MULLAINATHAN: The same person, when they're poor, should have very different cognitive capacity than when they're rich. So how would we test that? Well, unfortunately, we don't have the kind of money to go around making poor people rich, but sugarcane farmers actually create a natural experiment for us.More at npr
VEDANTAM: That's right - sugarcane farmers in India. These farmers, it turns out, are paid only once a year, right after the harvest.
MULLAINATHAN: The month after they get that income, they're pretty rich. But like anybody who gets a huge windfall all at once, the money gets spent a little too fast. And so by the end of the harvest cycle, they're relatively poor. So now we have the same person a month before harvest poor and a month after harvest well-off.
VEDANTAM: Sendhil and Eldar tested the farmers on their long-term thinking when they had no money and when they had plenty of money. The results were stunning.
MULLAINATHAN: We found a huge difference. So we found that post-harvest, when they're well-off, they have much more impulse control.
I find I have this problem, but I don't have a scarcity of money necessarily. I have a scarcity of time.
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