et al. 2020).”
Background
- Authors
- Mani, A., Mullainathan, S., Shafir, E., & Zhao, J.
- Affiliations
- University of Oxford (GB)
- University of Chicago (US)
- Princeton University (US)
- University of British Columbia (CA)
- Venue
- Journal of the Association for Consumer Research
- Publisher
- University of Chicago Press
- Published
- 2020-10-01
- Volume
- 5
- Issue
- 4
- Pages
- 365-376
- ISSN
- 2378-1815 (ISSN-L)
- 2378-1823
- OpenAlex
- W3030098916
- Cited by
- 73
- References
- 3
- Citations by year
- 2026: 9 · 2025: 11 · 2024: 14 · 2023: 13 · 2022: 15 · 2021: 10 · 2020: 1
- FWCI
- 7.18
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Journal of the Association for Consumer Research (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Decision Sciences › General Decision Sciences › Decision-Making and Behavioral Economics
- Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy, Pension, Retirement Analysis
- Social Sciences › Sociology and Political Science › Income, Poverty, and Inequality
- Keywords
- scarcity, cognitive load, cognitive function, income fluctuations, consumption smoothing, poverty, financial stress
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