The Power of Context


Lori's Story...

Before business school, Lori worked at ideas42, a non-profit consultancy that uses the principles of behavioral science to improve outcomes. After designing several experiments for the firm, Lori came to appreciate the power of context—how even small changes to an environment could profoundly impact a person's behavior.

This idea influenced all her work, but Lori saw its greatest potential in opportunities to alleviate poverty, explained in a book by ideas42 cofounders—Scarcity: Why Having Too Little Means So Much.

In Scarcity, the authors present research that shows exactly how poverty affects behavior; by creating a mindset where immediate needs (e.g. rent, or unexpected car repairs) crowd out the capacity for long-term financial planning. And more sobering, their research shows that any one of us born into poverty would make similar choices.

Lori realized that a better way to approach poverty, then, was not the current model, where paperwork lays additional burdens on already stretched families, but one which relieves the cognitive strain of trying to survive on too little. By reducing administrative demands on families, cash transfers could remedy problems intrinsic to the context of poverty.

Little did Lori know, there was one more graduate student at UChicago already wrestling with the same problem from the institutional angle....