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    Scarcity: Why Having Too Little Means So Much
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    Scarcity: Why Having Too Little Means So Much
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    Scarcity: Why Having Too Little Means So Much
    Ebook364 pages6 hours

    Scarcity: Why Having Too Little Means So Much

    By Sendhil Mullainathan and Eldar Shafir

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    About this ebook

    In this provocative book based on cutting-edge research, Sendhil Mullainathan and Eldar Shafir show that scarcity creates a distinct psychology for everyone struggling to manage with less than they need.

    Busy people fail to manage their time efficiently for the same reasons the poor and those maxed out on credit cards fail to manage their money. The dynamics of scarcity reveal why dieters find it hard to resist temptation, why students and busy executives mismanage their time, and why the same sugarcane farmers are smarter after harvest than before.

    Once we start thinking in terms of scarcity, the problems of modern life come into sharper focus, and Scarcity reveals not only how it leads us astray but also how individuals and organizations can better manage scarcity for greater satisfaction and success.

    LanguageEnglish
    PublisherMacmillan Publishers
    Release dateSep 3, 2013
    ISBN9781429943451
    Author

    Sendhil Mullainathan

    Sendhil Mullainathan, a professor of economics at Harvard University, is a recipient of a MacArthur Foundation “genius grant” and conducts research on development economics, behavioral economics, and corporate finance. He lives in Cambridge, Massachusetts.

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    Reviews for Scarcity

    4/5

    116 ratings22 reviews

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    • 4/5
      A compelling exploration of the effects of scarcity of a resource in life and psychology.The authors use various sociological methods to explore the effects of scarcity on a person. They demonstrate that scarcity has the ability to focus the mind: we focus better when we're approaching a deadline, for example. But that scarcity bonus has a cost: we tend to "tunnel," or focus only on one set of issues to the neglect of others. We can become overtaxed in our resource, be it time, money, or both, and find ourselves in a neverending cascade of crises. The authors speak of the value of slack: time or money which can be "wasted," or, alternatively, can provide the breathing space needed to get out of the scarcity trap. Those with greater resources have more slack and thus are able to cope and manage scarcity and challenges more effectively. Such is why poverty is in a different class of scarcity than time or diet: people can decide to not do a project or two and get some time back, a person can quit a diet, but it's nearly impossible to quit being poor. The authors speak of ways in which we can trick ourselves into avoiding the tunnel and to alleviate aspects of the scarcity trap. They do very well to describe and feature the premise of bandwidth: people have only so much bandwidth to give in life, and if it is overtaxed because of financial crises, time management issues, etc., they prove less productive, more prone to mistakes, and liable to burnout. People do well to give thought to their bandwidth and how they can most effectively maintain it through the difficulties of life. Whether you wish to understand why people in poverty act as they do, or if you're convinced you're always too busy or never have enough time or money, this book is worth a read.
    • 4/5
      A clearly written and oddly funny examination of the effects of scarcity on human behavior. They are mindful that a scarcity of money is far more crucial and devastating than the scarcity of time suffered by busy but well-off professionals, but they make a good case that there really are some parallel causes and effects in either case.
    • 5/5
      great great book
    • 5/5
      An economics/behavioral theory book about how scarcity and lack of bandwidth affect people in different ways (for instance, why low income people do things that self damaging, why busy people burn out, etc.). I thought it was really interesting and also made me think critically about being stretched thin in my professional life.
    • 5/5
      Amazingly insightful! Yet another great book written by genius authors!

