Scarcity by Sendhil Mullainathan and Eldar Shafir is one of the best books I’ve read in a while! It’s a book about psychology related to “scarcity,” a broad array of conditions under which any resource is lacking.
Scarcity includes scenarios more than poverty. If you are a busy person, then time is scarce for you. Similar to what poor people do with money (or a lack thereof), busy people “borrow” time. You put off work planned for today to accommodate a more urgent project. Then come tomorrow, you need to pay “interest” for that work you owe. It could be an apology, or spending more time since the momentum is lost, or a delay of bigger scale team effort in which you play a part.
The book introduces some terms associated with scarcity that are universal no matter what is scarce. For example, “tunneling” explains why people work more efficiently as the deadline closes in. “Bandwidth tax” throttles willpower, so a preoccupied fast food employee worrying about rent always forgets to smile to customers. “Slack” is like the opposite of scarcity. Rich people have more slack for impulse buys because the money does not hurt essential life expenses. Start a task early to give yourself slack – time and room for error. People are often too optimistic estimating ETA, and there are likely unforeseen challenges lurking beneath the surface.
The authors conducted experiments to show people’s behaviors with regard to scarcity. One smart experiment design is to randomly assign the status of being rich or poor, eg. give contestants of Family Feud-ish games different time limit to answer questions. People’s reactions towards these artificial constraints or abundance correspond to real-life observations. For example, payday loan is a multi-billion-dollar industry because people short on money today cannot see clearly the hefty price they have to pay tomorrow.
In conclusion, “Scarcity” is a good read beyond my first impression. One would easily think it’s a book discussing poverty, or worse yet, criticizing how low-income individuals manage money poorly. The content of “Scarcity” is way deeper than that. Through experiments the authors even demonstrated almost everyone acts similarly under artificial scarcity. Ie. the behavioral “problem” is universal not because of character, but due to scarcity itself.
Are you interested? Have you read it or a similar book? Leave your comments and thumbs up below!