Poverty and Productivity

This is a pretty weak study, but even so, it’s certainly pretty plausible that poverty depresses productivity. And the effect could be quite substantial. <irony>Which would explain why business is pretty strongly campaigning to minimise poverty in our society as part of its overall push to promote productivity enhancing reform …</irony>

Exposure to poverty and productivity
By: Dalton, Patricio (Tilburg University, School of Economics and Management) ; Gonzalez Jimenez, Victor (Tilburg University, School of Economics and Management) ; Noussair, Charles (Tilburg University, School of Economics and Management)
We study whether exposure to poverty can induce affective states that decrease productivity. In a controlled laboratory setting, we find that subjects randomly assigned to a treatment, in which they view a video featuring individuals that live in extreme poverty, exhibit lower subsequent productivity compared to subjects assigned to a control treatment. Questionnaire responses, as well as facial recognition software, provide quantitative measures of the affective state evoked by the two treatments. Subjects exposed to images of poverty experience a more negative affective state than those in the control treatment. Further analysis shows that individuals in a more positive emotional state exhibit less of a treatment effect. Also, those who exhibit greater attentiveness upon viewing the poverty video are less productive. The results are consistent with the notion that exposure to poverty can induce a psychological state in individuals that adversely affects productivity.

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