      1 person found this helpful

    • 5/5
      I am listening to this on CD in my car. Very thought provoking about how scarcity of money, resources, time, social skills impact the nature and quality of our choices.
    • 5/5
      A book I would read again.
    • 2/5
      Ideas and concepts are reasonable, but the implementation is overwrought and appears to be excessive padding. The book cannot decide what it wants to be, beyond just getting itself published.
    • 4/5
      I was really looking forward to reading "Scarcity: Why Having Too Little Means So Much" and it did not disappoint. Having too many things can affect many aspects in your life since the more there is, the less you can focus. It's an interesting concept in relation to how we perceive success and our own happiness.
    • 4/5
      In contrast to other popular science books, here for once is one that acknowledges that there are trade-offs in the world-more of everything is not necessarily better. Much is quite standard for an economist used to thinking about scarce resources, here attention. The novel point is that scarcity itself is costly. Scarcity reduces "bandwith", like a computer overloaded with running programs. An experiment with random assignment of rich and poor show how scarcity itself can be stressful and thus important beyond having fewer resources. Planning ahead is important for success-is there a difference between long-term thinkers and others? Maybe not, since find many who do not think ahead among students at good universities and other resourceful people. But there really are differences among, I would object, the question is what trait or combination of traits is more fundamental. Everyone tunnels, but it is a good idea to structure incentives well inside the tunnel. The authors recognize that we need to prioritize what to incentivize the poor to do, since every activity taxes bandwith. Effects on bandwith are important to consider and also to see as an outcome. E.g. helping a poor mother with full-day child care so she does not have to juggle so many arrangements. Allocated bandwith more important than number of hours, ref Ford and efficiency wages.
    • 5/5
      This book breaks down scarcity and lean times in easy to understand language. It reminds me of FREAKANOMICS. I did not have to know anything about economics. A layperson can understand what the authors are saying. There is humor in it. I laughed but I also was able to see how I do the same things the poor (or the busy) do in regards to good times versus lean times (extra time versus deadlines). I hope that I will make the necessary changes to save during prosperous times (or free time) for the lean times. It opened my eyes to what I am doing wrong and proposes what I can do for the future.
    • 4/5
      Scarcity influences performance in both good and bad ways. It can focus our thinking and our resolve. It forces us to economize and choose. It also takes up our mental bandwidth, often with compounding effects as we borrow and reshuffle. Chronic scarcity also reduces the opportunity for slack, which means any extra draw on time or resources can create unrecoverable backlogs and shortfalls. I found this book interesting and useful for filling a topical gap I haven't seen covered so aptly. There is a lot of focus on poverty. It's an important topic, but I'd like to see a follow up work focused on time management implications and performance.
    • 3/5
      This is a study of scarcity of resources, such as money, time, or even food. It describes the benefits of scarcity, as well as the drawbacks, both of which might be surprising. Using both empirical evidence and anecdotal examples, the authors clearly illustrate why scarcity may be at the root of many seemingly illogical behaviors.Clearly, this study of scarcity has political implications. It can help explain the cycle of poverty, and if politicians were to read this and accept the evidence as it is presented, they might design social safety net programs that were actually effective at lifting people out of poverty. There is even a chapter that suggests ways to improve the lives of the poor. It would be nice if politicians actually used evidence to make policy decisions, but we don't live in that world, unfortunately.The chapter on managing scarcity in organizations seems much more immediately useful. Some simple application of the lessons learned from this book could have immediate payoffs, as the examples demonstrate. Any organization that suffers from overwork, lack of resources, and constant firefighting could benefit.Scarcity, and behavioral economics in general, make for interesting reading. However, I am much more interested in the scarcity mindset -- and its counterpart, abundance -- which is a slightly different thing. Why do so many of us perceive that scarcity exists, and act accordingly, when that is not actually the case? Perhaps that is the topic for a follow-up book.I received a copy of this book through the Early Reviewers' program.

