Introduction

Poverty, as a multidimensional and complex phenomenon, has long been the focus of attention among thinkers and policymakers throughout history. Although classical approaches mainly concentrated on objective indicators such as income and consumption, in recent decades, the subjective and psychological dimensions of poverty have gained increasing attention. Based on Amartya Sen’s Capability Approach, poverty is not defined merely as a lack of income, but as the deprivation of fundamental capabilities required to achieve an acceptable standard of well-being. This perspective regards poverty as a multidimensional phenomenon in which its objective and subjective aspects are interwoven (Sen 2014).

Phenomenology, as a qualitative research approach, provides the possibility of discovering and understanding the subjective dimensions of poverty more deeply. Rooted in the ideas of Husserl and Schutz, this approach emphasizes individuals’ lived experiences and their everyday life-world. From a phenomenological perspective, poverty is not solely an objective phenomenon, but rather a semantic structure formed within the context of social and cultural relations that influences all aspects of an individual’s life. This viewpoint helps us understand how poor individuals make sense of their world and cope with the difficult conditions of life (Schutz 1967).

The psychological dimensions of poverty are among the most significant aspects of this phenomenon that have attracted researchers’ attention in recent years. Studies show that poverty can affect individuals’ cognitive functions, mental health, and economic behaviors. Cognitive load theory demonstrates that living in poverty, by generating constant concerns about meeting basic needs, consumes a considerable portion of an individual’s cognitive resources and reduces their capacity for logical and long-term decision-making (Mullainathan and Shafir 2013).

The main purpose of this study is to conduct a phenomenological analysis of the lived experience of poverty and to examine the psychological mechanisms that influence economic behavior. This research seeks to answer the following fundamental questions: First, how can the lived experience of poverty be described from the perspective of those who experience it? Second, which psychological mechanisms play a role in this experience? And third, how do these psychological mechanisms influence the economic behaviors of poor individuals? These questions are important because they can provide a deeper understanding of the complexities of poverty.

The significance and innovation of this research lie in its simultaneous attention to both the objective and subjective dimensions of poverty, as well as its use of a phenomenological approach to uncover the hidden meanings of this social phenomenon. The phenomenological approach enables researchers to go beyond predetermined frameworks and attain a deeper understanding of the life-world of poor individuals. Such profound understanding can create the foundation for designing more effective and more humane poverty alleviation policies.

From a methodological perspective, this study is conducted using a qualitative research method, specifically an interpretive phenomenological approach. In this method, the researcher analyzes the findings of previous studies to identify themes and semantic patterns embedded in the lived experiences of poverty. This approach allows for the understanding of the complexities of poverty within its specific social and cultural context.

The findings of this research can make important contributions to the existing literature on poverty studies. First, by focusing on the subjective dimensions of poverty, this study can bridge the gap in a body of literature that is predominantly quantitative. Second, analyzing the psychological mechanisms influencing economic behaviors can lead to a better understanding of the decision-making patterns of poor individuals. Third, the findings of this research can serve as a foundation for designing effective poverty alleviation interventions.

As a result, this study, by employing a phenomenological approach and focusing on the psychological dimensions of poverty, seeks to provide a deeper and more comprehensive understanding of this complex social phenomenon. Such understanding can pave the way for designing evidence-based poverty alleviation policies that are sensitive to cultural and social contexts. This research highlights that poverty is not merely an economic issue but a multidimensional phenomenon that requires an interdisciplinary approach for its understanding and resolution. The aim of this study is to conduct a phenomenological analysis of the lived experience of poverty: the psychological mechanisms influencing economic behaviors.

Research method

This research is a qualitative study conducted using the method of systematic library review. In this design, instead of collecting primary data, by identifying, reviewing, and analyzing the findings of previous qualitative research, an integrated understanding of the phenomenon under study is provided.

The statistical population of this study consists of all qualitative research (such as phenomenological studies, grounded theory, ethnography) published in the field of “lived experience of poverty” in Iran during the past decade.

For selecting samples, purposive sampling with specific criteria was used. The criteria for including studies in this review were as follows:

• conducted within the qualitative paradigm,

• the main focus on the “lived experience of the poor” or “psychological dimensions of poverty”,

• availability of the full text of the article, thesis, or report.

The search for these studies was carried out in Persian scientific databases (such as Noormags, Magiran, SID, Civilica) using key keywords. The data of this research were collected through a systematic review of documents and texts. The sources reviewed included: articles published in domestic scientific-research journals, master’s theses and doctoral dissertations, specialized books related to social psychology and behavioral economics, and research reports from reputable research centers. For analyzing the qualitative data extracted from the selected texts, the method of thematic analysis was used.

