Poverty-related stress causes an IQ loss greater than pulling an all-nighter, according to a book called Scarcity. Economist Sendhil Mullainathan of Harvard and psychologist Eldar Shafir of Princeton, the co-authors, say that goes a long way toward explaining why poor people have trouble making good decisions and plans for the future. They also say that’s good news — because it means the problem is situational, the stereotypes are wrong, and there are remedies.

Those remedies range from keeping it simple (one-stop-shops and direct payments) to first doing no harm (like, for instance, cutting off unemployment benefits to the long-term unemployed, with home losses and all the other hardships that will bring).

For all of you who have ever stayed up too late or all night, you know how you feel the next day. That is, not like tackling big challenges or sticking to disciplined master plans. Policymakers need to keep the scarcity effect in mind at all times as they consider safety-net programs.