Poverty and intertemporal choice: the mechanism of “psychological-shift” from the perspective of threat

Abstract: After eliminating absolute poverty, China still faces the arduous problem of relative poverty. Recently, studies on poverty psychology have found that unfavorable living conditions will trigger a series of special psychological processes, which in turn will make individuals engage in behaviors that are difficult to get rid of poverty and cause them to fall into the trap of "poverty-behavioral decision-making-poverty". People living in poverty have higher delay discount rate, tend to choose smaller-sooner gains, instead of larger-later returns, and often make “short-sighted” behavioral decisions, such as investing less in education, saving too little, and borrowing too much. These choices may further deepen their poverty. The psychological shift caused by threat perception, namely cognitive function failure, proximal thinking and fast life history strategy, is considered to be an important reason for the “short-sightedness”. In addition to more in-depth exploring the formation mechanism of the behavioral decision-making trap of poverty, the future research should develop effective intervention programs in line with China's national conditions, to attribute a more practical policy value to the theory of poverty psychology.

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