Scarcity and Cognitive Function around Payday: A Conceptual and Empirical Analysis

Anandi Mani, Sendhil Mullainathan, Eldarl Shafir and Jiaying Zhao

No 2020-04, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

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 paper, we examine the behavioral and cognitive impact of routine periodic fluctuations in financial status of the poor around paydays. In articular, e raw ink etween a ange f ocumented ehaviors and n 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 esearch designs in studying the yriad challenges in scarcity contexts.

Date: 2020
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Journal Article: Scarcity and Cognitive Function around Payday: A Conceptual and Empirical Analysis (2020)
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