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

Anandi Mani, Sendhil Mullainathan, Eldar Shafir and Jiaying Zhao

Journal of the Association for Consumer Research, 2020, vol. 5, issue 4, 365 - 376

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.

Date: 2020
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