Public policy attention toward behavioural insights risks focusing on individual decision-making at the cost of considering the root causes of broader societal problems. Addressing this, emerging research bridges the individual and society by showing how low socioeconomic status can shape our psychology. Evidence suggests that, in fact, many behaviours associated with poverty may be understood as a rational and adaptive outcome of living in an extreme socioeconomic context.

There was an air of self-assurance at the Park Plaza Hotel back in September, as the Behavioural Exchange conference 33, though only in its second year, welcomed more than 900 delegates from across the world. They were lured by the promise of learning how insights regarding the pitfalls of the brain—its ‘predictable irrationalities’, as Dan Ariely describes them—can enable us to improve the quality of decisions made by everyday citizens.

The argument goes that policy-makers and civil servants who want to improve how society runs should design regulations and communications to account for the ways in which heuristics, biases, self-regulatory failures, and social influences might prevent us from making good personal and economic decisions that we would have made otherwise. For example, our tendency to over-value the present means that we don’t save as much for the future as we should. However, if automatic enrolment is used in the design of pension schemes, citizens will rarely opt-out, thus saving more and benefiting both their future selves and society. Since the publication of Nudge in 2008, policy-makers have become aware of the potential for fruitful application in their work of behavioural economics—the study of the ways in which human decision-making departs from perfect utility-maximisation. But only recently, with the trumpeted successes of the UK Behavioural Insights Team and subsequent rekindling of interest in social and behavioural sciences in the US Government 34, has the science of behavioural insights been seen as an essential component of the toolkit of the savvy policy-maker.

Fashionable social innovations often trigger a degree of scepticism in response. When Nudge became a sensation, criticism of its application to the way governments do business centred on whether it was appropriate to employ discoveries originating in psychology in the ‘manipulation’ of the decision-making of unassuming citizens. This line of argument mostly subsided with the acceptance that there has always been subtle psychological influence involved in the framing of policies; as Simon Hedlin points out (in a related Angle article)35, applying behavioural insights is a chance to make sure such influence is not arbitrary, but designed to elicit decisions that are in the decision-maker’s long-term interest. A more profound critique, however, emerges from the concern that highlighting interventions which target individual decision-making shifts the focus away from where the root of a social issues usually lies: at the level of the societal system1 This can be particularly pernicious when the population being talked about and targeted lies at the margins of national or global society. By definition, marginalised groups are the least able to fight back against the assumption, often enabled by a focus on individual decisions and behaviours, that they are to blame for their socioeconomic condition.

Individualising societal issues

Indeed, the ‘individualisation’ of societal issues has arguably long-been the modus operandi of the behavioural sciences. When it comes to low socioeconomic status, it is easy now to dismiss stereotypes from political talk and tabloid news about groups being too ‘lazy’ or lacking in the right ‘attitude’ to improve their socioeconomic condition. But historically such terms were once standard in sociology, with prominent reports from the United States in the 1960s positing the absence of appropriate values or work ethic as one component of a pathological ‘culture of poverty’ 2,3,4. Though sociology has long moved on, fields that usually take just as societal a lens, such as public health, have been struck again and again by the evidence for the role of individual behaviour in driving healthy or unhealthy outcomes5. Because no improvement in sanitation facilities or medical protection can prevent people from choosing to eat sugary foods or smoke cigarettes, the field of health promotion has turned toward psychologists for help in designing behaviour change interventions that try to improve individual decision-making...while the predatory food and tobacco industries remain under-regulated.

Are fields such as psychology and behavioural economics forever destined to be relevant only at the individual level, thus constantly at risk of shifting attention away from social structural causes of societal problems? At a time when many countries continue to endure harsh austerity measures, must the application of behavioural insights to the policy realm stand as an indirect way of shifting the onus for improving society from the government to its people?

