Document Type : Research
Authors
1
PhD in Economics, Faculty of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad, Iran
2
Professor of Economics, Faculty of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad, Iran
3
Associate professor of Economics, Faculty of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad, Iran
4
Assistant Professor of Economics, Faculty of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad, Iran
Abstract
Resource scarcity, particularly financial scarcity, and its effects on economic behavior, as well as the mechanisms underlying these effects, have attracted considerable attention from behavioral and cognitive economists over the past decade. Previous evidence suggests that intertemporal choices change under conditions of scarcity, with cognitive functioning, stress, and negative affect identified as potential mediators of this effect. However, the role of working memory as an important cognitive mediator requires direct investigation using distinct assessment tasks. The present study tests the hypothesis that financial scarcity affects working memory performance, which, in turn, influences intertemporal choice. To test this hypothesis, a between-subjects experimental design was employed. Eighty students from Ferdowsi University of Mashhad (mean age = 22.2 years; 59.4% female) were randomly assigned to either a scarcity group or a control group. Financial scarcity was induced using the method developed by Krosch and Amodio (2014), working memory performance was assessed using the N-back and Corsi Block tasks, and intertemporal preferences were measured using the method proposed by Falk et al. (2018). Participants received real monetary rewards contingent on their financial choices. The findings were consistent with the study hypothesis. The scarcity group exhibited a statistically significant increase in response errors on the N-back task [b=3.48, t(71)=2.05, p=0.044, d≈0.49]. This decline in performance was associated with an increased likelihood of preferring a smaller-sooner reward over a larger-later reward [z=2.41, p=0.016, OR≈1.07]. A comparison of the fit of two ordinal logistic regression models suggested that the model incorporating the interaction between scarcity and working memory [LR χ²=11.27, p=0.004, Pseudo R²=0.033] provided a better explanation of variation in economic decision-making than the model including only the direct effect of scarcity [LR χ²=4.47, p=0.035, Pseudo R²=0.013]. These findings underscore the importance of accounting for cognitive capacities, particularly working memory, when designing support policies for individuals experiencing scarcity.
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