Sleep Deprivation Linked to Poor Financial Decisions in New Study
CHENNAI, INDIA – New research suggests a direct link between sleep deprivation and increased risk aversion, possibly impacting financial stability among low-income populations. Economists are conducting a year-long study in Chennai,India,examining whether improving sleep quality can alter decision-making related to savings,future investments,and immediate gratification.The study, temporarily paused due to recent severe flooding in the region, builds on emerging evidence that cognitive function – and the ability to plan for the future – is substantially diminished by lack of sleep.
Researchers from Harvard University and collaborating institutions are investigating how present circumstances influence an individual’s willingness to delay gratification. The core hypothesis is that when people are mentally fatigued or stressed – frequently enough a result of insufficient sleep – they tend to prioritize immediate needs over long-term goals.This can manifest as choosing smaller, instant rewards over larger, future benefits, and a general avoidance of complex decision-making.
“If you’re constantly scrambling to get by, having stuff now versus having things in the future does change how risk-averse you are,” explains researcher Schofield. She notes this can lead to behaviors like opting for immediate purchases,such as drinks after work,instead of saving,or avoiding opportunities requiring effort,like pursuing job training. Schofield herself admits to postponing important choices when tired, stating, “I’ll kind of put off choices that I no I should be making because I just don’t have the mental energy to… deal with them.”
The study involves recruiting participants from low-income neighborhoods around the Chennai lab and assessing their performance on computer tasks, their willingness to defer payment for higher future earnings, and their participation in savings programs. Crucially, the researchers are testing the impact of interventions designed to improve sleep. Initial attempts focused on providing sleep aids like pillows, eye masks, earplugs, and mosquito repellent. While helpful for some,like 38-year-old rickshaw driver Krishnamurthy,who reported falling asleep in “half an hour or even 15 minutes” with the aids compared to two hours previously,the team is now exploring the effectiveness of providing on-site naps on cots.
The research team anticipates preliminary results within weeks, with full findings expected in approximately eight months, followed by six months of analysis and publication. The study’s findings could have important implications for poverty alleviation programs and public health initiatives, highlighting the importance of addressing sleep deprivation as a factor impacting economic well-being.
(Editor’s note: Heavy rains over the past two days have caused massive flooding across Chennai. The lab referenced in this story is located in one of the affected areas and has temporarily closed.This story was reported before those events.)
