Scarcity: Why Having Too Little Means So Much PDF/EPUB

Scarcity: Why Having Too Little Means So Much I once heard Sendhil Mullainathan speak at an event in DC, and he was smart and engaging He s a MacArthur Foundation genius, a Harvard economist, and a TED speaker He has a wry sense of humor and tells anecdotes from his personal life to make his economics work come alive And all of that is in this book, written with his long time collaborator, Eldar Shafir, who s a Princeton psychologist.Still this book was a bit of a disappointment, possibly because I expected so much A lot of the conclusi I once heard Sendhil Mullainathan speak at an event in DC, and he was smart and engaging He s a MacArthur Foundation genius, a Harvard economist, and a TED speaker He has a wry sense of humor and tells anecdotes from his personal life to make his economics work come alive And all of that is in this book, written with his long time collaborator, Eldar Shafir, who s a Princeton psychologist.Still this book was a bit of a disappointment, possibly because I expected so much A lot of the conclusions are, well, obvious The book s entire thesis can be summarized as People make bad decisions when they are resource constrained, whether the resources in question are money, time, food, or something else Some of it recaps what has been said before about hyperbolic discounting in economics.The book s chapters go like thisIntro definition of scarcity and overview of its consequencesChap 1 The good scarcity can cause focus The bad focus can mean inattention to other things.Chap 2 Scarcity causes an internal disruption that makes it harder to make good decisions.Chap 3 Slack the opposite of scarcity allows better choices and reduces the bad consequences of failiure.Chap 4 Poor people are sometimesrealistic about estimating costs, because they have to be.Chap 5 Borrowing when you re short of cash leads to a descending spiral of debt.Chap 6 7 Poverty is a vicious circle of scarcity leading to bad decisions leading to scarcityChap 8 Poverty can be alleviated by creating slack, such as extra cash or day care to createtime.Chap 9 Efficient use of resources and division of labor helps organizations becomeefficient.Chap 10 Efficient use of self control helps with life issues.On the positive side, the book contains some interesting stories, and a rich set of endnotes to track down the many studies the authors cite On the negative side, the book keeps talking about how mainstream economics is traditionally for example, that people are rational decision makers , just so the authors can tear down the mainstream view Economists come across as completely clueless, which maybe they are Is it really surprising that when you re poor, hungry, and stressed, that you would make less than rational decisions Mullainathan and Shafir seem aware of this problem with the book Chap 2 contains some defensive passages about how bad decisions under scarcity are different from bad decisions due to stress The explanation isn t compelling, and unlike most of their other claims, that passage doesn t have lots of studies to back it up.The most interesting study in the book is one about street vendors in India who are in perpetual debt from a loan sell repay cycle Chap 6 The researchers give the vendors a cash grant to pay off their debts, which should have allowed them to start saving a little and eventually eliminate the need for borrowing altogether One by one, though, the vendors fall back into debt Any non economist would see this as challenges of personality or habit It s the same reason why couch potatos find it hard to get off the couch and exercise everyday The authors, though, somehow turn this into a story of scarcity How it was because there wasn t enough slack Why don t they do an experiment where they give everyone a little extra cash to save They don t, though, and I d bet good money that with additional cash, the vendors would still have fallen back into debt eventually What the vendors need is some training and hand holding.This study illustrates one of the biggest problems with the book In order to make a case for the centrality of scarcity, the authors go too far Not every bad decision is about scarcity Sometimes, people are dumb, and sometimes there are dumb people And sometimes, people are smart, and there are also smart people At one point, the authors write, all people, if they were poor, would have less effective bandwidth Not sure about that My grandmother managed seven kids and ran a shop, but she was dirt poor until her children grew up 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 examples of a mind set produced by scarcityDrawing 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 focusMullainathan 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 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, 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 eventime 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 While I find the topic very interesting and the science and research put into understanding the scarcity factor intriguing, I think the book was overly long, repetitive and quite frankly circular Many of the points and ideas made were well described early in the book and yet 70% of it was just regurgitating the same themes Many books are written in such manner especially when they deal with non fiction topics and this book is no different Editors must be gunning for volume