Poverty and the all-consuming fretting that comes with it require so much mental energy that the poor have little brain power left to devote to other areas of life, according to the findings of an international study.

The mental strain could be costing poor people up to 13 IQ (intelligence quotient) points and means they are more likely to make mistakes and bad decisions that amplify and perpetuate their financial woes, researchers found.

"Our results suggest that when you are poor, money is not the only thing in short supply. Cognitive capacity is also stretched thin," said Harvard economist Sendhil Mullainathan, part of an international team that conducted the study.

In a series of experiments, researchers from Harvard, Princeton and other universities in North America and from Britain's University of Warwick found that pressing financial worries had an immediate impact on poor people's ability to perform well in cognitive and logic tests.

Far from signalling that poor people are stupid, the results suggest those living on a tight budget have their effective brain power, or what the researchers called "mental bandwidth", dramatically limited by the stress of making ends meet.

On average, someone weighed down by money woes showed a drop in cognitive function in one part of the study that was comparable to a 13 point dip in IQ, and similar to the performance deficit expected from someone who has missed a whole night's sleep.-Reuters