Poor Psychology: Poverty, shame, and decision making


Poverty has been shown to affect thoughts and behavior, but research on its emotional consequences is scarce. A psychology of poverty that does not consider the emotions caused by living in poverty, is a poor psychology. In this dissertation, I explore the role of shame and opportunity costs in poverty. In the Netherlands, about one in seven adults report feeling ashamed of their financial situation. Experiencing this type of shame is related to many other negative psychological outcomes, such as stress and a lack of control. It is also associated with behavior that can reinforce poverty, such as status consumption and social withdrawal. Previous research predicted that the poor should be more likely to think about opportunity costs—spending money on one thing means you cannot spend it on another. However, I find that all people tend to neglect opportunity costs, no matter their income.