and as such authors While I find the topic very interesting and the science and research put into understanding the scarcity factor intriguing, I think the book was overly long, repetitive and quite frankly circular Many of the points and ideas made were well described early in the book and yet 70% of it was just regurgitating the same themes Many books are written in such manner especially when they deal with non fiction topics and this book is no different Editors must be gunning for volume and as such authors are forced to write the same thing over and over again in different words The book did a good job explaining the issue and yet did not offer much on terms of strategies to handle In short good albeit long and repetitive description of the problem and almost no solutions Advice to new readers You can bail out after the first third and not miss anything of substance I stuck to the end and can attest to that This extremely important book takes a close and counter intuitive look at how the brain behaves when confronted with the lack of something That something is often money, but it can also be time, or will power, or human connection In a nutshell, it explains how the brain s default method of creating immediate solutions to urgent problems can very often create a much larger problem down the road.The reason for this is that urgent problems causes the brain to tunnel, which takes a tremendous amou This extremely important book takes a close and counter intuitive look at how the brain behaves when confronted with the lack of something That something is often money, but it can also be time, or will power, or human connection In a nutshell, it explains how the brain s default method of creating immediate solutions to urgent problems can very often create a much larger problem down the road.The reason for this is that urgent problems causes the brain to tunnel, which takes a tremendous amount of cognitive processing capacity Focus on the immediate problem creates a tax on processing power that impairs the ability to step back and take a wider view of the situation in particular, it causes us to underestimate the long term costs of what may seem on the surface to be a good short term solution.This book is written in a fairly academic style and is somewhat repetitive in the first half While it is not a self help book, it does contain critical information on how we can counteract mental habits that keep us in a scarcity loop It also contains scores of real world examples of the bandwidth tax in action, from farmers in India to small business owners in the Caribbean to air traffic controllers in the Midwest That latter group offered a particularly unique example of the bandwidth tax on days when flights were backed up and they were required to manage a heavier load of airborne planes than normal, they demonstrated decreased ability to parent their children in a consistent fashion.I originally assumed this would be an academically interesting book that would be most useful to those who develop aid programs It is definitely that, as the authors address how many programs designed to help people get out of poverty fail because their structure contributes to a worsening of this bandwidth tax In reading it, however, I also sawandof myself in its pages Though it took me weeks to finish it because I was trying to put out so many fires at work the irony of it ending up overdue at the library was not lost on me it gave me tremendous insight into how I had ended up so far behind and what I need to do to fix that Thanks to Richard for encouraging me to bump it up my list There is no scarcity of books about the brain and psychology and emotion In fact, the shelves are groaning with them But here s a psychological take on what you might regard as a problem of economics and that makes it genuinely fascinating So it s a shame that it doesn t work better as a book but this is one of those titles that you will want to read despite that.The authors Sendhil Mullainathan and Eldar Shafir look at the nature of scarcity and, crucially, the effect it has on human per There is no scarcity of books about the brain and psychology and emotion In fact, the shelves are groaning with them But here s a psychological take on what you might regard as a problem of economics and that makes it genuinely fascinating So it s a shame that it doesn t work better as a book but this is one of those titles that you will want to read despite that.The authors Sendhil Mullainathan and Eldar Shafir look at the nature of scarcity and, crucially, the effect it has on human performance You might hear the term and think it s about going hungry and that is one example of scarcity but they also look at what happens when money, time and even friends are in short supply Although they aren t exact analogues, all have related impacts on us as human beings.By referencing the best available studies and doing a few of their own , the authors come to some important conclusions Scarcity isn t all bad It concentrates the mind gives us focus But there is a price to pay for being in that tunnel It means that other essential aspects of life get ignored And, most strikingly, what the authors call bandwidth a combination of cognitive ability and ability to concentrate is reduced They call this a bandwidth tax.So far, so engaging We aren t just offered the symptoms and diagnosis, but also some attempts to counter this Pointing out, for