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Poverty and decision-making: How behavioural science can improve opportunity in the UK

third of the UK population spent at least one year in relative income poverty between 2011 and 2014. In this literature review the Behavioural Insights Team (BIT) explores how individual decisions in shaping people’s experiences of poverty in the UK and to identify the drivers of these decisions. 

The report proposes a more expansive capital-based model of poverty and decision-making than the traditional approach of increasing people’s economic capital (e.g., income) and human capital (e.g., educational attainment). Drawing on emerging research from behavioural science they describe how less tangible resources, which derive from psychological, social and cultural processes, significantly influence people’s ability to overcome disadvantage.

BIT applied their capital model to six key decision areas that influence poverty in the UK:

  • choosing low-cost credit;
  • accumulating savings;
  • moving into work from unemployment;
  • accessing government entitlements;
  • responsive parenting; and
  • applying to post-secondary education (NB considers young people only)

The report explains how a lack of the different types of capital influence individual decisions, and illustrates potential interventions to overcome the negative effects. 

Findings of relevance to the MHFENetwork and the Adult Education (Community Learning) Mental Health research TLA methods and data collection in particular are the two sections on:

  • moving into work from unemployment;
  • applying to post-secondary education (although unfortunately this only considers young people)

And, their finding that investing in a person’s psychological resources can often have very fast and wide-ranging benefits. For example, one study found that people in poverty performed better on tests (equivalent to a 10 point increase in IQ), and were more likely to consider making use of programmes that would benefit them, if they had recently been asked to recall a proud moment or past achievement (Hall, Zhao, & Shafir, 2014). By comparison, another study found that when low-income students were asked to answer demographic questions about their parents’ income and occupations before a test, they performed worse than the low-income students who were not asked these questions (Spencer & Castano, 2007). This psychological perspective of inequality in the UK highlights that processes which build in small empowering interactions between users and service providers, at key moments, can potentially boost a person’s psychological resources which can, in turn, increase their ability to overcome disadvantage.

Key take-away

Cognitive load test: Policymakers should not reduce the value of their investments in anti-poverty programmes through complex and stigmatising application processes and eligibility checks which absorb cognitive bandwidth. We all have limited mental processing capacity to reason, to focus, to learn new ideas, and to resist temptation. The worries involved in making ends meet every day already deplete bandwidth so government services aiming to tackle disadvantage – such as savings schemes, employment advice and parenting programmes – should be required to pass a cognitive load test to ensure these services do not make it harder for people on low incomes to make good decisions for themselves.

Conclusion

Investing in traditional forms of capital – economic and human – remains important for reducing poverty in the UK but understanding how less tangible forms of capital influence decision-making is useful in two respects: first, it can help to explain why some well-intentioned interventions may fail; and second, it can open up a new set of tools to address poverty.

Resource Type: 
Online resource
Resource Publisher: 
The Behavioural Insights Team (BIT)
Resource Year: 
2016
Resource Month: 
October
Resource Day: 
20