When Your Brain is ‘Taxed’ - So Is Your Bank Account
By Karen Wawrzaszek, Co-Founder
with contribution by Cara Champlin
On an acquaintance’s Instagram post honoring his mom for Mother’s Day, the caption read “No one starts life at zero, and because of you I had a head start.” While I cannot speak on the quality of his childhood (we are mere acquaintances after all - isn’t that the point of social media?), the thought behind the caption is not just true, but understated. No one starts life at zero - we are born into circumstances, both good and bad, that are beyond our control yet have the power to set the trajectory of our lives. Nowhere is this more evident than in the Bandwidth Tax.
The Bandwidth Tax - not a tax that has anything to do with the IRS - is a psychological term describing the behavior of our minds under extreme, long-term stress and scarcity. Research has shown that when our minds are preoccupied with mere survival, we have less ‘mind’ and/or brain capacity to give to other productive endeavors. In other words, when immediate goals override future goals, future goals are that much harder to reach. Scarcity makes us less insightful, less controlled, and less forward-thinking. In fact, the effect of scarcity on our brains is the equivalent to trying to have a productive day after missing an entire night of sleep - an aspiration for us all!
Individuals at the bottom of the economic ladder, those who do struggle to put food on their tables and provide basic necessities for their families, live the aftermath of the Bandwidth Tax. In other words, they function on a (metaphoric) missed night of sleep every single day! This is not an optimal scenario for raising children, particularly those living in poverty. As you can see from the graph below, the effects of the Bandwidth Tax result in a significant reduction in IQ.
Sociologists, psychologists, and politicians have long debated the root causes of poverty with the honorable goal that if they could just nail down the precise theory, poverty would be eradicated once and for all. Two different viewpoints are commonly suggested:
- Poverty due to the individual’s own decisions (Internal)
- Poverty due to uncontrollable, even fatalistic circumstances (External).
Neither argument is fully accurate. Terrible, unforeseen events (e.g. natural disasters, lack of access to education) do occur, forcing previously well-adapted individuals into downward spirals. On the other hand, individuals possess control over the decisions - large and small - that they make on a daily basis (e.g. whether or not to consume illicit drugs, to eat healthy foods, to apply for a job). Because of this tension, researchers have proposed a third theory - that poverty is a combination of life choices, unfortunate circumstances, and bad luck which propels individuals into a perpetuating cycle of scarcity with little capacity and/or opportunity for exit. Under this argument, poverty exploits people’s inherent weaknesses and biases - ones that we all share - due to its narrow margin of error. This is statistically supported, as 65% of children born in the bottom fifth of incomes remain within the bottom two-fifths as adults. The Bandwidth Tax aligns with this theory.
Let’s imagine that Polly Smith (not a real person) is born to a mom that never received a higher education, and a dad who isn’t even aware that he’s a dad - he’s not with Polly’s mom. Polly’s mom works two jobs to provide for Polly and her two siblings, and is rarely home - leaving before 7AM and getting home twelve or thirteen hours later. At an early age, Polly learns to be self-sufficient - get ready for school, find and make breakfast, attend school, entertain herself in the evenings, find and make dinner, go to bed. No one talks to Polly about how doing well in school today can help her get into college later; for that matter, no one talks to her about the importance of completing homework. If it gets done, it gets done, who cares? Polly’s mom definitely doesn’t have the capacity to teach Polly about what living a healthy lifestyle entails - they don’t have money to buy fresh fruits and vegetables, and there is rarely food in the refrigerator as it is. Polly’s concern is whether she’ll be able to find something non-moldy to eat for dinner, not whether the item has trans fat in it. Polly doesn’t just not care about these things (due to not having knowledge about their importance in the first place), she also doesn’t have the time or energy to focus on them. She’s busy finding clean clothes in the morning, not getting in trouble with the neighbors for disturbances, and scrounging up food for meals. Her mind’s capacity is used up on the present with no remainder for futuristic planning - the Bandwidth Tax at work. Statistics show that if Polly’s life were to continue as is, adult Polly would live in similar circumstances to that of her mom, and the cycle of poverty would start over once again.
Though Pomona Society is passionate about the Bandwidth Tax and its relationship to those living in poverty and are committed to its alleviation, the disastrous consequences of the Bandwidth Tax span many spheres of one’s life. In family life, there is a correlative relationship between poverty and good parenting abilities. Being poor disallows parents to focus their attention on their children because there isn’t enough mental and emotional capacity to do so - a vivid example of the Bandwidth Tax at play, and the exact “rinse and repeat” cycle that Pomona Society is addressing through our work in poverty alleviation. In personal finances, the Bandwidth Tax causes irrational spending due to the inability to prioritize, ultimately leading to debt when perpetuated over months and years. Finally, the Tax limits one’s capacity for additional education - education that could lead them out of poverty. After all, as discussed previously, cognitive capacity is a scarce resource - there is only so much of it to go around - and when you are working multiple minimum wage jobs it is tough to find the time and energy for additional educational opportunities.
Yet the story does not end here. For the Bandwidth Tax too, there is redemption, a way out of its bondage. Such exoneration requires the intersection of all facets of society - enterprise, policy, and nonprofits. This is not surprising to Pomona Society, as this intersection is the answer to many societal challenges. In future conversations, we will discuss the myriad of solutions to the Bandwidth Tax. For now, check out these resources for further information on the Bandwidth Tax and its consequences:
- Scarcity: The New Science of Having Less and How It Defines Our Lives by Sendhil Mullainathan
- Part Two: Lowering Bandwidth Tax for Families In Poverty - Huffington Post
- How Poverty Taxes The Brain - City Lab
- No Money, No Time - New York Times
- Why Mental Bandwidth Could Explain The Psychology Behind Poverty - Wharton, University of Pennsylvania