      1 person found this helpful

    • 5/5
      If behavioral science and economics interest you, this is a book that must not be missed. The authors are Ivy League professors and their collaboration has produced a very thought-provoking set of theses about why and how scarcity in any 1 area of life can lead to less bandwidth or cognitive overload across other areas. The scarcity captures our attention and, while such focus can be effective, the flipside is that it also results in a form of tunneling that excludes other potentially important issues, causing stress, distress and sub-optimal situations and experiences. In fact, scarcity begets further scarcity.The book starts with personal examples of people trying to manage work-life issues such as deadlines, finances, exercise, etc., and the impacts on parenting, work effectiveness, team management, personal health, wealth, etc. It then moves into larger issues within organizations, economic policies, critical professions, etc. With each example, the authors illustrate very effectively how to view and address the conflicts between resources and desires - some of these are common-sensical while some are new takes based on experiments and studies.What I am really enjoying about the book is that it is giving me an operative vocabulary for understanding scarcity in my daily work and life. And, not just to articulate/explain but to be able to reflect and consider alternative approaches as well. I'm taking my time with the book because, after every few pages, I find the need to pause and reflect on what I'm learning and how that answers certain questions for me. In that sense, it is a very rewarding reading experience. I am also simultaneously reading Daniel Kahneman's Thinking Fast and Slow (not deliberately planned) and finding helpful synergies across both books.The authors do advise, in the book's introduction, that they consider the "science of scarcity" as a new and evolving school of thought, even though it is closely-tied to economics. There is a hefty Notes/References section at the end which I intend to leverage for further reading. That said, I hope, very much, that the authors are planning a follow-up book as I think there's a lot more to be said/written beyond this excellent primer.
    • 3/5
      Sendhil Mullainathan and Eldar Shafir offer an intriguing look at the complexities of scarcity (of time, money, resources, etc.) and their impact on decision making. Starting with the psychological impact of scarcity, the book then outlines how to harness the power of scarcity for personal and organizational benefit.The book covers it subject well, but I can't help but thinking that much of the material in the book has been covered by others (I'm thinking of Daniel Gilbert's "Stumbling on Happiness") and in a more engaging way. Still, this is a fine overview of the subject and a good read for those interested in organizational behavior and planning.Disclosure: I received a free copy of this book through LibraryThing's Early Reviewer program.
    • 3/5
      "If you want a job done, give it to a busy person." The first part of this book provides interesting insights into behavioral economics research that confirm the old adage. People value things more highly when they are scarce: poor people value money more than rich people, and time challenged people value time more. The later part describes what to do about it, and compares restaurants like Beni Hana, which are very efficient at processing diners, to others that keep people waiting yet have empty tables. The research is illuminating but one is left wanting a bit more. Your mother told you all this a long time ago - who knew she was a behavioral economist?

