Scarcity: Why Having Too Little Means So Much

“The biggest mistake we make about scarcity is we view it as a physical phenomenon. It’s not.”

We’re busier than ever. The typical inbox is perpetually swelling with messages awaiting attention. Meetings need to be rescheduled because something came up. Our relationships suffer. We don’t spend as much time as we should with those who mean something to us. We have little time for new people; potential friends eventually get the hint and stop proposing ideas for things to do together. Falling behind turns into a vicious cycle.

Does this sound anything like your life?

You have something in common with people who fall behind on their bills, argue Harvard economist Sendhil Mullainathan and Princeton psychologist Eldar Shafir in their book Scarcity: Why Having Too Little Means So Much. The resemblance, they write, is clear.

Missed deadlines are a lot like over-due bills. Double-booked meetings (committing time you do not have) are a lot like bounced checks (spending money you do not have). The busier you are, the greater the need to say no. The more indebted you are, the greater the need to not buy. Plans to escape sound reasonable but prove hard to implement. They require constant vigilance—about what to buy or what to agree to do. When vigilance flags—the slightest temptation in time or in money—you sink deeper.

Some people end up sinking further into debt. Others with more commitments. The resemblance is striking.

We normally think of time management and money management as distinct problems. The consequences of failing are different: bad time management leads to embarrassment or poor job performance; bad money management leads to fees or eviction. The cultural contexts are different: falling behind and missing a deadline means one thing to a busy professional; falling behind and missing a debt payment means something else to an urban low-wage worker.

What’s common between these situations? Scarcity. “By scarcity,” they write, “we mean having less than you feel you need.”

And what happens when we feel a sense of scarcity? To show us Mullainathan and Shafir bring us back to the past. Near the end of World War II, the Allies realized they would need to feed a lot of Europeans on the edge of starvation. The question wasn’t where to get the food but, rather, something more technical. What is the best way to start feeding them? Should you begin with normal meals or small quantities that gradually increase? Researchers at the University of Minnesota undertook an experiment with healthy male volunteers in a controlled environment “where their calories were reduced until they were subsisting on just enough food so as not to permanently harm themselves.” The most surprising findings were psychological. The men became completely focused on food in unexpected ways:

Obsessions developed around cookbooks and menus from local restaurants. Some men could spend hours comparing the prices of fruits and vegetables from one newspaper to the next. Some planned now to go into agriculture. They dreamed of new careers as restaurant owners…. When they went to the movies, only the scenes with food held their interest.

“Scarcity captures the mind,” Mullainathan and Shafir write. Starving people have food on their mind to the point of irrationality. But we all act this way when we experience scarcity. “The mind,” they write, “orients automatically, powerfully, toward unfulfilled needs.”

Scarcity is like oxygen. When you don’t need it, you don’t notice it. When you do need it, however, it’s all you notice.

For the hungry, that need is food. For the busy it might be a project that needs to be finished. For the cash-strapped it might be this month’s rent payment; for the lonely, a lack of companionship. Scarcity is more than just the displeasure of having very little. It changes how we think. It imposes itself on our minds.

And when scarcity is taking up your mental cycles and putting your attention on what you lack, you can’t attend to other things. How, for instance, can you learn?

(There was) a school in New Haven that was located next to a noisy railroad line. To measure the impact of this noise on academic performance, two researchers noted that only one side of the school faced the tracks, so the students in classrooms on that side were particularly exposed to the noise but were otherwise similar to their fellow students. They found a striking difference between the two sides of the school. Sixth graders on the train side were a full year behind their counterparts on the quieter side. Further evidence came when the city, prompted by this study, installed noise pads. The researchers found this erased the difference: now students on both sides of the building performed at the same level.

Cognitive load matters. Mullainathan and Shafir believe that scarcity imposes a similar mental tax, impairing our ability to perform well and exercise self control.

We are all susceptible to “the planning fallacy,” which means that we’re too optimistic about how long it will take to complete a project. Busy people, however, are more vulnerable to this fallacy. Because they are focused on everything they must currently do, they are “more distracted and overwhelmed—a surefire way to misplan.” “The underlying problem,” writes Cass Sunstein in his review for the New York Review of Books, “is that when people tunnel, they focus on their immediate problem; ‘knowing you will be hungry next month does not capture your attention the same way that being hungry today does.’ A behavioral consequence of scarcity is “juggling,” which prevents long-term planning.”

When we have abundance we don’t have as much depletion. Wealthy people can weather a shock without turning their lives upside-down. The mental energy needed to prevail may be substantial but it will not create a feeling of scarcity.

Imagine a day at work where your calendar is sprinkled with a few meetings and your to-do list is manageable. You spend the unscheduled time by lingering at lunch or at a meeting or calling a colleague to catch up. Now, imagine another day at work where your calendar is chock-full of meetings. What little free time you have must be sunk into a project that is overdue. In both cases time was physically scarce. You had the same number of hours at work and you had more than enough activities to fill them. Yet in one case you were acutely aware of scarcity, of the finiteness of time; in the other it was a distant reality, if you felt it at all. The feeling of scarcity is distinct from its physical reality.

Mullainathan and Shafir sum up their argument:

In a way, our argument in this book is quite simple. Scarcity captures our attention, and this provides a narrow benefit: we do a better job of managing pressing needs. But more broadly, it costs us: we neglect other concerns, and we become less effective in the rest of life. This argument not only helps explain how scarcity shapes our behaviors; it also produces some surprising results and sheds new light on how we might go about managing our scarcity.

In a way this explains why diets never work.

Scarcity: Why Having Too Little Means So Much goes on to discuss some of the possible way to mitigate scarcity using defaults and reminders.

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