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Savings Policy and Decisionmaking in Low-Income Households

An insightful paper by Sendhil Mullainathan on how behaviorial influence, like the status quo bias, affect the poor and rich alike. The main difference being the narrow margins for error in poverty:

…According to this behavioral view, people who live in poverty are susceptible to many of the same impulses and idiosyncrasies as those who live in comfort, but wherease people who are better off function in the midst of a system—composed of consultants, reminders, cooperative employers, “no-fee” options, incentive awards, and automatic deposit—that is increasingly designed to facilitate their decisions and improve their outcomes, people who are less well off typically find themselves without easy recourse to such “aids” and are confronted by obstacles—institutional, social, and psychological—that render their economic choices all the more overwhelming and their economic conduct all the more fallible.

Savings Policy and Decisionmaking in Low-Income Households