instance, that it s better for people to make decisions and learn things when they are going through a good phase than through scarcity However I have two problems with this as a book One is that while it s no textbook, it really isn t particularly readable it takes a really interesting subject and makes it a bit dull And the other is that there are strong signs that this is really a magazine article, not a book For page after page the same thing is said in subtly different ways If I see the word bandwidth again today, I ll scream The meat of this book could easily fit in 4,000 words.So, paradoxically, I do urge you to read the book, as the subject is well worth exploring but I can t promise that you will enjoy the experience The premise of the book is that we have a limited amount of mental bandwidth and we use a bit of that bandwidth each time we address a problem Poverty, time pressure, and responsibilities all tax our mental bandwidth, even when we are not actively thinking about them The value of this text is not in highlighting that pressure from outside factors affects us all the time, but rather in explaining the importance of considering bandwidth in designing programs, assigning tasks, etc Scarcity prov The premise of the book is that we have a limited amount of mental bandwidth and we use a bit of that bandwidth each time we address a problem Poverty, time pressure, and responsibilities all tax our mental bandwidth, even when we are not actively thinking about them The value of this text is not in highlighting that pressure from outside factors affects us all the time, but rather in explaining the importance of considering bandwidth in designing programs, assigning tasks, etc Scarcity provides a lexicon that is severely lacking from the conversations of social entrepreneurs, behavioral economists, and managers alike A quick read, I highly recommend this to anyone who has ever been perplexed by the disconnect between knowing what to do and being able to do it Some people say poor people have poor ways, the implication being that they are poor because of their poor ways These authors maintain that the reverse is true, that people have poor ways because they are poor They say it can be explained by the psychology of scarcity.What will suprise many readers is that rich or non poor persons manifest the same behavior attributed to poor people when subjected to situations of scarcity e.g lack of time In other words, the rich often have poor ways to Some people say poor people have poor ways, the implication being that they are poor because of their poor ways These authors maintain that the reverse is true, that people have poor ways because they are poor They say it can be explained by the psychology of scarcity.What will suprise many readers is that rich or non poor persons manifest the same behavior attributed to poor people when subjected to situations of scarcity e.g lack of time In other words, the rich often have poor ways too, but they have enough money of cover the fiscal mistakes However, the psycholgy of scarcity can show up in scarcity of time and friends as well as money and the psychology of scarcity can come into play for all social and economic classes.This book finds surprising links and similarities between the stressed out time poor of the west with the truly poor dollar a day workers of the developing world Many wealthy people who are critical of the behavior of poor people will be surprised to learn from this book that they share the same behavior patterns as the very poor when in an environment of scarcity The psychology of scarcity and its resulting behavior can be witnessed when there s a scarcity of time, money, or relationships with others Two terms repeatedly used in this book are bandwidth and tunneling Bandwidth refers the limited number of things that any human can focus on at one time The results of this limited bandwidth leads to a kind of cognitive tunnel, limiting what a person is able to focus on at one time Limited bandwidth and tunneling depletes self control and leads to impulsive and sometimes dumb behavior Unfortunately this behavior can spiral into a trap of worsening scarcity.The authors bring an abundance of examples from their respective fields of study to support their descriptions of the psychological and behavioral consequences of the feeling of scarcity Sendhil Mullainathan is a behavioral economist and Eldar Shafir is a cognitive psychologist Scarcity is one of those books that explains some aspect of the world in a way you hadn t though of before, in an accessible form, and backed by research results I d put books like Thinking, Fast and Slow, Antifragile Things That Gain from Disorder, and The Difference How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies in this category They stretch your expectations and your perspectives.In this book, scarcity is considered in a variety of forms, including a lac Scarcity is one of those books that explains some aspect of the world in a way you hadn t though of before, in an accessible form, and backed by research results I d put books like Thinking, Fast and Slow, Antifragile Things That Gain from Disorder, and The Difference How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies in this category They stretch your expectations and your perspectives.In this book, scarcity is considered in a variety of forms, including a lack of wealth poverty , time overcommitted , food