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Can Being In Debt Affect Your IQ?

3rd September 2013

By Andrew Graveson

I was interested to read a recent article in the Independent about new research connecting IQ to your financial situation. The research findings (published in the Science journal) suggest that the presence of money worries causes your intelligence to decline. When the money worries are removed the findings suggest that your IQ quickly recovers to a higher level.

What was the work that produced these results?

One set of findings came from IQ testing Indian sugarcane farmers. They produce most of their annual revenues from a single harvest. Because of this they tend to be pretty poor before the harvest and comparatively affluent immediately afterwards. The difference in their intelligence between these two periods, as measured by an IQ test, was a substantial nine to ten IQ points on average.

Another dataset came from measuring the intelligence of American shoppers. Half of those that were tested were asked how they would cope financially if they were landed with a big bill for car repairs. Those that would struggle to pay it (the poorer shoppers) scored an average 13 IQ points lower than the richer shoppers when an intelligence test was conducted after this question. A second group of shoppers did the test without this question being asked first. Their IQ test results did not vary according to their financial status.

We know that debt problems are a primary cause of money worries. Is it possible that an individual experiencing worry about their debts might suffer a temporary 10-13 point IQ loss like the farmers and shoppers? This seems very likely based upon this scientific research. The reasons appear to be rooted in the individual’s cognitive capacity being stretched by having to deal with their financial concerns and an IQ test at the same time. To put it another way, less brain power is available to solve the puzzles as much of this power is already absorbed by the financial difficulty that’s also on their mind. 

There’s a wealth of debt research in the UK that illustrates and explains the terrible health, professional and personal problems that debt can lead to for some individuals. This research linking intelligence to debt and other types of financial worry builds upon the existing knowledge and understanding. It would be easy to conclude that simply being in debt therefore makes it just that little bit harder (for some people) to make rational decisions about how to get out of it (or when to get out of it).

Anyone that agrees with this conclusion may connect this to the delays that some people experience before taking advice despite it being clear that a significant debt problem exists. They might also make a link with the worrying fact that some people make poor decisions about how to tackle their debts (not helped by some poor providers of debt advice that may be taking advantage of them).

There’s no evidence that people struggling with debt are any less intelligent that the general population on average. The new evidence that they may experience a temporary impairment of their ability to deploy their intelligence (when worrying about their situation) is however significant in several ways. Not least, anyone seeking advice or a debt solution should step back quietly and make time to think through their options prior to making any final commitment. A hasty decision during a stressful period might be a source of future regret.

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