Scarcity, Cognition, and Health Decision-Making: Evidence from a Lab-in-the-Field Experiment in Rural China

Abstract Understanding how financial scarcity impacts health-related decision-making is vital for designing interventions to break the cycle between poverty and poor health. We conducted a lab-in-the-field experiment with 479 rural adults in two low-income regions of China, Yunnan and Shaanxi, to examine the cognitive and behavioural consequences for health-related preferences and choices. Participants were randomly assigned to a scarcity prime (Hard vs. Easy scenario) and completed tasks measuring cognitive function (Raven’s matrices), time and risk preferences in both monetary and health domains, and budget allocations across necessities (groceries), health, and temptation goods. In Yunnan, a moderately poor region, scarcity significantly reduced cognitive performance and increased health-related risk aversion, whereas no such effects were observed in Shaanxi, where poverty was more severe. Time preferences were largely unaffected by the prime in both regions. Spending allocations showed limited shifts under scarcity, with some subgroups reallocating more toward health. Our findings suggest that scarcity’s psychological effects are not universal but context-specific, with implications for health interventions and poverty alleviation strategies. Choice architecture interventions (e.g., nudges) may be effective for moderately poor populations, while choice infrastructure with structural supports remains essential for those facing chronic deprivation.