Those lower in socioeconomic status are more likely to engage in unhealthy behaviours, such as smoking cigarettes. Graph based on 2006 Geelong Osteoporosis Study data, reproduced, with author's permission, from Brennan, S. L., Henry, M. J., Nicholson, G. C., Kotowicz, M. A., & Pasco, J. A. (2009). Socioeconomic status and risk factors for obesity and metabolic disorders in a population-based sample of adult females. Preventive medicine, 49(2), 165-171.

Emerging research from a number of behavioural science subfields suggests that this is not necessarily the case. This research hints that it is possible, as sociologist William Julius Wilson observed almost twenty years ago, to study the decisions, behaviours and culture associated with poverty and low socioeconomic status in a way that reveals the signature of an oppressive social structure6 That is, by systematically observing how conditions such as poverty and marginalisation influence psychosocial processes such as interactions, motivation, emotion, and cognition, one can understand decision-making at the bottom of society as, in part, a consequence of how that society is set up. Using methods from across the social and behavioural sciences, perhaps we can come to understand the psychological situation of poverty in a way that still assigns an important causal role to institutions, communities, governments, and economic structures.

Low socioeconomic status is linked with a less independent sense of agency

The first subfield producing research relevant to this question is that of the cultural psychology of social class. The argument is that whether through lack of resources or being low in the occupational hierarchy, life when one is low in social class means having little autonomy, such that working class children are brought up to think that one cannot always get what one wants and should consider the needs of others over one’s own. Thus, people living in working class contexts in the United States have a more interdependent sense of self than those in middle or upper classes, and are more likely to make decisions that favour their relationships with others over those that favour their personal goals7. Studies exploring this question have shown how working class Americans are less comfortable in contexts focusing on individual choice and uniqueness, and are more likely to prefer items that were chosen for them (or that others also like) over items that they are forced to choose themselves (or that no one else likes)8. What looks like conformity or weakness of will is in fact a different way of making decisions, and one which is a rational response to life in poor or working class environments.

Additional studies have shown that working class Americans feel a diminished sense that they can control their life outcomes9 - a self-appraisal that we know matters for whether one is likely to engage in healthy behaviours10. The negative correlation between socioeconomic status (SES) and sense of control or self-efficacy has been observed cross-nationally11 and even in studies in which one is experimentally induced to perceive that one is low in SES, implying that it is low SES that causes low sense of control, as opposed to the reverse12.

These differences are relevant to the educational context too. Nicole Stephens and colleagues argue that part of the reason why first generation college students don’t do as well as other students is because American universities propagate and project a very middle class sense of agency, in which one’s goal at college should be to discover the ways one is unique from others and to realise a personal aspiration. This clashes with the more interdependent sense of agency that working class students bring to university, contributing to their greater likelihood of feeling like they don’t ‘fit in’, and to poorer academic performance and higher likelihood of drop-out13. Thus, what initially looks like a failure of individual academic motivation or effort is in fact a cultural mismatch that is exacerbated by the middle class blinkers of those at the top of higher education institutions.

Suboptimal decisions are a product of the situation, not the person

Where the cultural psychology of class looks at how one’s socioeconomic environment constrains one’s sense of agency, the behavioural economics of poverty reveals how the same environment, through its impact on human psychology, shapes one’s economic decisions. Development economist Johannes Haushofer has studied the ‘psychology of poverty’ internationally, finding that being poor is linked to unhappiness across countries, while in specific contexts, periods of financial hardship (such as drought for Kenyan farmers) are associated with stress and worry14. The negative psychological impact of not having enough resources matters for economic behaviour. For example, we know that randomly assigning people to feel negative emotions leads to more short-sighted economic decisions, as indexed through the classic measure of whether one would prefer a small reward now or a larger reward later15. A similar shift toward devaluing the future occurs following laboratory-based administration of hydrocortisone (the stress hormone), indicating that the stress of poverty leads to sub-optimal economic behaviour16.

