This article (and noted research) makes its point very well and comes along at a time when the idea of a guaranteed minimum income is being floated by different countries and politicians (note: a recent vote in Switzerland failed to approve a minimum income policy/law). The effects of poverty on thinking and decision making have been noted by others (Mani et al, Shah et al) but this article does a good job of pulling together several cognet studies.
There are many ways to approach the question of ‘why do poor people do dumb things?’ and they all seem to be pointing to a few key ideas.
For example, researchers Daniel Kahneman and Angus Deaton have found that a minimum annual income of around $75K was the benchmark income level for maximum measures of “positive affect” (i.e., outward signs of happiness) and personal well-being (and beyond which self-reporting of well-being do not increase/change). People at this level of income or higher are more likely to report being “stress free” the day before (and, as we have seen, constant stress over finances is a major source of ‘cognitive impairment’). See my 2010 article ‘ Money Does ‘Buy’ Happiness, Up to A Point’ (http://planetsave.com/2010/10/14/money-does-buy-happiness-up-to-a-point/)
Also, for a more in-depth analysis of the effect of poverty on the poor (which includes some of the research noted in this article) — emphasizing the idea of ‘cognitive deficit’ — check out my 2013 piece ‘How Poverty Impairs Mental Functioning And Promotes Risky Decision-Making’ (http://planetsave.com/2013/10/12/how-poverty-impairs-mental-functioning-and-promotes-risky-decison-making/)