Theoretical foundations and literature review

The psychology of poverty: from cognition to behavior

Studies in the psychology of poverty clearly show that living in poverty is not merely a financial condition but rather a pervasive experience that affects individuals’ fundamental cognitive functions and behavioral patterns (Gennetian and Shafir 2015). Cognitive load theory argues that the human mind has limited processing capacity. Poverty, by generating continuous and stressful concerns about meeting basic needs (such as food, housing, and expenses), occupies a significant portion of this limited capacity. This phenomenon, sometimes referred to as “mental overburdening”, leads to a reduction in the cognitive resources available for other tasks.

In such conditions, the individual, instinctively and for the sake of survival, focuses on immediate and short-term problems and becomes unable to attend to long-term goals, planning, and rational decision-making. Put simply, when a person’s mind is heavily preoccupied with solving daily crises, little capacity remains to invest in the future (Mani et al. 2013).

This compulsory focus on scarcity is not limited to financial matters and can also apply to time. The sense of time scarcity can be just as powerful in activating an individual’s anxiety systems and reducing their mental capacity. When someone is confronted with scarcity, their perception of the world changes; the brain interprets this scarcity as a survival threat and directs all mental processing toward resolving it. As a result, the mental space available for other activities and strategic decision-making is drastically reduced. For example, field studies on farmers have shown that their cognitive and intellectual performance is significantly lower during periods of financial scarcity before harvest, compared to periods when they enjoy financial stability (Gillani et al. 2025).

On the other hand, the theory of mental accounting in behavioral economics examines how individuals categorize money and resources in their minds, and this categorization does not necessarily align with standard economic logic (Dean et al. 2017). For poor individuals, this mental framing is often strongly shaped by negative emotions caused by poverty, such as chronic stress, shame, and helplessness. This emotional state can lead to seemingly irrational decisions. For example, a person facing severe financial hardship may spend a small amount of money on a non-essential item in order to temporarily ease feelings of shame and deprivation – even though, from the perspective of an outside observer, this is not an optimal economic decision. Such behavior can be understood as a psychological response to the stress of poverty (Molotsky and Handa 2021).

In addition, the feeling of poverty and social comparison can in themselves be harmful, even if the person is not living in absolute poverty. Individuals who perceive themselves as being on the lower rungs of the socio-economic ladder often experience a sense of powerlessness and diminished self-esteem (Shildrick and MacDonald 2013). This feeling can lead to riskier behaviors such as gambling in the hope of quickly improving one’s situation, which in turn perpetuates the poverty cycle. Research shows that low-income individuals disproportionately purchase lottery tickets – a phenomenon sometimes referred to as a “tax on the poor” (Cohen 2001).

Neuroscientific evidence also supports these effects. Brain imaging studies have shown that individuals who grow up in poverty may have reduced volume in brain regions associated with language, decision-making, problem-solving, and future-oriented thinking. These findings suggest that poverty can affect not only functioning but also the physiological structure of the brain itself, thereby perpetuating the poverty cycle across generations (Piccolo and Noble 2019).

Thus, it can be said that poverty, through complex psychological mechanisms such as imposing heavy cognitive load and shaping mental frameworks under the influence of negative emotions, diminishes individuals’ capacity to break free from the cycle. Understanding these mechanisms is essential for designing social and economic interventions that take into account these cognitive and emotional limitations, enabling them to assist individuals living in poverty more effectively.

Poverty as a lived experience: a phenomenological perspective

The phenomenological approach to poverty, by shifting the focus from objective economic indicators to subjective dimensions and lived experience, provides a deeper understanding of this phenomenon. From this perspective, poverty is not merely a quantitative state but rather an existential condition that affects all aspects of a person’s life, including identity, social relationships, and self-concept (Duclosel 2025). In other words, poverty is a mode of being in the world, in which the poor individual perceives and interprets their world and their place within it in a particular way. This perception is constructed through the complex interaction of material conditions, social-cultural context, and the individual’s subjective interpretations (Simpson et al. 2020; Lopez-Tiu 2025).

The existential dimensions of poverty are manifested in experiences such as existential shame, social humiliation, and relational isolation. Existential shame refers to a profound sense of inadequacy and worthlessness that arises when an individual feels unable to fulfill expected social roles (such as being a proper breadwinner). This feeling is not merely about economic failure but strikes at the core of the individual’s being and identity. For example, a study on unemployed men shows that they view joblessness not only as a financial problem but as an “identity failure” that undermines their sense of masculinity and self-esteem (Strier et al. 2014).

Social humiliation occurs when poor individuals, in their daily interactions, are met with disdainful looks, stigmatization, or neglect. These experiences weaken social belonging and lead to both emotional and physical withdrawal from public spaces (Estanislau and Ximenes 2019).

In facing such difficult conditions, poor individuals are not passive; rather, they employ active and complex coping strategies. These strategies can be categorized along a spectrum from “adaptation” to “resistance”. Adaptive strategies include efforts to manage shame and preserve dignity within existing structural constraints. For example, individuals may try to “normalize poverty” to reduce psychological tension or redefine success criteria (such as emphasizing moral values instead of material possessions) to give meaning to their lives. While these strategies may provide short-term psychological adjustment, they risk reinforcing the status quo (Walker and Bantebya-Kyomuhendo 2014).

