By Maggie Fox, Senior Health Writer, NBC News

Being poor affects your ability to think, a new study shows. Those coping with severe financial stress don't have the mental bandwidth to deal with all of life’s troubles, a team of researchers reported Thursday.

They’ve done a series of tests that show when people are flush with cash, they can stop worrying and make better decisions. But having financial woes takes up so much attention, they often make poor decisions.

“When you are very, very focused on what you don’t have enough of, you do all you can do to get more of it, at the expense of other stuff,” says Eldar Shafir of Princeton University, who worked on the study published in the journal Science.

When people don't have enough money they're so focused on ways to get more that they don't make good choices, a new study has found.

Spencer Platt / Getty Images file Poorer people make bad decisions, such as using pawn shops to raise cash, according to the study

The team’s been trying to figure out why people who are poor seem to exist in a vicious cycle of poverty. Much of it seems to boil down to what is taking up their attention, the international team of researchers found.

"Imagine you're sitting in front of a computer, and it's just incredibly slow," says Harvard economist Sendhil Mullainathan, who worked on the study.

"But then you realize that it's working in the background to play a huge video that's downloading. It's not that the computer is slow, it's that it's doing something else, so it seems slow to you. I think that's the heart of what we're trying to say."

They report on two experiments that demonstrate how this works – one done in a shopping mall in New Jersey and another done with sugarcane farmers in India.

With the 101 shoppers, they gave them a series of problem-solving tests – for example, asking how they would handle a 5 percent salary cut, a 15 percent salary cut; or an emergency car repair costing either $150 or $1,500. With that in their heads, they were also given basic IQ and computer-based tests of focus and concentration.

The shoppers made on average $70,000 a year, but some made as little as $20,000. The poorer and richer shoppers did equally well when they had a minor financial issue at the back of their minds. But when the car repair was more expensive, or when the salary cut was higher, the lower-earners did significantly worse on the later tests than the higher-earners.

“It’s what is in their mind that changes,” Shafir told NBC News. “The test is the same both times. All that changes is how much it takes to fix your car. It’s being distracted by fixing your car that all of a sudden takes away your attention. You are just as smart when the car is cheap and you are less smart on the exact same question when fixing the car is expensive.”

To check out this theory in a real-world situation, the researchers went to rural India, where sugarcane farmers are paid just once a year for their harvests. They are flush with cash right after the harvest, and pretty broke the last month before the harvest.

The farmers made more poor decisions in real life when faced with a financial crunch – they pawned more items – a truly awful financial decision – and were twice as likely to borrow money.

“This cannot be explained by differences in time available, nutrition, or work effort,” Shafir’s team wrote in their report.

“Nor can it be explained with stress: Although farmers do show more stress before harvest, that does not account for diminished cognitive performance. Instead, it appears that poverty itself reduces cognitive capacity.”

There’s no question that many poor people make poor decisions, the researchers add.

“The poor use less preventive health care, fail to adhere to drug regimens, are tardier and less likely to keep appointments, are less productive workers, less attentive parents, and worse managers of their finances,” they write, citing studies that support all their statements.

“These behaviors are troubling in their own right, but they are particularly troubling because they can further deepen poverty.”

Policymakers can take actions to help, they say.

“One thing you want to do is facilitate bandwidth,” Shafir says. “You want to think of ways to make things easier.”

Wealthy people may have nannies and accountants and drivers that free up their minds to focus on other problems. Poor people are often busy juggling inadequate and unreliable childcare, transportation and housing. “What do you do with people who need better financial management? Getting paid on a regular basis instead of sporadically (helps),” he says.

Direct-debits for rent may help someone who has trouble remembering to pay the landlord. Even simplified forms for collecting social benefits may help, he said.

It’s not just poverty that distracts people, says Shafir. Dieting and other distractions that have to do with making resources scarce do, too. It may be that rationing anything from food to time to money is especially distracting for the human brain. Shafir and Mullainathan have written a book on the issue "Scarcity: Why Having Too Little Means So Much," to be published in September.

"Previous views of poverty have blamed poverty on personal failings, or an environment that is not conducive to success," says Jiaying Zhao, who worked with Shafir on the study. "We're arguing that the lack of financial resources itself can lead to impaired cognitive function. The very condition of not having enough can actually be a cause of poverty,” adds Zhao, now an assistant professor of psychology at the University of British Columbia.

Having to worry about money is a huge distraction, the researchers found. “That means we are unable to focus on other things in life that need our attention," said Zhao.

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