The cognitive cost of poverty (with Sendhil Mullainathan)

If you’re a Parks and Rec fan, you’ll remember Ron Swanson’s Pyramid of Greatness. Right there at the base sits “Capitalism: God’s way of determining who is smart and who is poor.”

It’s a joke, but not really. Few want to justify the existence of poverty, but when they do, that's how they do it. People in poverty just aren’t smart enough, or hard-working enough, or they’re not making good enough decisions. There’s a moral void in that logic to begin with — but it also gets the reality largely backward. “The poor do have lower effective capacity than those who are well off,” write Sendhil Mullainathan and Eldar Shafir in their book Scarcity. "This is not because they are less capable, but rather because part of their mind is captured by scarcity.” They show, across continents and contexts, that the more economic pressure you place on people, the worse their cognitive performance becomes.

Mullainathan is a genius. A literal, MacArthur-certified genius. He’s an economist at the Chicago Booth School of Business who has published foundational work on a truly dizzying array of topics, but his most important research is around what scarcity does to the brain. This is work with radical implications for how we think about inequality and social policy. One thing I appreciated about Mullainathan in this conversation is that he doesn’t shy away from that.

This is one of those conversations I wanted to have because the ideas are so important and persuasive. I didn’t expect Mullainathan to be such a delight to talk to. But since he was, we also discussed the economics of our AI-soaked future, the power of rigid rules, the reason conversation is so much better in person, why cigarette taxes make smokers happier, what Star Trek got wrong, and how he’s managed to do so much important work in such a vast array of disciplines. We could’ve gone for three more hours, easily.

If you liked this episode, you should also check out the Robert Sapolsky and Mehrsa Baradaran podcasts.

Book recommendations:
One Hundred Years of Solitude by Gabriel García Márquez
Where Good Ideas Come From: The Natural History of Innovation by Steven Johnson
Man's Search for Meaning by Viktor E. Frankl