[Read This] Scarcity: Why Having Too Little Means So Much

I had the opportunity recently to hear Princeton psychologist Eldar Shafir talk about the research and principles behind his new book (co-written with Harvard economist Sendhil Mullainathan), “Scarcity: Why Having Too Little Means So Much.”  The premise of the book is simple and manages to elegantly explain volumes of research on poverty through one compelling idea:  scarcity.

When a person lacks something they need, the effect of such scarcity changes their thinking and behavior in consistent and predictable ways.  In the case of poverty, we’re talking about people who lack sufficient financial resources.  But the scarcity effect outlined in this book holds true for people who lack other things they need – like time or calories.

The sheer mental bandwidth required of people in situations of scarcity often crowds-out their other concerns.  It may mean repeatedly choosing short term over long term gains.  Navigating resource scarcity requires enormous skill and presence of mind, but it frequently dominates mental bandwidth and leaves an impression on every aspect of a person’s life.  As The Guardian notes, “the alarming conclusion of this book is how completely scarcity colonizes the mind.”   

Shafir’s research has enormous implications for schemes ostensibly designed to ‘help’ low income people.  An Economist review of the book put it this way:

Ingenious schemes to better the lot of the poor fail because the poor themselves often fail to stick to them. The authors describe these shortcomings as the “elephant in the room”—which poverty researchers ignore because it is disrespectful to the people they are trying to help. But if these so-called character flaws are a consequence of poverty, and not just a cause of it, then perhaps they can be faced and redressed.

The authors cite the example of jobs-training programs, which are often woefully under-attended.  Is it that workers don’t want to better themselves?  Rather than starting with pejorative assumptions about participant motives, we should look for the mechanics of scarcity at play.  Since many of these programs are designed so that an attendee is heavily penalized for missing even one class, prospective participants who know they will likely need to miss class for whatever reason (lack of reliable transportation, lack of affordable childcare), opt out entirely.    

There is a popular and enduring cross-cultural tendency to disregard the poor.  Too often this stems from a deep-seated judgement that being poor is a failure of will or of character.  To succumb to such an understanding of poverty is a bit lazy.  ‘Scarcity’ employs scientific methods and experiments to provide powerful insights into the rational motivations of low income individuals and produces compelling explanations for their behaviors under scarcity.