Tag Archives: Economics

Book Review – Scarcity: Why Having Too Little Means So Much

I have a confession. I have a high school diploma, an associate’s degree in general education, a bachelor’s degree in history, and a master’s degree in public history. I’m not uneducated by any stretch. But I’ve never taken an economics course. Never. Not micro, not macro, not even a 101 intro class. It’s a hole in my learning, for sure.

Recently I downloaded the audiobook¬†Scarcity: Why Having Too Little Means So Much by Sendhil Mullainathan, and Eldar Shafir. I was expecting a social justice book. What I got was a mixture of economics, psychology, sociology, social justice, and more. Sendhil Mullainathan is a behavioral economist, and Eldar Shafir is a psychologist. The book reads like an academic paper in some regards, but manages to be approachable at the same time. Like I said, I don’t have any background in economics. Yet I found their thesis fascinating.

The main argument of this book is that scarcity, defined as not having enough (be it time, money, food, companionship, or really any basic need), causes people to “tunnel” or focus in on what they lack. This is a good thing in the short-term. We’ve all experienced how productive we can be with a deadline approaching, or how thoughtfully we spend our money when our account balance gets low. But long-term scarcity has negative consequences.

People experiencing long-term scarcity loose sight of things that are approaching. They’re so focused on their immediate need that they can’t see the big picture. They put off things that may be more important, but which are less pressing. They don’t invest in the things they should. They take on future commitments that they’ll regret, like bad loans for the money-scarce, and future projects for the time-scarce. These commitments, in turn, lead to more problems in the future and result in falling further and further behind.

What I enjoyed about this book was the way it considered the psychology of human behavior. Mullainathan¬†and Shafir explain that within the tunnel, when we’re so focused on our immediate problems, we actually lose some of our cognitive ability, or bandwidth. This is why stressed-out parents are impatient with their kids, and why drivers on the phone get in more accidents. Your mind can’t be divided without losing processing skills.

Okay, so we all know that being too busy, multi-tasking, or being stressed out make it hard to focus, but for people living in poverty, this is a constant problem. Their minds are always divided between the tasks at hand and the worry in the back of their minds about how they are going to make ends meet, put food on the table, etc. It’s like trying to live your life while on a constant phone conversation at the same time. People living in chronic scarcity constantly struggle to see the big picture and juggle everything on their minds.

The last part of the book talks about how we can avoid falling into scarcity traps by creating margin in our lives. Margin helps us handle the kind of every day shocks that can drop us into seasons of scarcity. But even more than that, the closing section suggests ways that aid programs, policymakers, and others can work within or around peoples’ scarcity tunnels and lack of bandwidth to make more of an impact on their lives. I love this because they don’t just suggest throwing more money at problems, but in helping aid dollars go further and helping people get out of the downward spiral of scarcity.

If you work in social services, policymaking, or the non-profit sector, I highly encourage you to read this book. It will help you to understand what scarcity does to the human brain, and how to work with those challenges to build better programs and services.