Scarcity: Why Having Too Little Means So Much
by Sendhil Mullainathan and Eldar Shafir 2013
There are two extremes in life that profoundly affect our mindset, abilities, and motivations. During abundance, we feel secure and satisfied, able to relax and take whatever life throws our way. But amid scarcity, we're insecure and threatened. The things in short supply- time, money, or food become all-consuming and the mind tunnels in on those things at the expense of everything else.
Most people live in between the two extremes, with their lives fluctuating between abundance and scarcity depending on age, crop yields, economic trends, and natural or man-made disasters. This book is about what happens when the needle points more towards scarcity, especially for the poor, and how it taxes their abilities to the point it's hard to bounce back.
Sendhil Mullainathan, a professor of behavioral economics at Harvard, teamed up with Eldar Shafir, a professor of cognitive science at Princeton to write this informative and thought-provoking book. Using psychological studies, the authors have done research on what happens to people when scarcity enters their lives, and how even temporary scarcity changes behaviors. Their studies have relevance to the problems of poverty, and also the problems of people who choose to focus on the now when problems loom in the future. (Think global warming and infrastructure).
People who have an abundance of time and money are more likely to waste both. Without the threat of losing something, it's easier to amble on with life in a carefree fashion. The presence of scarcity of either time or money quickly motivates us into action to get things done. Deadlines are notoriously helpful in motivating creative people to get work done, even if it's done at the very last minute. Economic downturns make people more aware of budgeting their money and planning ahead, because scarcity is forcing them down to reality.
The authors call this new motivation a focus dividend, and it's a good thing- up to a point. That point is where the newfound focus crowds out other important things like friends, family or health. Those who are caught in a scarcity mindset behave as they are inside of a tunnel, (what the authors call "tunneling"), and they lose sight of all the things that fall outside of it. The negative consequences of excessive focus is called a tunneling tax, and it causes people to neglect doctor appointments, insurance, long-term planning, and even their children.
The most interesting concept from the entire book is something they call "bandwidth," which they define as a basic ability to function amidst distractions- encompassing critical things like attention, decision-making, willpower, and impulse control. Cognitive capacity, aka fluid intelligence, can be taxed in situations of scarcity to such a point where learning is difficult and new information can't get through. For example, consider an adult trying to talk to a teenager wired into a phone, ipod, television and laptop all at the same time. The other things that suffers is executive control, which includes things like planning, starting and stopping, paying attention, and controlling impulses. Will-power is a finite resource, and once it's used up we're more susceptible to giving in to temptations. Scarcity uses up that limited amount of willpower as we try to negotiate our way in a world that is less forgiving.
The authors use the metaphor of a suitcase to introduce the critical issue of slack. Those who have abundance have huge suitcases that they can pack casually, leaving extra space or taking outfits they might not wear. Those in scarcity use much smaller suitcases and have to face trade-offs for everything they decide to take or leave out. Poor people lack the extra space in their lives and live life more on the edge. The consequences of their every decision can be stark and unforgiving. The unexpected things that happen to everybody hurt the poor much more than the rich because of slack. The rich can more easily absorb the unexpected, while the poor have to suffer or borrow to make up for unexpected setbacks.
The authors described a study the did in India with poor peasant vendors who were perennially in debt. They borrowed to keep afloat, paying exorbitant fees and interest to lenders much the same way we do here with payday loans. In the study, researchers paid off the debts of half of the vendors to see if it would make a difference. Sadly, in the long run it didn't. The vendors stayed out of debt for a little while, but because they couldn't absorb the shocks of life at the bottom, they eventually went back into debt just as bad as the other half who had not been helped. The implications of this for anti-poverty programs in other developed nations is not good.
While the authors examine several types of scarcity such as time crunches and dieting, they devote most of the book to money and economic scarcity, which they see as more damaging and permanent. They make a bold statement that goes against what many today believe: living with chronic scarcity causes people to be poor. The meritocratic assumption by many is that poor people make bad choices, so they deserve to be poor. Instead, the poor choices are often caused by lack of bandwidth, and any one of us could fall into the trap with enough scarcity in our lives. This opens all sorts of questions about social and racial justice, and inequality. Are the rich better than the poor? Or just luckier? How much power do people have to influence their fates, and what place is there for personal responsibility when the odds are stacked against you?
Poor farmers don't weed as much as rich farmers,and their crops suffer. Poor students don't attend classes regularly sometimes because of scarcity of resources, and give up once they fall too far behind. Lower income patients don't always take their medicines- not just because of the cost, but also because their available bandwidth is gone and they just plain forget. Parents snap at their kids or neglect them more in poverty because of lack of role models and lack of self-control. The authors don't even mention drug and alcohol abuse, but these scourges tax bandwidth and problem-solving capability the most.
The final three chapters of this book are thankfully devoted to solutions and recommendations. The authors recommend redesigning anti-poverty programs with bandwidth in mind, meeting the tunneling minds of the poor where they can do some good. To help those in scarcity, help needs to be placed close to the tunnels, and assistance has to increase bandwidth so they can focus on things more in the future. Limits need to be small and quick, as distant deadlines fall way outside of the tunnel. Government needs to find ways to create more peace of mind for frazzled single parents with such things as childcare and mass transportation systems. Savings needs to be automated through 401k contributions and bills need to be paid automatically. The authors don't mention it, but the Universal Basic Income, or UBI, would be another thing that would help people break the pattern of borrowing from the future.
In order to keep ourselves from falling into a tunnel of scarcity, we need to preserve slack in our lives. Keep some savings out of reach to handle emergencies. Leave an hour a day at work or more unscheduled to plan, daydream, or consolidate what's been going on. It's tempting in the age of efficiency to book up every single minute and cut every employee who's not busy all the time. Too much efficiency removes all slack, with the effect that we get lost in a fragile world of busyness and constant movement that can crumble with the tiniest unpredictability. Productivity has its limits, and a bit of slack gives us time to recover and be human again.
There are dozens of books about abundance, and how to increase it in your life, but this is the only one I've seen that seriously examines scarcity. Most of the books on abundance teach the law of attraction, a decidedly unscientific theory that what we think about and visualize is what we attract. Rhonda Byrne's The Secret is one of the best known books on this and it is an attractive philosophy. All you have to do to increase abundance is to think about it. While I agree with this up to a point, the studies in this book on scarcity show that it's not so easy to put positive thinking into practice when your rent is two months late and your car needs a new engine. Those that have abundance tend to get more of it, and the same with those in scarcity.
Scarcity is frightening, and much more damaging than I had ever imagined. While it can motivate us to work harder and be more efficient, we have to be careful that it doesn't consume us to the point where our health- both mental and physical is affected. That's easier said than done, but at least this book asks some of the right questions and points to some new ways of thinking on the topic.