On the other end of the spectrum lie resistant strategies, aimed at changing conditions. These can take individual forms (such as making extra efforts to find a job or pursue education) or collective forms (such as participating in local associations and peaceful protests). Resistance is often rooted in “hope for a better future” and a “sense of agency” – the belief that one can influence one’s own destiny (Turunen and Seppälä 2025).

These coping strategies directly and indirectly influence economic behaviors. For example, an individual who turns to conspicuous consumption in order to preserve their self-esteem may spend part of their limited income on symbolic goods, thereby redefining themselves in the eyes of others. While this behavior may appear economically irrational, from a phenomenological perspective it is a meaningful response to the psycho-social pressures of poverty. Similarly, participation in informal neighborhood mutual-aid networks (a collective coping strategy) can function as a micro-social security system, enhancing individuals’ economic security against shocks (Arthur 2015). Therefore, understanding these strategies and their inner logic is essential for designing social policies that align with the realities of the lives of poor individuals. A food assistance program that fails to account for the shame associated with receiving aid may fail, even if it is economically cost-effective (Bruckner et al. 2021).

Research background

Shalchi and Zandieh (2024), in a study on the experience of poverty among women in Isfahan, highlighted poverty in the outskirts of large cities as an important issue, especially given the growth of these areas. Studying the poverty of women is an even more complex matter, since poor women suffer from double deprivation. The study sought to provide a deeper understanding of poverty among marginalized women and how they perceive this condition. This was a qualitative study using thematic analysis. Participants included 20 marginalized women aged 20 to 50 from District 14 of Isfahan, selected through convenience sampling. The findings were mapped and analyzed around several main themes: the general conditions of marginalized women, economic class differences, job satisfaction, discriminatory attitudes, and the dual spectrum of belonging versus non-belonging to their place of residence. Their concerns included job insecurity, neighborhood safety, family-related worries, and marital concerns. Their needs and expectations involved access to education, cultural activities, and facilities similar to those available in other parts of the city. The strategies used by these women in facing poverty and marginalization included focusing on positive personal traits, conforming to the community, and attempting to alter unfavorable conditions to their advantage. Finally, their outlook on the future ranged from pessimistic to optimistic to neutral.

Amirpanahi and Namiyan (2024), in a study on the lived experience of female heads of households, found that these women perceive subordination as a multidimensional experience that includes economic deprivation, social exclusion, and symbolic humiliation. They described shame and reduced self-esteem from their inability to provide basic family needs as the most prominent psychological dimension of this experience. However, a key finding of the study was that these women simultaneously employed resistant strategies, such as relying on informal support networks and fostering resilience, to cope with these conditions. Thus, the study emphasized the need to move beyond a one-dimensional view of poverty, and to focus simultaneously on the psycho-social mechanisms of endurance and resistance to subordination.

Hemmati and Shamsi (2025) examined the psychological and social mechanisms that help individuals supported by charities not only adapt to harsh economic conditions but also pursue advancement. The findings showed that resilience among these individuals is a multidimensional phenomenon operating across three main domains: intra-personal factors such as religious faith, optimism, and goal-setting; interpersonal factors, especially emotional and instrumental support from family and friends; and institutional factors such as access to supportive services and a sense of community belonging. A key finding was that cash assistance from charities alone does not guarantee resilience. Instead, outcomes depend on how recipients use these resources and integrate them into broader coping strategies. Specifically, individuals who invested the funds in education, skill training, or micro-business ventures demonstrated higher levels of resilience compared to those who spent the money solely on daily consumption. The study concluded that strengthening resilience among vulnerable populations requires integrated interventions that go beyond financial support, focusing instead on reinforcing psychological assets and social capacities to break the cycle of poverty.

Ghorayshi (2024), focusing on the feminization of poverty, investigated the gendered dimensions of this phenomenon. The study demonstrated that poor women face double deprivation: on one hand, they struggle with economic constraints, and on the other, they contend with cultural and social barriers. This dual burden has a particular impact on their psychological mechanisms and economic behaviors.

Tabrizi Kahoo et al. (2023) conducted their research using a phenomenological method and interviews with 21 female heads of households in Mashhad. Participants were selected purposefully through criterion and maximum variation sampling. Data were collected using semi-structured interviews and analyzed with Colaizzi’s method. The findings revealed that female heads of households perceive social support across four themes: lived experience of support, self-esteem, supportive behavior, and social ties. For some, support led to increased self-esteem; conversely, others believed their self-esteem diminished. Perceptions also varied depending on who provided the support and with what intention. Some women felt that support strengthened their social ties, while others believed it made them more isolated. The support environment for most was built on distrust, especially toward men; thus, conformity and withdrawal were central to their social connections. However, for most women, support acted as a psychological buffer.

