The effect of mental poverty on labor performance

This study uses an innovative questionnaire to investigate the effect of mental poverty on the performance of human resources in an Iranian sample. Evidence from behavioural economics shows that mental poverty defined as reduced cognitive capacity due to scarcity and financial worries affect individuals’ performance. The innovative questionnaire that has been distributed and completed among the same people at the beginning and end of a given month has made it possible to exogenously impose mental poverty through time. It is assumed that workers are more likely to suffer from mental poverty at the end of the month when most of their income is consumed. Therefore, they are expected to have lower cognitive performance at the end of a given month. Data on individuals' performance in IQ tests, Frederick cognitive test and simple math questions is collected through the questionnaire. The questionnaire is distributed among 161 selected government employees in two rounds; once at the beginning of a given month and once at the end of the same month. The findings indicate that there is a negative and significant relation between mental poverty and labour performance in IQ tests.