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Spring Lecture: Eldar Shafir on “Psychology in Contexts of Scarcity”

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The Graduate School of Education Spring Lecture recently featured Eldar Shafir, Ph.D., who addressed “Psychology in Contexts of Scarcity.”  Watch the full lecture here.

As Professor of Behavioral Science and Public Policy at Princeton University and the Inaugural Director of Princeton’s Kahneman-Treisman Center for Behavioral Science and Public Policy, Dr. Shafir’s most recent research focuses on decision-making in contexts of poverty and on the application of behavioral research to policy. He has received several awards, most recently a Guggenheim Fellowship and the William James Book Award. He was also named one of Foreign Policy Magazine’s 100 Leading Global Thinkers of 2013, and elected fellow of the American Academy of Arts and Sciences. He received his B.A. from Brown University and his Ph.D. from the Massachusetts Institute of Technology.

Dr. Shafir provided multiple examples of studies that supported the premise of how living in poverty affects myriad behaviors in negative ways. “Poverty hijacks the focus and contents of thoughts and leaves reduced ‘bandwidth’…” In other words, scarcity, or money concerns, is a significant source of demand on one’s cognitive capacity and has a negative impact on one’s ability to think and process as quickly or as in-depth as those who do not live in poverty.

Dr. Shafir argues that many well-intentioned policymakers, in trying to alleviate struggles brought on by those living in poverty, instead create badly designed programs that result in punitive measures that cause more harm than good. For example, short-term loans that offer the means to cover purchases or pressing needs, typically called payday loans, are allowed to have triple-digit interest rates. He uses this example to support the idea that borrowers often end up trapped in a cycle of high cost debt that will not necessarily change the trajectory of the recipient.

Scarcity is a persistent problem that creates an emotional load and results in lowering cognitive performance. It can overwhelmingly create a myopic view, so that other important life messages do not cognitively register with the individual. If, however, society gets the psychology right and focuses on alleviating stressors of scarcity, people’s lives can be improved.

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