Another set of behavioural economists have looked at poverty as an example of the wider phenomenon of resource scarcity, the latter inducing a recognisable psychological mindset. A recent book 36 by Sendhil Mullainathan and Eldar Shafir discusses how not having enough of a particular resource causes people to engage in a form of tunnel vision, focusing only on pressing needs and neglecting future outcomes. In one set of studies, giving middle class participants the temporary experience of resource scarcity in a computer game led them to borrow resources excessively from future game rounds, in a way that the authors argue mimics the damaging cycles of debt in which the contemporary poor find themselves17. According to the authors, the reason for this shift toward suboptimal economic decision-making is the psychological constraint imposed by scarcity, which prevents people from performing even basic cognitive operations as well as they could otherwise. A striking application to the case of poverty was demonstrated in a study of Indian sugar cane farmers, where cognitive functioning and performance on an intelligence test were worse in periods when they had less money compared to when they had just been paid18.

The implication of these findings is that unwise economic decisions and poor academic performance are a product of the psychological situation of poverty, and thus less individual than social structural in origin.

Inspired by these findings, my recent research has looked at the cognitive impact not of having few resources, but of realising that one has far fewer resources than others. In one series of studies, Jim Sidanius and I have shown that giving middle class participants the temporary perception that they sit low on the socioeconomic ladder of the United States leads them to perform worse in a range of measures of cognitive function. People in the ‘low SES’ condition were also worse at picking out the best of a set of three fictitious credit card offers, evidence that the negative cognitive impact of feeling one is at the bottom of society carries over into one’s financial decisions19. These findings are important because this form of ‘socioeconomic status anxiety’ matters for people at all levels of the societal ladder, not just the poor, and will likely grow in potency as economic inequality rises20.

Middle income participants who perceive they are relatively low in socioeconomic status are less likely to spot the best of three complex credit card offers. Graph reproduced with permission from Sheehy-Skeffington, J., & Sidanius, J. (2014). Distracted looking up: Priming low socioeconomic status impairs executive functions. Paper presented at the 17th General Meeting of the European Association of Social Psychology, Amsterdam, The Netherlands.

Is the psychology of low socioeconomic status always negative?

Is the psychology of low socioeconomic status always one of hopelessness, constrained agency and impaired cognitive functioning? An ecological perspective suggests not; rather, what might look like suboptimal decisions and behaviours are in fact quite rational and adaptive when considered in their ecological context. Gillian Pepper and Daniel Nettle, for example, have pointed out that socioeconomically deprived neighbourhoods contain more violence and environmental toxins than better off neighbourhoods, meaning that people living there have high levels of extrinsic mortality risk—the likelihood that one will die for reasons outside of one’s control. In such situations, it is adaptive for all species, not just humans, to shift their energy investment away from uncertain future outcomes toward immediate gains...which is what is observed in the behaviours of the poor21. Seen from this perspective, the pain relief that one gets from smoking, or the status enhancement that one gets from spending earnings on flashy goods, are actually ‘worth more’ to the organism than the long-term health and educational benefits, respectively, of giving up smoking or putting money away in a college fund.

In a related line of argument, evolutionary psychologists have claimed that what looks like impairment in cognitive performance might actually signal the rational reallocation of cognitive resources to tasks that better serve evolutionary fitness22 to information-processing styles that focus on the here and now23 or toward stimuli that are survival-relevant24. In line with this, Michael Price and I are running studies at Brunel University to see whether the subjective perception of low SES leads to poor cognitive performance because it triggers a status threat, thus diverting cognitive resources toward status-seeking. If so, once one portrays a cognitive task as an opportunity to regain status, one should see performance on it improve as cognitive resources are brought back online—a pattern that is emerging in our preliminary results25.

Designing policies with the psychological situation of poverty in mind

The insights from the cultural psychology of social class, the behavioural economics of poverty and the evolutionary psychology of status teach us that one can study the decisions and behaviours associated with different socioeconomic groups without ignoring the role of society. This integration of individual and social structural levels of analysis is gaining adherents in high level institutions, as evidenced by the inclusion of psychological, social, cultural, and institutional factors in the World Bank’s World Development Report 2015 37 (entitled Mind, Society, & Behavior). Indeed, discoveries about what low socioeconomic status means for subjective well-being, sense of control, cognitive functioning, and economic and health-related decisions are ripe for translation into lessons for designing more effective anti-poverty policies.