Yousaf and Rafique (2025) explored the subjective experiences of child laborers and street children. This qualitative study employed interpretive phenomenological analysis (IPA) through semi-structured interviews with street children. The findings showed that these children face multiple psychological challenges, including feelings of social rejection, stigmatization, deprivation of education, and constant exposure to violence. In response, they employed coping strategies such as relying on informal social networks, developing survival skills, and maintaining a sense of hope. Despite harsh conditions, these children demonstrated considerable adaptability and resilience. The study concluded by emphasizing the need for psychosocial interventions that build on their strengths and psychological assets. The researchers suggested that support programs must be designed based on a deep understanding of these children’s lived experiences and with their active participation, in order to more effectively address their psychological and social needs.

Albelda (2023) argued that the issue is not simply that women are poor, but that “poverty itself is gendered”. The article examined concepts and measurement methods developed by feminist economics to better understand this phenomenon. It emphasized several structural factors: time spent on unpaid labor (such as caregiving and household work) and social reproduction, the gendered division of paid labor, a redefinition of “economic well-being”, family structures and intra-household resource distribution, and the gendered structure of welfare systems. Using this analytical framework, Albelda engaged with feminist debates on the feminization of poverty and discussed policies such as cash transfers (e.g., state subsidies).

Kwarteng (2023) examined the lived experience of economic hardship among single Black mothers. Using IPA and semi-structured interviews with 11 single Black mothers, the study identified seven main themes: the Strong Black Woman (SBW) schema, stigmatization of Black femininity, mental health issues, challenges to self-esteem, the role of social support, racial and cultural identity, and the role of spirituality. The results showed that single Black mothers occupy a unique position in the social landscape due to their multiple intersecting and marginalized identities (race, gender, and class), which complicate their lived experiences. The study concluded that understanding these women’s experiences requires attention to their multiple dimensions of identity, and any supportive interventions must account for these complexities. Spirituality was also identified as an important source of resilience and a coping mechanism in facing economic hardship. This research emphasized the importance of qualitative approaches for a deeper understanding of poverty in marginalized groups.

Green (2022) explored the subjective experiences of public employees after participating in a poverty simulation. This phenomenological study used in-depth interviews with government employees who had taken part in the simulation. The findings revealed that the simulation, as a transformative experience, significantly enhanced participants’ empathetic understanding of the daily challenges faced by the poor. Participants reported that this hands-on experience shifted their perspectives from stereotypical views to an appreciation of the real complexities of poverty. Specifically, the simulation increased their sense of social responsibility and sensitivity to structural barriers. The study concluded that poverty simulations can be a powerful tool in training public employees to design and implement more effective social policies. It highlighted the importance of experiential learning approaches in creating sustainable attitudinal changes among policymakers and program implementers.

Ballo (2020) examined the deep subjective experiences of therapists who work with impoverished clients. This qualitative research, conducted using interpretive phenomenological analysis (IPA), collected data from a small and focused sample of therapists. The findings revealed four main themes in the therapists’ experiences: adapting to the paradox of power and empathy, the limitations of traditional therapeutic frameworks, the psychological strain resulting from exposure to severe deprivation, and the necessity of going beyond the classic role of the therapist. The study concluded that working with poor clients presents therapists with unique professional challenges that extend beyond conventional psychotherapy training. Therapists require greater organizational support, such as specialized clinical supervision, targeted training on poverty and trauma, and access to a network of social resources for client referrals. The central conclusion emphasized that in order to provide effective care to this population, a socio-political framework must be integrated into therapeutic models, enabling therapists to address both intrapsychic and structural factors affecting clients’ well-being. In other words, the mental health system needs to become more flexible and interdisciplinary to meet the needs of disadvantaged populations.

Simpson Reeves et al. (2020) investigated how poverty can be defined not solely through objective economic indicators but through an understanding of the daily and subjective experiences of those living in poverty. Using phenomenology, the study collected qualitative data primarily through in-depth interviews with people living in poverty. The main goal was to move beyond top-down, externally imposed scientific definitions and instead understand how individuals themselves experience, interpret, and define poverty in everyday life. Key findings indicated that participants viewed poverty as a multidimensional phenomenon that extends beyond financial deprivation. They described it as encompassing social exclusion and marginalization, feelings of dependence and loss of independence, the denial of dignity and experiences of disrespect, and persistent insecurity and instability surrounding basic needs such as housing, food, and employment. The authors concluded that official and objective definitions of poverty, which are largely income-based, are inadequate for capturing its full complexity. They argued that poverty is a relational and lived condition, shaped to a large extent by social relations characterized by powerlessness and exclusion. Thus, fully understanding poverty requires attention to its subjective and social dimensions – how it influences people’s sense of identity, their relationships with others, and their place in society. The study recommended that anti-poverty policies be designed on the basis of these lived experiences in order to address more effectively the suffering associated with poverty, including social exclusion and the loss of human dignity.

