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Thursday, January 1, 2015

Poverty's profound impact on decisions

Recently, the Economist published a piece on the theory of behavioural economics – a field of study designed to explore how socio-economic status shapes basic behaviours and decision-making processes.

According to the 2015 World Development Report, published by the World Bank, research is now showing that poverty influences economic decisions in a way that can be detrimental to a person’s well-being.

It has been found that the poor are more likely to make decisions that could be perceived as irrational or illogical, not because they are foolish or careless, but because of the various challenges that come along with poverty that limit their ability to make choices that might otherwise improve their situation.

In this third post in our series exploring choices and poverty, the World Bank report and the Economist article are among a new and growing body of literature that is helping shed light on the key factors influencing the impossible decisions that people in the developing world make on a daily basis.

Over the years, HOPE International Development Agency has seen, first-hand, how systemic poverty – such as the lack of resources like roads, food, schools, work – alters how people experience their own poverty and this in turn shapes their behaviours and attitudes in managing their situation.

Because everyone experiences poverty differently, HOPE International Development Agency works with individuals and their families to provide them with the resources they need to help them help themselves out of poverty. These resources include things like tools and equipment, training and education, advice and psycho-social support.

In this way, we are working to build communities that are made up of strong and resilient people who, in the face of adversity, are enabled to make sound decisions and take positive steps towards their own well-being. Our goal is always to equip and empower the poor in ways that ultimately change the decision-making paradigm, leading to real and long-lasting transformation.