Exposure to Poverty and Productivity
CentER Discussion Paper Series No. 2016-027
29 Pages Posted: 28 Jul 2016
Date Written: July 22, 2016
We study whether 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 analyses show 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.
Keywords: Poverty, Productivity, Mood, Emotions, Limited attention, Experiments
JEL Classification: D03, J24, C91
Suggested Citation: Suggested Citation