Using Behavioral Economics to Reduce Poverty and Oppression

Karla Hoff and Allison Demeritt
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Allison Demeritt: University of Washington

CAGE Online Working Paper Series from Competitive Advantage in the Global Economy (CAGE)

Abstract: Until recently, economics conceived of poverty solely as a lack of material resources. This view likely captures the reality of poverty experienced by many people around the globe. However, two waves of behavioral economics demonstrate that the narrowing of people’s external environments may change people themselves: poverty lowers the quality of decision-making, and poverty and oppression may depress the capacity to aspire. Poverty and a history of oppression also change how individuals are perceived. To overcome these effects may require helping people acquire new mental models. This essay discusses key findings from behavioral economics, the implications for agency, and some interventions with promising outcomes. We hope to inspire scholars and policymakers to think more deeply about the nature of poverty and oppression and to consider policies that target the psychological and sociological factors that create cycles of poverty

Keywords: psychology of scarcity; culture; cognition; mental models; agency; role models; participatory theater JEL Classification: (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-cbe and nep-nud
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Persistent link: https://EconPapers.repec.org/RePEc:cge:wacage:695

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