Some lessons act like classic behavioural insights: Mullainathan and Shafir, for example, have recommended making application forms for government assistance or small loans shorter and clearer, to cater for the cognitive constraints imposed on those asked to fill them out, who are usually people on low incomes with a lot on their minds. Cultural diversity in sense of agency, and the recognition that many low income groups have been socialised with interdependence, are processes that might help explain why recruitment campaigns for public jobs that focus on serving one’s community have been so effective 38.

Aside from keeping the psychological situation of poverty in mind when designing policies and communications targeted toward low income groups, policymakers can also value psychological outcomes in their own right. Haushofer has highlighted the importance of including variables such as stress and happiness as metrics of success for development programmes. He argues that a micro-loan programme that brings financial gains at the cost of a huge psychological pressure to repay may not have a net positive impact on the well-being of its clients; conversely, an initiative addressing domestic violence may have immediate effects only in the psychological domain, with economic benefits arising as an indirect consequence of the improvement in well-being26 Just as we know the economic consequences of stress and well-being, so we know how important it is for people to feel in control of their lives in order to want to invest in their health or education. This provides a mechanistic foundation for the effectiveness of community empowerment in international development, while highlighting just as strong a need to increase poor people’s autonomy, sense of control, financial security and environmental stability in the Global North27

Low socioeconomic status is not just a psychological constraint that yields deficits in cognition and decision-making. Rather, it might lead to better performance on tasks that focus on the here and now, that involve a particular scarce resource, or that draw on interdependence. This implies that there may be psychological skills that develop in situations of deprivation, such as resilience, concrete information-processing and interpersonal empathy, which enable those coming from such situations to excel, as long as they are given the opportunity. We might consider, for example, framing academic achievement tests in such a way that makes clear their relevance to socioeconomic status, perhaps enhancing the cognitive resources of low SES compared to high SES students.

Keep society in focus

Most important of all, advances in economic, social, cultural, and evolutionary psychology remind us to keep society in focus when looking for the root causes of social problems. Knowing how deprivation or low social status change the mindset of those experiencing it, in a way that would play out similarly in any of us, means that one can understand behaviours as an outcome of social structural forces rather than of enduring traits or ‘free’ decisions. It also highlights the importance of interventions beyond the individual level, such as changing the way universities project their culture as independent, convincing governments to provide financial assistance that reduces resource scarcity, and reducing economic inequality as a way of making status comparisons less insidious. These changes could yield benefits on two levels: they should directly improve poor people’s socioeconomic condition, and also increase the likelihood of their making decisions in their long-term interest, with a positive feedback effect on personal and economic outcomes. Indeed, there is evidence that the income achievement gap in higher education diminishes once universities convey to working class students the importance of community28 that unconditional cash transfers improve well-being and long-term outcomes29 and that times of greater economic equality are also times of increased happiness across social groups30.

There are subfields of psychology that have always focused on the social structural context, such as community psychology, with its emphasis on social justice31 or societal psychology, with its rootedness in real world issues32. Research on the psychological consequences of low socioeconomic status can augment these fields by offering a rigorous way of testing the assumption, common in left-wing political discourse and social theory, that one’s structural position really does shape one’s decisions and behaviours. This rigour comes in the form of the experimental method, essential for testing causality, and the statistical analysis of large datasets, needed to draw population-level conclusions. If it can harness the renewed interest in policy circles in the application of behavioural insights, this research can at very least make governments’ understanding of behaviour in contexts of poverty more nuanced. The shared goal should be to improve societies so that they better serve people living in deprived or marginalised situations...and ultimately to eradicate those situations altogether.