Anand and Lea (2011) provided a broad review and evaluation of the emerging literature in the field of psychology and behavioral economics of poverty. The paper highlighted the experiences of poverty, the role of neighborhoods, the dynamics and transmission of poverty, the intersections of poverty with child disability, and issues of personal finance. It also examined psychological aspects and policy responses, with a particular focus on autonomy, empowerment, and poverty reduction programs. Their central thesis was that detailed knowledge of individual experiences, cognitions, and social factors drawn from psychology and related social sciences complements the traditional economic emphasis on structural factors and policy tools. This, they argued, is reflected in the emerging contributions of behavioral economics. They concluded that it is increasingly recognized that poverty reduction policies informed by behavioral insights are likely to be more effective.

Despite these valuable contributions, there remains a clear research gap in phenomenological analyses of the lived experience of poverty and its relationship to the psychological mechanisms that shape economic behavior. The present study seeks to address this gap (Table 1).

Theoretical framework

This research employs an integrated theoretical framework that combines three perspectives: phenomenology, cognitive psychology, and behavioral economics. This framework is based on the assumption that poverty is a multi-level phenomenon that can only be understood through an interdisciplinary approach.

Phenomenological theory of lived experience

Phenomenology is a philosophical school that was founded by Edmund Husserl in the early twentieth century. This school studies the structures of lived experience and consciousness from the perspective of the experiencing individual (Habibi and Jalalnia 2022).

The central slogan of phenomenology – “Return to the things themselves” – expresses its aim of moving beyond pre-constructed theories and concepts in order to provide a faithful description of phenomena as they are revealed in immediate experience (Rabani Golpayegani 2002). A key feature of this approach is its focus on subjectivity: phenomenology pays attention to the world as it is lived by an individual, not the world as an objective reality separate from human beings (Karimi 2024). Its goal is to reveal the meanings that are experienced in daily life (Habibi and Jalalnia 2022).

Husserl established the foundations of this method by presenting the following concepts:

Lived experience: in phenomenological studies, lived experience refers to the representation of experiences, choices, and knowledge that a person directly acquires from his or her own life. This experience is not examined while living it, but through reflection and recollection after passing through it (Given 2008).

Intentionality is a central concept in phenomenology, referring to the structure of consciousness as always being directed toward something. Consciousness is never self-contained; rather, it is always consciousness of something, whether an object, an experience, an idea, or an imagined phenomenon. This directedness constitutes the fundamental structure of the relationship between consciousness and the world.

Phenomenological suspension: Husserl proposed that in order to study phenomena purely, we must “put in brackets” or suspend our judgments and assumptions about the existence or nonexistence of the external world. This allows the researcher to describe the structures of consciousness without prejudice (Rabani Golpayegani 2002).

Alfred Schutz, philosopher and sociologist, introduced Husserl’s concepts into the social sciences and in particular expanded the concept of the “lifeworld” (Feyzi et al. 2022).

Lifeworld: Schutz defined the lifeworld as the pre-theoretical and everyday world in which individuals are born, act, and interact with others. This world is based on tacit knowledge, traditions, and pre-constructed patterns that individuals accept as self-evident.

Dialectical relationship: unlike Husserl, who considered the lifeworld as the only comprehensible reality, Schutz established a dialectical relationship between the individual’s consciousness and the lifeworld, meaning that each one creates and influences the other (Feyzi et al. 2022).

Intersubjectivity: Schutz emphasized that the lifeworld is not a completely individual phenomenon, but is constructed and sustained intersubjectively through the sharing of meanings among social actors.

By combining the views of Husserl and Schutz, the phenomenological approach to studying poverty will be as follows:

Changing the starting point of analysis: poverty is understood not as an external quantitative variable (such as income below the poverty line), but as part of the lifeworld and the lived experience of poor individuals. The goal of the research is to understand the meaning the person gives to his or her own conditions (Karimi 2024).

Emphasis on subjective meanings: this approach focuses on personal interpretations, everyday coping strategies, feelings, hopes, and despairs of individuals. For example, how a person preserves his or her “human dignity” in difficult conditions.

Understanding the multilayered nature of reality: from Schutz’s perspective, the experience of poverty can have multiple layers; from tangible and everyday reality to the world of dreams and aspirations. The researcher must move between these layers to understand this phenomenon (Feyzi et al. 2022).

Psychological capital theory

Psychological capital is a central concept in positive psychology which refers to the individual’s developmental and measurable psychological state. This capital goes beyond economic capital (money) and social capital (connections) and relates to the person’s positive internal resources (Luthans et al. 2015). This concept consists of four main and interrelated components:

1. Self-efficacy: confidence in one’s abilities to mobilize motivation, cognitive resources, and strategies of action necessary for success in performing specific and challenging tasks. An individual with high self-efficacy strives for goals with greater confidence (Bandura 1997).