      1 person found this helpful

    • 3/5
      Not what I expected but interesting nonetheless.
    • 4/5
      Scarcity is not just a physical constraint. It is also a mind-set. When scarcity captures our attention, it changes how we think {…} By staying top of mind, it affects what we notice, how we weigh our choices, how we deliberate, and ultimately what we decide and how we behave. When we function under scarcity, we represent, manage, and deal with problems differently.In this behavioral-economics exploration, the authors suggest that experiencing scarce resources (“having less than you feel you need”; here mostly in terms of money and time) “imposes itself on our minds” and causes profound negative effects on cognition and performance.Like a software program running in the background, scarcity reduces “bandwidth”-dependent functions of intelligence and self-control, and tightens mental focus into a detrimental “tunneling” that excludes valuable information and perspective. And it becomes circular: “Scarcity not only raises the costs of error; it also provides more opportunity to err, to make misguided choices. {…} An initial scarcity is compounded by behaviors that magnify it.”The authors set their thesis in the Introduction and then spend the book supporting it through research, case studies and anecdotes. It’s illuminating in terms of the cognitive effects of scarcity; the personal, organizational, and political implications; some solutions that aren’t currently working well (including education); and some tweaks that might make them work better. And though the authors discuss substantive stuff (poverty), "tweak" is an appropriate word because they show the large effects of small changes. For example, in a recommendation to build in “slack” (i.e. save for a rainy day), even just enough slack to cover a sprinkle can prevent a snowballing descent toward bankruptcy or the collapse of a project timeline. They offer other do-ahead tips to lessen the probability of poor decisions made later in a scarcity mind-set, e.g. make easy (but damaging) behaviors harder to do (say no to ice cream once at the grocery store rather than multiple times at your freezer), and hard (but beneficial) behaviors easier to do (automate payroll savings).Though at times repetitive, this is an illuminating treatment of an important topic, an interesting read with an easy flow.
    • 4/5
      There's a passage from the introduction where the authors tell a colleague about their research for this book, and the colleague replies, "There's already a science of scarcity. You might have heard of it. It's called economics." The authors then go on to defend why their particular focus is unique, though I must admit I was skeptical too. I just didn't see how this subject would go from the abstract to something nearer to my own experience. Fortunately, my concern was unfounded. Some fancy-sounding words are thrown about (tunneling, bandwidth and slack, for example, sound more mathematical than not) but how they're applied in real life is what makes the study of scarcity practical and familiar.I've had a saying for years now, "When you're up and life's going your way, the choices are easy. It's the choices you make when you're down on your luck or in failure's grip that says the most about your character—about who you really are." This book is a partial scientific explanation about why this is true. The sections on poverty, especially, demonstrate just how limited the choices are for the poor. Certain groups of people—those in positions of power, the wealthy, the well-educated—they simply have more resources to weather the bumps in life.I recommend this one. The playing field may never be leveled though that doesn't mean we shouldn't try. What's important is that in the process of doing so we need to be aware that everyone faces life's problems from different starting points and often with a wide variety of advantages and disadvantages.
    • 5/5
      Free LibraryThing Early Reviewer book. Excellent collection of research, much of it new to me, on decisionmaking and why scarcity (what the authors often call “lack of bandwidth”) matters. If you only read one pop culture behavioral economics book this year—sadly, this does not describe me—then I’d recommend this one.Scarcity of time makes us busier because of the decisions about what to put off we make, borrowing from the future; scarcity of money makes us poorer for the same reasons. There’s also some research about other resources, like food (calorie restriction makes us obsess about food, and more likely to make mistakes about our desired consumption), but mostly the authors focus on poverty and, secondarily, time shortages. People who are focusing on their need for money and are asked to do a money-related task do worse on it; the same people do differently on IQ tests depending on where they are in a payment cycle.The bad news: because scarcity changes how we think, narrowing our focus and often outpacing the effects of alcohol or a sleepless night in diminishing our performance, there is very little individuals can do to compensate, though the authors have a few minor suggestions for bringing important considerations “into the tunnel” where scarcity-induced focus goes. Resource-constrained people are both more likely to make significant mistakes and less able to recover for them: a rich person can shrug off a $1000 car repair, while someone without the $1000 may lose her job for want of transportation or take out a payday loan that just keeps driving her further into debt. The good news: because performance is so profoundly affected by external environments, poverty isn’t a fixed condition of people and giving them more resources or taking away barriers (e.g., removing onerous requirements for renewing food stamps) can make them perform better on what were supposedly indicators of individual characteristics. But the changes have to be significant—even a 1-page form may be too much of a barrier given that resource-stressed people spend so much time and energy putting out fires and have almost nothing left for long-term goals; assistance filling out the form or automatic importation of tax and other information by the service provider may be required.The book