Decisions under financial scarcity

Doctoral Thesis of Leon P. Hilbert


The dissertation explores the complex interplay between financial scarcity and its psychological effects, shedding light on its impact on decision-making, avoidance behavior, and perceived control. Through a series of experiments, we found that financial scarcity increases temporal discounting, indicating a tendency to prioritize immediate gains over future outcomes. A longitudinal study revealed a reciprocal relationship over time between financial scarcity and avoidance behavior, hinting at the existence of a psychological poverty trap. Furthermore, an experiment demonstrated that financial scarcity increases the tendency to delay bill payments. However, evidence regarding attentional disengagement from financial stressors, assessed with an eye-tracker, remained inconclusive. A global survey spanning 51 societies confirmed the negative link between financial scarcity and perceived control, but also uncovered significant cross-cultural variations. Surprisingly, in societies with lower welfare provisions and institutional quality, the negative relationship between financial scarcity and control was weaker. Likewise, collectivist and traditional values seemed to buffer against the negative effect of financial scarcity on control. The dissertation informs about the psychological reality of dealing with problematic household finances and its consequences on decisions.


Supervisors: prof. dr. Wilco van Dijk en dr. Marret Noordewier 

Date: 2024-03-27

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