Scarcity: Why Having Too Little Means So Much

Scarcity: Why Having Too Little Means So Much

Sendhil Mullainathan, Eldar Shafir

Language: English

Pages: 143

ISBN: 7213063499

Format: PDF / Kindle (mobi) / ePub

A surprising and intriguing examination of how scarcity—and our flawed responses to it—shapes our lives, our society, and our culture

Why do successful people get things done at the last minute? Why does poverty persist? Why do organizations get stuck firefighting? Why do the lonely find it hard to make friends? These questions seem unconnected, yet Sendhil Mullainathan and Eldar Shafir show that they are all are examples of a mind-set produced by scarcity.

Drawing on cutting-edge research from behavioral science and economics, Mullainathan and Shafir show that scarcity creates a similar 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 sugarcane farmers are smarter after harvest than before. Once we start thinking in terms of scarcity and the strategies it imposes, the problems of modern life come into sharper focus.

Mullainathan and Shafir discuss how scarcity affects our daily lives, recounting anecdotes of their own foibles and making surprising connections that bring this research alive. Their book provides a new way of understanding why the poor stay poor and the busy stay busy, and it reveals not only how scarcity leads us astray but also how individuals and organizations can better manage scarcity for greater satisfaction and success.

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The Rational Optimist: How Prosperity Evolves

The Wealth of Nations (Bantam Classics)

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Economic Development: What Everyone Needs to Know

Basic Economics: A Citizen's Guide to the Economy





















Alex said, “but not 50 percent more!” Alex had made a clear choice: he decided he would suffer through ten or more minutes of heat and dirt in order to avoid paying a 50 percent surcharge. Now, suppose in another context, Sendhil had proposed, “Alex, I want you to spend ten minutes in a sauna with your clothes on, with the sound of car horns blaring in your ears. Oh, I’ll also occasionally throw some dirt in your face. But to make it worth your while, here’s fifty cents.” Alex would likely not

behave more “rationally.” They are closer in this case to the rational economic ideal, closer to homo economicus. This not only tells us something about poverty; it also tells us something about behavioral economics. That money is valued in relative terms is considered a classic finding in behavioral economics: presumably something that characterizes everyone’s thinking. Yet here we see that scarcity overturns—or at the very least waters down—this classic finding. In fact, scarcity alters many

afford that price. Without engaging in real trade-offs, the frugal, like all those who live with abundance, have a hard time making sense of a dollar. So they rely on context. Such was the case with Alex and the rickshaw. He sold his time so cheaply (and inconsistently) because he used his context to determine the “reasonable” price for a rickshaw ride. Alex was frugal but not poor. A friend of ours, also a behavioral researcher, recently purchased a cognac truffle for $3. When later asked if it

similar across different domains, its impact can be quite different. This will be particularly true when we analyze the case of poverty. The circumstances of poverty can be far more extreme, often associated with contexts that are more challenging and less forgiving. The bandwidth tax, for example, is likely to be larger for the poor than for the busy or for dieters. For this reason, we will later pay special attention to the poor. In a way, our argument in this book is quite simple. Scarcity

Orbiter slowed down too much and got caught in the gravitational pull of Mars. For a project of this significance, this was a comical, if highly consequential, blunder. Errors are inevitable. NASA engineers know this. This is why endless checks and tests are put in place. So what happened? In the months leading up to the launch, the entire team at the Jet Propulsion Laboratory was running behind schedule. They were understaffed and had failed to turn their attention fully to all the project

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