The Right Amount of Income Variability: Evidence from Small Retailers in Vietnam

Patricio Dalton, Nguyen Nhung, Julius Rüschenpöhler

Research output: Working paperOther research output

Abstract

Recent in influential literature suggests that poverty by itself reduces cognitive capacity. We hypothesise that it is the income variability typically associated with poverty that impedes cognitive functioning of low-income people. To test this hypothesis, we experimentally induced thoughts about finances to a sample of small low-income retailers in Vietnam whose businesses are exposed to different levels of income variability. We found that cognitive performance in financial stressful situations is not affected by absolute poverty as measured by wealth or income. However, cognitive performance in financial stressful situations has an inverted U-shaped relationship with income variability. Being exposed to very low or very high income variability can be detrimental for cognitive capacity. There seems to be an optimal amount of income variability which potentiates the cognitive capacity of the retailers when they face financial stressful situations.
LanguageEnglish
Place of PublicationTilburg
PublisherTilburg University
Number of pages21
StatePublished - Jan 2016

Publication series

NameDFID Working Paper

Fingerprint

Income
Retailers
Poverty
Low income
Finance
Functioning
Wealth
Inverted-U
Hypothesis test

Cite this

Dalton, P., Nhung, N., & Rüschenpöhler, J. (2016). The Right Amount of Income Variability: Evidence from Small Retailers in Vietnam. (DFID Working Paper). Tilburg: Tilburg University.
Dalton, Patricio ; Nhung, Nguyen ; Rüschenpöhler, Julius. / The Right Amount of Income Variability : Evidence from Small Retailers in Vietnam. Tilburg : Tilburg University, 2016. (DFID Working Paper).
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Dalton, P, Nhung, N & Rüschenpöhler, J 2016 'The Right Amount of Income Variability: Evidence from Small Retailers in Vietnam' DFID Working Paper, Tilburg University, Tilburg.

The Right Amount of Income Variability : Evidence from Small Retailers in Vietnam. / Dalton, Patricio; Nhung, Nguyen; Rüschenpöhler, Julius.

Tilburg : Tilburg University, 2016. (DFID Working Paper).

Research output: Working paperOther research output

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Dalton P, Nhung N, Rüschenpöhler J. The Right Amount of Income Variability: Evidence from Small Retailers in Vietnam. Tilburg: Tilburg University. 2016 Jan, (DFID Working Paper).