Fun Fact: “A Harvard study found that our IQs can drop by 13 points when we are under financial stress. This is in part due to the amount of brain power we use to think about any financial burdens we carry, causing distraction.”
Are you surprised to hear that financial stress lowers IQ?
According to Canada’s CBC News (cited below), “People struggling to pay their bills tend to temporarily lose the equivalent of 13 IQ points, scientists found when they gave intelligence tests to shoppers at a New Jersey mall and farmers in India. The idea is that the financial stress of trying to make ends meet monopolizes thinking, making other calculations slower and more difficult, sort of like the effects of going without sleep for a night.”
Financial stress and IQ
We know IQ tests aren’t reliable indicators of innate intelligence, but they can be used to measure changes in a person’s cognitive capacity under different conditions. In other words, we don’t have to compare a person’s scores to anyone else’s, we can compare their specific scores without making judgments about their overall intelligence.
CBC described the study:
“The scientists looked at the effects of finances on the brain both in the lab and in the field. In controlled lab-like conditions, they had about 400 shoppers at Quaker Bridge Mall in central New Jersey consider certain financial scenarios and tested their brain power. Then they looked at real life in the fields of India, where farmers only get paid once a year. Before the harvest, they take out loans and pawn goods. After they sell their harvest, they are flush with cash.
[Harvard researcher Sendhil] Mullainathan and colleagues tested the same 464 farmers before and after the harvest and their IQ scores improved by 25 per cent when their wallets fattened.”
What the study doesn’t mean
The study does not mean that rich people are smarter than people who are having temporary or long-term financial difficulties. It only means they have more cognitive resources to “spend.” They can think more clearly and concentrate better on other tasks since they’re not worried about money. — WTF fun facts