is packed with neat experiments/research, including a study about perceptions of change, which turn out to be highly relative: for weight, a noticeable difference is about 1/30th of the background amount. If you’re holding 3 pounds, 1/10th of a pound will be noticeable, but if you’re already holding 30, it would take a pound. This is also true of our perceptions of cost: we go out of our way to spend 40% on a $20 book, but often won’t do the same for 1% on a $1000 refrigerator—though poorer people turn out to be better judges of absolute cost in this way. Indeed, the book emphasizes that tunneling can produce efficient decisions for the very short term, which may be necessary—it’s just that it also harms judgment and memory for other, often quite important, issues.One of the striking findings to me was that excise taxes—which are part of the posted price—affect smoking behavior of the rich and the poor equally, whereas changes in the sales tax only affect poor smokers, because poorer people are better at knowing, at a level that affects decisionmaking, that the total price isn’t the posted price. Also, sometimes supermarkets charge more per unit for larger packages, taking advantage of the standard assumption that bulk means discount—but supermarkets in low-income neighborhoods are least likely to do this, because it’s harder to trick people who are tracking every penny in this way. It’s easier to trick people with things like interest rates: the research also shows that people understand payday loans better and borrow less when interest is disclosed in dollars rather than percentages. But the controlled research shows that it is poverty itself—being short in a key resource—that causes the underlying cognitive difficulties, rather than being a simple effect of personal characteristics that land people in poverty, and that’s an important message.
    • 5/5
      I enjoy reading books (think: Malcolm Gladwell’s) that give me a new way of looking at and thinking about the world. In Scarcity, the authors put forth the idea that not having _______ (fill in the blank with just about any resource; time and money are the most obvious) focuses us, for good or ill, on what we lack – and how that can affect decision-making. Borrowing from the research of others, and adding their own pieces of the puzzle, the authors give birth to the new science of “scarcity.” The book is divided into three sections: the scarcity mindset, scarcity creates scarcity and designing for scarcity. It is the first two sections that I found the most fascinating; it’s where the authors are laying out their thinking on the topic with clarity and passion. They use great examples that help engage and enlighten readers who are not experts in behavioral economics or psychology. The third section seems weaker, as if the authors are running out of time, energy and ideas and just want to finish the book. (And if that, indeed, was the case, the authors have given us many a clue as to why that might have happened.) That’s a small complaint, however. Overall, I found Scarcity a compelling read and believe I will think of it as pivotal in my thinking about a variety of topics, with poverty at the top of the list. (Anyone who wonders why poverty is such an intractable problem will wonder no more after reading Scarcity.) The authors take on payday loans, multitasking and term papers provide insight into the “why” of human foibles.
    • 4/5
      The mathematics of queuing theory demonstrates that as resource utilization approaches 100%, queue length and delay increase toward infinity. Systems that are not resilient to congestion reach a point of overload where they experience a decrease in carried load even as offered load increases. We experience this when congested highways encounter “volume delays” – fewer cars per hour get through simply because too many are trying to get through.The authors apply these principles, without the math, to analyzing several important social problems. Scarcity captures the mind; it focuses us on immediate needs while it diminishes the executive control functions we need for impulse control and to make good longer-term priority decisions. Poverty results from a scarcity of money, aggravated by a scarcity of mental bandwidth needed to plan better use of the available money. Busy people, already suffering from scarcity of time, waste even more time because they don’t have the bandwidth to plan the best use of their time. Diets are difficult to sustain because the scarcity of permitted calories causes a focus on what you can’t eat now while a tunnel vision excludes consideration of healthier options. Lonely people suffer from a scarcity of social contacts. The misery increases with each cycle.People embroiled in scarcity do not make the rational decisions predicted by traditional economics; instead they consistently make costly short-term decisions. Payday loans that charge exorbitant fees to lend money until your next paycheck arrives are one remarkably popular and costly example. The present is crushing, the future is abstract. Borrowing goes hand-in-hand with scarcity. Poverty causes failure, not the other way around.The general solution they offer to breaking various scarcity cycles is to introduce slack into the system—capacity that is available to carry unplanned but inevitable surges in resource needs. For example, a chronic shortage of operating rooms at St. John’s Regional Health Center was alleviated when they decided to leave one operating room intentionally unused. The steady flow of unscheduled emergencies was handled by this room without disrupting the scheduling of elective surgery. A focus on efficiency alone has to yield to planning for slack capacity required to handle the unplanned yet inevitable shocks to the system. Henry Ford apparently knew this in 1926 when he famously adopted a shorter 40-hour work week and gained an increase in output over the traditional 60-hour work week.While traditional systems such as payday loans are often designed to exploit poor decision making during scarcity, systems can be redesigned to help people make better decisions during times of abundance. GlowCaps, pill bottles that glow and beep to remind you to take the medicine each day, are one good example.