Poverty can affect all aspects of life

Hey there, time traveller!
This article was published 05/07/2023 (1055 days ago), so information in it may no longer be current.

Dear Money Lady Readers,

In an economic environment where people are struggling, it is important to remember that charity comes in many forms — monetary of course, but also by being helpful, understanding, loving and generous with your time and support.

It is a common assumption that people stuck in the cycles of poverty are personally responsible for their situations. This is a widespread belief of many who arbitrarily assign moral meanings to poverty. It is very easy for outside observers to see ways that the poor should better their situation. Those with money often say, “if they wanted it bad enough, they would find a way to improve.”

Passing judgment on those who may be impoverished is not the Canadian way. As a country, we support many world-wide charities and are very empathetic to those in need. Scarcity can be found everywhere, even in our own families. Border-line poverty affects the ability to make decisions and ultimately derails both the motivation and ambition of those who live in poverty. Poor single parents and the elderly, have a lot of challenges and not having enough money for ordinary things that others take for granted causes some people to make less rational decisions. When you are preoccupied with money worries, you cannot help but feel challenged, in every way, every day.

Many years ago, economist Sendhil Mullainathan and psychologist Eldar Shafir compared the IQs of those who had money and those who did not. Respondents were chosen because their IQ scores were the same at the beginning of the study. These were people from all walks of life, with different educational backgrounds, of all ethnicities, from all over the country. All participants were given the same problems to solve and were told to relate the situations to their own lives. When faced with a financial challenge about their future, let’s say an expensive car repair, the ones that had the money to pay for the repair seemed to have a higher IQ with the balance of the testing.

This was interesting. Why was this? The researchers theorized that the wealthier respondents did not have the “brain drain” of finding a solution to this problem because the challenge of the car repair was relatively easy. They knew they could pay for the repair out of their savings or on credit, and their brains were free to move on to the next problem. This was not the same for the poorer respondents, who were stuck on the financial question since it was more difficult for them to meet this personal challenge. Being preoccupied by financial concerns make people who have less measurably unable to do the things others can do because they have no worries about their futures and day-to-day monetary commitments.

This is an ongoing problem in Canada, especially now that inflation and interest rates are on the rise. Canadians categorized as living in poverty are those with incomes below the 50% median income in the area in which they live. We must remember that it is harder for most people to improve their situations than it is for those of us in middle-class society, and we should never judge. Many struggle with hardships that most upper-middle-class Canadians could never endure. Remember, financial scarcity is generally not a one-time event, it has long lasting consequences.