2. Hope: a positive motivational state based on the interaction between “willpower” (energy to move toward goals) and “way-power” (planning to achieve those goals). A hopeful person finds alternative ways to reach the goal and persists in the face of obstacles (Snyder 2000).

3. Optimism: an explanatory style in which the individual attributes current and future successes to internal, stable, and pervasive factors, while attributing negative events to external, temporary, and specific factors. Realistic optimism does not mean ignoring problems, but believing in positive outcomes in the future (Carver and Scheier 2014).

4. Resilience: the ability to cope, endure, and return to the initial state after facing problems, hardships, and even major failures. Resilient individuals are able to maintain their mental health in difficult conditions and even grow from that experience (As 2014). Poverty, by creating chronic stress and restricting access to resources, seriously threatens and depletes all four components of psychological capital. Living in economically insecure conditions creates constant stress that reduces the individual’s cognitive and psychological capacity for long-term planning, hope, and maintaining optimism (Mani et al. 2013).

For example, constant worry about providing basic needs (such as food and housing) occupies the individual’s “psychological bandwidth” and leaves less space for thinking about future goals or developing skills. These conditions weaken self-efficacy and make the person more vulnerable to despair (Hobfoll 2001). Despite the destructive effects of poverty, studies show that psychological capital is not necessarily completely lost and can be preserved or restored through internal and external mechanisms. This process is often described as “resilience against hardship”. The presence of strong support networks (family, friends, community) is one of the most important protective factors. These supports can strengthen the sense of belonging, love, and self-esteem, and act as an external source of hope and self-efficacy (Ungar 2011). For many individuals, religious or cultural beliefs provide a meaningful framework that helps them to understand suffering and hardship and to find a purpose in life beyond present material conditions. This significantly contributes to strengthening hope and optimism (Frankl 1985). Even achieving small and controllable goals can create a positive feedback loop. These successes reinforce the individual’s belief in his or her abilities (self-efficacy) and motivate him or her to strive for larger goals, which itself is the basis of hope (Bandura 1997). The theory of psychological capital provides a hopeful perspective in the study of poverty. This theory emphasizes that although poverty can deplete the individual’s internal resources, these resources are not completely destroyed and have the potential to be developed. Therefore, effective interventions for poverty reduction should not only focus on material aspects, but also include programs for the deliberate and systematic strengthening of self-efficacy, hope, optimism, and resilience in individuals. Such an approach helps poor individuals to become empowered not only financially, but also psychologically, and to be able to break free from the cycle of poverty (Luthans et al. 2015).

Behavioral economics and decision-making under pressure

Behavioral economics, by integrating insights from psychology and economics, challenges the fundamental assumption of neoclassical economics about human “perfect rationality”. This field shows that in their economic decision-making, humans often use “heuristics” which lead to systematic “cognitive biases”. For example, instead of calculating long-term consequences, individuals decide based on available and salient information or within specific frames. These mental limitations cause actual behaviors to not conform to the predictions of classical models (Bonnefon and Rahwan 2020).

The condition of poverty does not only mean low income, but is accompanied by a heavy burden of uncertainty, insecurity, and lack of resources (financial, time, social). These shortages manifest themselves as a “lack of mental bandwidth”. The poor are forced to constantly focus on complex and urgent problems such as securing food, paying rent, or medical expenses. This forced focus consumes a large part of their cognitive capacity (attention, working memory, self-control) and leaves less mental capacity for other decisions such as saving, investing in education, or pursuing long-term plans (Mullainathan and Shafir 2013).

Under the pressure of the cognitive load caused by poverty, decision-making is directed toward options that are simpler, faster, and provide more immediate rewards, even if they are costly in the long term. For example, an individual may, due to psychological pressure and mental fatigue, prefer short-term loans with very high interest (informal lending) over bank loans with more complex administrative procedures. From a neoclassical perspective, this behavior may appear irrational, but from the perspective of behavioral economics, it is a predictable reaction to the lack of “mental bandwidth”. This situation can be considered analogous to driving on an unknown road with a malfunctioning car that forces the driver to focus all attention on immediate problems and ignore the road signs to the destination (Bertrand et al. 2004).

In addition to cognitive limitations, emotions such as stress, anxiety, and despair, which are intensified in the context of poverty, directly influence preferences and decision-making. The feeling of injustice or relative deprivation can lead to choices that are more about preserving “self-respect” or complying with local social norms than maximizing financial gain. Likewise, the tendency to maintain social relationships and respond to the expectations of others (such as providing financial help to relatives in difficult conditions) may take priority over individual saving. These behaviors can be understood within the framework of social and emotional preferences (Akerlof and Kranton 2010).

