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Scarcity, Money, and Undocumented Immigrants

posted by Pamela Foohey

Scarcity refers to having less than one needs -- time, money, calories when on a diet. For example, not having enough money reduces a person's cognitive capacity as much as missing one full night of sleep. When Scarcity, by Sendhil Mullainathan and Eldar Shafir, was published, Slipster Katie Porter connected its lessons about the mental tax of not having enough to adding a "cushion" to a chapter 13 plan. And now, Slipster Nathalie Martin's recently published paper, Survival in the Face of Scarcity: The Undocumented Immigrant Experience, uses her hour-long interviews with 50 undocumented immigrants living in Albuquerque, New Mexico to explore how their acute financial scarcity impacts their lives. Though the paper is focused on undocumented immigrants, some of the lessons of the narrative that Martin weaves apply equally to all cash-strapped people.

The individuals who Martin interviewed generally live in poverty, which is typical of the undocumented immigrant population. They also face unique barriers to escaping that poverty, such as unstable employment, fear of the legal system, and a propensity to be taken advantage of because of their immigration status. They also face barriers to escaping poverty more typical of financially insecure individuals, such as the propensity to be targeted for predatory credit products and a fear of traditional banking institutions. The result of their poverty is an (as anticipated) hyper-vigilance about money. One of the most effective parts of the paper is Martin's recounting of how interviewees talked of problems in the financial lives by discussing how much they owed or were over-charged down to the dollar or penny. In short, when you don't have enough money, every penny counts, and counting every penny all the time makes it difficult to focus on other parts of life, such as your job. It is a vicious cycle for anybody, but even more so for undocumented immigrants who routinely are taken advantage of by employers. And it is a textbook example of the effects of scarcity, as detailed by Mullainathan and Sharif.

In addition, Martin found that this type of scarcity changes how people think about their expenses. Researchers, including Martin, typically ask people how they would cope with an unexpected expense, such as arising from an unanticipated medical problem, as differentiated from how they would cope with expected expenses, such as through budgeting. But 74% of the individuals who Martin interviewed indicated that they could not afford a $100 unexpected expense. For these people, as Martin writes, "it made little sense to try to tease out whether certain coping strategies for economic scarcity" varied based on whether the person faced an expected or an unexpected expense. Rather, "expenses were just expenses" for these individuals. For people on the financial precipice all the time, "unexpected was expected." Martin's findings again suggest that the breadth of their financial scarcity taxes these individuals' cognitive capacity. And though the conclusions in Martin's paper apply best to the undocumented immigrants living in Albuquerque, the lessons of her interviews likely can be extended to help understand how all severely cash-strapped people cope with their financial circumstances.

Finally, beyond exploring these undocumented immigrants' economic scarcity, Martin's paper discusses how strict immigration laws and deportation as a looming threat uniquely affects their ability to cope. Over at JOTWELL, Jill Family has written a post that focuses on this aspect of Martin's paper.

Comments

Thanks for the shout out Pamela, and big huge kudos to Chrystin Ondersma, who actually did the lion’s share of the work on the survey instrument used in this study. She and I did sister studies in two different locales, Chrystin in New York City, and me in Albuquerque, New Mexico. Her upcoming paper, Debt Without Relief: An Empirical Study of Undocumented Immigrants, is just awesome and draws some of the same conclusions as mine but also some very different ones. When it comes out, I will blog about it. Chrystin and I received an NCBJ grant to do these two studies.

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