| dc.description.abstract | This paper aims to show that poverty imposes higher cognitive costs to decision-making. To prove this statement, we rely on an extensive review of behavioral science research, especially the experimental one. First of all, we present the theoretical grounds of Behavioral Economics, as well as the Prospects Theory, the Hyperbolic Intertemporal Discounts and the Ego Depletion. After that, we discuss how poverty increases cognitive biases, using, as an example, a greater risk aversion and bigger intertemporal discounts. It creates, therefore, a truly cognitive tax, as long as the decision-making in poverty is more cognitively expensive.
Contribute to this situation factors that go mainly through an intensified ego depletion, cumulated with the impairment of cognitive functions, greater stress levels and the attentional focus facing the scarcity. Finally, we discuss how policy making agenda could mainly use nudges as a mechanism to reduce the cognitive taxes. To show that, it will be analyzed three examples of public policies: two that work well relying on behavioral insights and the PRONATEC, which are not having as much success as it could, because it ignore these insights. We conclude, to sum up, that poverty - by itself - imposes severe cognitive costs in decision-making process. In this context, the policy making agenda could be improved by using the behavioral economical theories, as a way to simplify the decision in a poverty condition. Finally, the paper highlights the importance of this research agenda, underlining that data is necessary to contribute in a more effective way to public policy. | |
