Material Hardship Predicts Response Bias in Loss-Averse Decisions: The Roles of Anxiety and Cognitive Control

Abstract

Income poverty is associated with an enhanced tendency to avoid losses in economic decisions, which can be driven by a response bias (risk avoidance) and a valuation bias (loss aversion). However, the impact of non-income dimensions of poverty on these biases remains unclear. The current study tested the impact of material hardship on these biases, and the mediating effects of anxiety, depression, and cognitive control in these associations. Healthy adults (N = 188) completed questionnaire and behavioral measures of the variables. Results of regression-based analyses showed that participants who reported higher material hardship exhibited greater response bias, but not valuation bias. This effect was mediated by anxiety. Although material hardship predicted lower cognitive control, cognitive control did not mediate the association between material hardship and either type of bias. These findings suggest that material hardship may lead to economic decision-making biases because it impacts emotional states rather than cognitive control.

Keywords:

• Material hardship
• economic decisions
• loss aversion
• anxiety
• cognitive control

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Data Availability

All data have been made publicly available at the repository on Open Science Framework (OSF) and can be accessed at https://osf.io/xm9a3/.

Additional information

Funding

Data collection and preliminary analysis were sponsored by the National Natural Science Foundation of China (Grant numbers: 32000755 and 3227070448).

Notes on contributors

Xu He

Xu He is pursuing a doctoral degree in the School of Psychology at the South China Normal University. His research interests include poverty, decision making, cognitive control, and human-environment interactions.

Boyu Qiu

Boyu Qiu, Ph.D., is a lecturer at Guangzhou Medical University. His research interest is human-computer interaction, especially the relationship between video games and social behavior.

Yuting Deng

Yuting Deng is studying for a postgraduate degree in the Department of Psychology at Guangzhou University and plans on pursuing a doctoral degree in social or developmental psychology. Her research interests include childhood adversity, executive function, and reward learning.

Zhengxinyue Wang

Zhengxinyue Wang is studying for a postgraduate degree in the Department of Psychology at Hangzhou Normal University. Her research interests include childhood adversity, cognition, and fear learning.

Xinyu Cao

Xinyu Cao is studying for a postgraduate degree in the Department of Psychology at Hangzhou Normal University. Her research interests include childhood adversity and mental health.

Xiaoyu Zheng

Xiaoyu Zheng is studying for a postgraduate degree in the Department of Psychology at Hangzhou Normal University, who plans on pursuing a doctoral degree in social or developmental psychology. Her research interests include childhood adversity, emotions, and child development.

Jianjun Zhu

Jianjun Zhu, Ph.D., is a psychology professor in the Department of Psychology at Guangzhou University. His research focuses on how Early life adversity (ELA) affects brain structure and function (e.g., emotional learning and executive function).

Wei Zhang

Wei Zhang, Ph.D., is a professor in the School of Psychology at the South China Normal University. His research interests include poverty and adolescent development, adolescent internet addiction, and adolescent problem behaviors.