hunger and social contact loneliness Through a variety of experiments from a behavioral economic point of view, the authors demonstrate that all of the varieties of scarcity share certain characteristics and that the results manifest themselves in ways that we might not have expected However, they particularly focus on poverty, with good reason, because it is a form of scarcity that affects both individuals and society the most.As an example, take the idea of the lack of success of the poor Are they not successful because they are poor, or are they poor because they are not as capable Or both Your answer to that may depend on your worldview or your politics, but it is a question worth asking, because without a solid answer, we have very little basis for finding solutions.The authors decided to see if someone s level of wealth would affect them intellectually To do this, they started by giving a random group the scenario You car needs 300 in repairs, the insurance will cover half Would you get it fixed How would you decide and have them talk about that decision Immediately after this, they were given test of general intelligence Raven s Progressive Matrices to be exact it s an IQ type test In this case the result was that both poor and prosperous people come out very similar in their results Their cognitive capabilities were nearly equal.They then changed the scenario to represent a larger financial hurdle You car needs 3000 in repairs, the insurance will cover half Would you get it fixed How would you decide They presented this to a similar random group of subjects and the results were striking After that scenario, the poor people performed significantly worse than the prosperous people How much worse An equivalent of 12 13 IQ points, or a greater effect than taking the test after being forced to stay up all night with no sleep.Note that this was at a subconscious level the scenario is hypothetical in both cases However, the mere distraction of the scarcity of money causes significant degradation of intellectual functioning Moreover, the same effect happened when they run a similar test on executive function that is, self control and willpower With the first scenario, no difference between poor and prosperous With the second, significant differences.So, what does that tell us That when we see the poor making choices that are clearly not helping their lives, or performing poorly in educational settings, or getting caught in behaviors that are downward spirals, we need to take into account that there are invisible for significant cognitive deficits that any one of us would be under if we were in the same financial circumstances These are not character flaws, they are deeply embedded ways that the human brain deals with scarcity We find similarly irrational behaviors in successful people whose scarcity involves lack of time, and not lack of money.This book is filled with experiments like this and the results, and the authors have done an admirable job conducting them to address some of the possible confounding factors They also do an excellent job of communicating their work in a readable form If you want a fantastic lens with which to examine some of the most perplexing questions facing our world today, this book is an excellent choice.As is usual with books like these, I thought that their solutions part of the book was weaker than the discussion What books like this really spur and why they are so important when they become popular are new conversations and thoughts among many people that lead to a shifting of general perception, and ultimately, people using this perspective to find solutions that are far beyond what the authors would have ever dreamed As is usual for my reviews, I try and reserve my 5 star reviews than cause me to rethink something significant in the world that I had taken for granted before Although it s not perfect, this book fits that descriptions to a tee Proposes that scarcity undermines rationality in consistent but unrecognized ways across human life The schedule, the diet, the budget, the farm, the attempt to connect The butter was spread a little thin, but I appreciate that this book attempted to be humane about human failings I also appreciate that it did not fall into the Malcolm Gladwell smugness about how we re doing it wrong, without any help on doing it right Mullainathan and Shafir at least tried, though their suggestions did soun Proposes that scarcity undermines rationality in consistent but unrecognized ways across human life The schedule, the diet, the budget, the farm, the attempt to connect The butter was spread a little thin, but I appreciate that this book attempted to be humane about human failings I also appreciate that it did not fall into the Malcolm Gladwell smugness about how we re doing it wrong, without any help on doing it right Mullainathan and Shafir at least tried, though their suggestions did sound a little like try not being poor While it did not morally blame us for our failings, it still located causes in us I am skeptical that is really what s driving the poverty of the street vendors in Chennai


About the Author: Sendhil Mullainathan

Is a well known author, some of his books are a fascination for readers like in the Scarcity: Why Having Too Little Means So Much book, this is one of the most wanted Sendhil Mullainathan author readers around the world.


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