Understanding these mechanisms shows that the seemingly irrational behaviors of the poor are not due to moral or intellectual deficiency, but rather a predictable response to environmental pressures and mental limitations. This perspective has important implications for the design of public policies. For example, aid programs should be designed to be simple, automatic, and with minimal administrative burden in order to reduce the cognitive load on recipients. Understanding the behavioral economics of poverty teaches us that to improve decision-making, we should not blame individuals, but change the decision-making context (Thaler and Sunstein 2009).

Research findings

The phenomenological analysis of the lived experience of poverty in the qualitative studies reviewed shows that poverty is a multidimensional existential condition that activates complex psychological mechanisms and directly affects individuals’ economic behaviors. The fin-dings are organized around four main themes.

1. Poverty as cognitive load: the trap of mental scarcity

The most important psychological mechanism identified is “cognitive load” or “lack of mental bandwidth”. Living in poverty conditions is accompanied by continuous worries and stressors such as securing food and housing, which consume a large part of individuals’ attention and self-control capacity. This state compels people to focus only on solving immediate and short-term problems, leaving them with fewer cognitive resources for long-term planning, educational investment, and strategic economic decision-making. For example, constant worry about livelihood severely reduces the ability of female heads of households to pursue developmental goals (Mullainathan and Shafir 2013).

2. Poverty as existential suffering: shame, humiliation, and social isolation

From a phenomenological perspective, poverty is an “identity wound” that manifests itself in experiences such as existential shame and social humiliation. Poor individuals, due to inability to fulfill expected social roles, may experience feelings of inadequacy and encounter stigmatizing interactions in everyday life. This can weaken their sense of social belonging and lead to relational isolation. Such existential suffering may, in turn, affect economic behavior; for instance, an individual may engage in conspicuous consumption or purchase symbolic goods in order to preserve self-respect, even if this behavior appears irrational from an economic perspective (Shildrick and MacDonald 2013).

3. Coping strategies: from adjustment to resistance

Poor individuals are not passive in the face of difficult conditions but employ various active strategies, ranging along a spectrum from adjustment to resistance. Adjustment-oriented strategies such as normalizing poverty, while helping with short-term psychological adaptation, may lead to the continuation of the condition. In contrast, resistance strategies rooted in hope and sense of agency aim to change conditions and can appear in the form of participation in informal mutual aid networks, which themselves function as a micro-social security system. Strengthening psychological capital is the main foundation of these strategies (Luthans et al. 2015).

4. Mental framing and decision-making under pressure

Under the influence of cognitive load and negative emotions, the mental framing of poor individuals regarding money changes. Their economic decisions are directed toward options that provide more immediate rewards, even if they are costly in the long run. For example, choosing short-term loans with very high interest instead of formal bank loans, or turning to gambling in the hope of quickly improving conditions, are among such behaviors. These findings confirm the view of behavioral economics that such behaviors are predictable responses to the stressful context of poverty and not due to individual deficiency (Thaler and Sunstein 2008).

5. The experience of daily suffering: poverty as existential pain

One of the main themes identified is the experience of daily suffering, which has been represented in various ways in the accounts of poor individuals. This suffering not only has an economic aspect, but is an existential pain that affects individuals’ identity and human dignity. For example, one of the women participating in a study about female heads of households said: “Poverty means waking up every day with tearful eyes and not knowing how to feed your child… Poverty means being humiliated in front of others”. This experience of suffering activates multiple psychological mechanisms, including increased sensitivity to threat, reduced tolerance for frustration, and forced concentration on short-term problems. These mechanisms, in turn, affect economic behaviors and lead to prioritizing immediate needs over long-term goals (Sen 2002, translated by Mahmoudi).

6. Relative deprivation: social comparison as a source of suffering

Another theme identified is the feeling of relative deprivation, which arises from social comparison. Poor individuals compare themselves with others, and this comparison becomes a source of suffering and dissatisfaction. This feeling stems not only from comparison with the wealthy but also from comparison with peers of the same status. A study on the residents of the outskirts of Isfahan showed that “seeing others advance while you remain trapped in poverty is the bitterest experience of life”. The feeling of relative deprivation activates psychological mechanisms such as jealousy, a sense of backwardness, and injustice, which in turn affect economic behaviors. For example, this feeling may lead to conspicuous consumption; that is, a poor person, in order to compensate for the feeling of deprivation, irrationally spends his or her limited resources (Shildrick and MacDonald, 2013).

7. Social isolation: poverty as symbolic marginalization

The third main theme is social isolation, which acts both as a cause and as a consequence of poverty. Poor individuals are gradually excluded from dominant social networks and pushed to the margins. This isolation is not only an objective social condition but also a form of symbolic marginalization that affects individuals’ social identity. A study on marginalized women showed that “poverty means no one cares about what you say; it means being ignored”. Social isolation activates psychological mechanisms such as the reduction of social capital, depression, and decreased self-confidence. These mechanisms, in turn, affect economic behaviors and limit access to economic opportunities (Bourdieu 2019, translated by Izadi).

