Abstract

Empirical studies have shown that those who live in conditions of poverty are more likely to follow certain specific suboptimal decision patterns. In particular, poor people appear considerably inclined to have very high levels of time discounting, and thus, to favour an increment of utility x over a bigger increment y, even when receiving y is guaranteed but delayed in time. In this paper we will describe the peculiarities of the decision patterns typically adopted by agents in conditions of poverty and uncertainty. We will then show that it is not fruitful to explain the dynamics behind the adoption and maintenance of said decision patterns, by only taking into account individual tendencies in conditions of uncertainty, nor by only considering the contextual difficulties that those people face in everyday life due to their lack of material resources. Instead, there is a deeper level of analysis that the economic literature has already started to consider, which involves the role that trust and distrust play in poor people’s decision making. We will analyse which notion of trust seems the most appropriate to consider in these cases, and what role trust plays in further shaping a decisional context already conditioned by uncertainty and poverty.