The poor are more rational than the rich in making purchasing decisions
Imagine the following scenario. One working day you go to an electronics store with the intention of buying a new printer. Once there, someone informs you that the price of the printer is 250 euros and yet you know that in a store 20 minutes away from where you are you can get the same product for 50 euros less. Would it be worth your while to make the trip to save that money?
Probably, unless you have an emergency. However, what if the printer cost 1,000 euros? Would you still find it so good to walk for 20 minutes to save 50 euros? You may have more doubts in this case.
Poor and rich: what differences are there in how they manage their economic resources?
Interestingly, in the second case people are more likely to underestimate the convenience of going to the other store, although the savings are exactly the same in both scenarios: 50 euros, a not inconsiderable amount. Deciding to make the trip when the printer costs 250 euros but not to do so when it costs much more is a clear sign that our decisions related to purchasing and the economy do not attend only to rational cost-benefit criteria . And, curiously, it seems that this is more evident in people who are in a better economic situation, while poor people do not fall into this type of trap so easily.
A team of researchers has provided evidence of these differential trends by making rich and poor face a similar situation to that described in the printer example. They divided more than 2,500 participants into two groups: those with incomes above the national average and those with incomes below the national average.
The results, published in the journal Psychological Science , are intriguing. While members of the “rich” group tended to be more likely to take the trip when the product was cheaper, this was not the case in the group of people with below-average incomes. The latter were equally likely to make the trip in both scenarios.
Why does this happen?
The researchers who conducted the study believe that this pattern is explained by the way rich and poor consider whether or not it is worth making the trip . People with high incomes would tend to approach the question on the basis of the price of the product, and since the discount may seem more or less insignificant depending on the total price to be paid, their decision would depend on the amount they have to pay. This is an example of heuristics: if the discount seems small compared to the price, it is not really that important. People on low incomes, however, would start by valuing the discount, not the price of the product, and from there they would consider what they could buy with the amount saved: perhaps a good pair of trousers, or dinner for two in a restaurant.
In short, the value that people with little income would give to the discount does not depend on the total price of the product , and therefore it is a more robust and rational criterion. Possibly, these people are forced to decide daily according to a cost-benefit logic, while the population that is in a more comfortable economic situation can afford certain eccentricities when deciding what to buy and where to do it.
From Economics to Thinking
Karl Marx maintained that the conceptual categories with which we think have their origin in the different modes of production of each epoch. In a similar way, studies like this one show how the economic sphere influences the way of thinking . The dividing line between rich and poor is not only found in their material means of subsistence, but also in the different points of view they use to approach reality. In a certain way, having more or less possibilities to prosper economically could make things look very different.
This does not have to make the economically disadvantaged a privileged class by being more rational in making certain kinds of decisions. They probably follow a cost-benefit logic because the opposite can harm them much more than the rest of the people: it is a style of thinking based on the need for subsistence . Perhaps by understanding the pitfalls that separate the ways of thinking among the humbler popular strata and the privileged minorities, certain social problems can be better addressed.
- Shah, A. K., Shafir, E. and Mullainathan (2015). Scarcity Frames Value. Psychological Science, 26(4), pp. 402 – 412.