8. Feminization of poverty: gendered dimensions of the poverty experience

The analysis of data shows that the experience of poverty has significant differences for women compared to men. The feminization of poverty has been identified as a secondary but important theme in this research. Poor women face not only economic constraints but also gender barriers that affect their lived experience of poverty. For example, a study on female heads of households showed that “poor women face the burden of multiple responsibilities; they are both breadwinners and carry out household and childcare work”. This multiple burden activates specific psychological mechanisms, including mental exhaustion, feelings of guilt, and lack of control over life. These mechanisms, in turn, affect women’s economic behaviors and push them toward low-income and flexible jobs (Albelda 2023) (Table 2).

Discussion and conclusion

This research, with a phenomenological approach, explores the lived experience of poverty and explains the psychological mechanisms that influence economic behaviors. The findings show that poverty is not merely an economic condition, but rather a multidimensional existential condition that manifests itself in themes such as daily suffering, relative deprivation, social isolation, loss of self-esteem, and existential fragility. These subjective dimensions activate powerful psychological mechanisms such as cognitive load, existential suffering (shame and humiliation), and specific mental framing, which in turn shape individuals’ economic behavioral patterns, such as short-term focus, risk avoidance, and inefficient resource allocation. This research concludes that understanding these complexities is essential for designing poverty alleviation policies that respond not only to the material but also to the psycho-social dimensions of poverty (Schutz 1967; Sen 1999).

The analysis of findings shows that living in poverty conditions, by creating continuous livelihood concerns, occupies a large portion of individuals’ limited cognitive capacity (“mental bandwidth”). This cognitive load forces individuals to focus on solving immediate problems and prevents them from engaging in long-term planning and strategic economic decision-making. This finding aligns well with the “scarcity” theory of Mullainathan and Shafir, which argues that the forced focus on resource scarcity (financial or temporal) reduces cognitive capacity for optimal decision-making (Mullainathan and Shafir 2013).

From a phenomenological perspective, poverty is an “identity wound” rooted in experiences such as existential shame and social humiliation. Inability to fulfill expected social roles and encountering humiliating looks damage individuals’ sense of dignity and social belonging and lead to their isolation. This existential suffering may help explain seemingly irrational economic behaviors such as conspicuous consumption, which can serve as a strategy for reconstructing lost self-respect. This analysis is consistent with the findings of Shildrick and MacDonald (2013) on the link between poverty and social shame.

The findings confirm that poor individuals are not passive in the face of difficult conditions, but rather employ active strategies across a spectrum from adjustment (such as normalizing poverty) to resistance (such as participation in mutual aid networks). Strengthening psychological capital, comprising self-efficacy, hope, optimism, and resilience, represents a key foundation of resistance strategies that provide individuals with the capacity to cope and plan for the future. This perspective is consistent with Luthans and colleagues’ theory of psychological capital, which emphasizes the growth of positive psychological states for breaking out of vicious cycles (Luthans et al. 2015).

The analysis of data clearly shows that the experience of poverty differs significantly for women compared to men. Poor women face the “burden of multiple responsibilities” (breadwinning, domestic work, and caregiving) as well as additional gender barriers, which exert specific effects on their psychological mechanisms and, consequently, their economic behaviors. This finding reinforces Albelda’s argument on the “feminization of poverty,” which emphasizes the need to consider structural factors such as the gendered division of labor in poverty analysis (Albelda 2023).

This research demonstrated that poverty is a multidimensional lived experience that, by affecting deep psychological mechanisms (cognitive load, existential suffering, and mental framing), drives individuals’ economic behaviors toward short-sighted decision-making and inefficient resource allocation, trapping them in the vicious cycle of poverty. A phenomenological understanding of poverty, which focuses on the subjective and meaningful dimensions of this phenomenon, reveals the reality that poverty is not only an economic problem but also a human issue related to identity, dignity, and psycho-social well-being.

On this basis, the final conclusion of this research is that any poverty alleviation policy or program that focuses solely on objective indicators is destined to fail or achieve limited effectiveness. Successful approaches must simultaneously and integratively address three levels: (1) the material level: meeting basic needs and creating economic security; (2) the psychological level: strengthening psychological capital (self-efficacy, hope, resilience) through psycho-social interventions and reducing cognitive load by simplifying support processes; and (3) the social-symbolic level: combating stigmatization and social exclusion and strengthening support networks to restore the sense of belonging and dignity.

The dialectical relationship between poverty, psychology, and economics presented in this research can provide a foundation for designing human-centered and context-aware policies; policies that view the poor not as a problem but as human beings with capabilities who act within a specific structural context.

Disclosures

This research received no external funding.

Institutional review board statement: Not applicable.

The authors declare no conflict of interest.