NEW YORK —
It's not that the poor don't think enough about money, or the busy about their time — it's that they think about it too much. Shafir likes to cite a survey the researchers did at Boston's South Station. They asked arriving train passengers what the starting fare is on Boston taxis. Rich travelers take more cabs than poor ones, but low-income respondents were much more likely to know what it costs to take a cab, because in thinking about the decision between taking a cab or a bus, a couple of dollars one way or another really matters. This attentiveness ensures that they have enough cash to finish the day, but all of these immediate distractions — deciding whether to buy a muffin or some other minor indulgences; comparison shopping cereal brands; calculating and recalculating expected expenses against a dwindling bank balance — threatens to leave no mental space to consider the bigger picture of managing finances for the long-term. (The time-scarce similarly expend so much effort dealing with the minutiae of getting through the day that they fail to think about making their lives less harried and more productive in the future.)
Mullainathan, Shafir, and a number of other researchers have been running lab experiments to understand the impact of time pressures on decision-making. Together with University of Chicago psychologist Anuj Shah, they ran a lab experiment based on the old game show Family Feud, using Princeton undergraduates as their subjects. "Contestants" were asked to name items that belong to categories like "Things Barbie could auction off if she needed money fast." The responses were a matter of subjective judgment rather than fact; the "right" answers were those that had been most popular among 100 random Americans who were surveyed prior to the "show." For example, the answer "Barbie's dream car" earns 35 points because 35 out of the 100 people had offered that as an answer. The contestants were given only a few seconds to come up with a set of answers. But some experienced more scarcity than others: "Rich" ones had more time for each round than "poor" ones.