Friday, February 25, 2022

Review of Scarcity: Why Having Too Little Means So Much by Sendhil Mullainathan, Eldar Shafir

This review was written by Eugene Kernes

Book can be found in:
Genre = Economics, Behavioral
Book Club Event = Book List
Intriguing Connections = 1) Why Do People Think Differently?, 2) War for Your Attention,
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Elaborate Review


Scarcity can be objective, but it is a very subjective feeling.  It is the feeling of having less than you think you need.  Too little time, money, patients, charm, or just about anything which one feels there is an inadequate supply of.  Scarcity changes the way people think.  Scarcity forces itself on the mind.  Scarcity does provide a very narrow benefit, that it makes the individual better at managing the pressing needs.  The problem is that it costs much more, as everything else becomes neglected.  A little bit more effective at the scarce resource, but much less effective at everything else.  Scarcity taxes the mental bandwidth, making it much harder to think about anything else.  Under scarcity, any errors become magnified while also providing more opportunities to err.  With some slack, failures become less costly.  But too much slack leads to little need to be efficient.  What matters is how scarcity is managed.    

Remarkable effort can be applied when feeling constrained.  As focus goes solely to the object of the constrained.  Creative bursts that are built on previous hard work and experience, can occur under time pressure which requires condensation of those prior efforts for immediate output.  The positive outcome of scarcity capturing attention is called the focus divided.  Scarcity is extremely difficult to fake.  

Scarcity can create positive outcomes by driving focus on what matters most.  The problem is that scarcity causes people to tunnel, as it causes people to neglect other things that might be even more important.  Scarcity inhibits other goals and considerations.  Scarcity captures the mind automatically.  Under the influence of scarcity, there is no consideration for trade-offs, weighing the costs and benefits.  Rather than consider the many benefits that come later, the mind tunnels to limit the immediate costs.  Future benefits are not considered because they are outside the tunnel.  Scarcity does force trade-off thinking that are attached to immediate needs.

Bandwidth is a collective term for various psychological functions such as computational capacity, ability to pay attention, make appropriate decisions, stick to plans, and resist temptation.  What scarcity does is tax the bandwidth, inhibiting many fundamental capacities.  Scarcity generates internal disruptions, preventing clear thinking.  Unmet needs capture attention and become thought of frequently.  Much like being distracted by external stimuli, the mind can get captured by distracting thoughts.  Situations in which there is major distractions, there can be attentional blink.  Seeing of hearing something, but not registering or considering it because the mind is on other thoughts.  Scarcity reduces the available bandwidth.  

Under scarcity, people borrow.  Making it more difficult for future circumstance.  Scarcity is an auto-catalyst, as it creates more scarcity.  Tunneling on current needs, prevents thinking about future needs.  Caught in a scarcity trap means being a step behind and juggling.  Not only having to deal with the situation right before it becomes a major problem, but also having various things to deal with.  To get away from the scarcity trap requires constant and everlasting vigilance.

When there is slack, usefulness becomes less apparent.  Slack has hidden efficiency, as it makes errors and unexpected events less costly.  Slack gives maneuverability.  Scarcity raises the costs of error, while also giving more opportunities to fail.  Harder to do things right when there are so many constraints.  Slack affords the luxury of not needing to think much about the problem.  

Different forms of scarcity share common ingredients, but that does not mean their outcomes are similar.  The ingredients of tunneling, borrowing, lack of slack, and bandwidth tax impact the mind differently depending on the context.  Some forms of scarcity are discretionary, such as choosing to do less under time scarcity.  Discretional scarcity provides a safety valve to manage scarcity’s stress and damage.  But with poverty, changing wants is not a viable option.

The poor are not less capable, their minds are captured by scarcity.  It is not just income that the poor have a problem with.  Poverty is a host of problems.  Dealing even with just one, even just increasing income, will not help alleviate poverty.  For there are a lot of scarcity things on the minds of the poor, and they will have trouble with the others.  The poor also lack slack in their situation, causing any successes to be wiped away by even a single setback.  The irony, is that the poor are better at making ends meet for present circumstance.  

The authors used many experiments.  Some had artificial aspects such as triggered thoughts about hypothetical questions.  But some of the experiments were from real life.  The experiments showed the complexity of the ideas behind scarcity.


An easy to read book, that shows the complexity of the idea, and comes with many ideas to help manage scarcity.  What the ideas lack are practical habits and tools to make them happen, which need to be identified on an individual basis and adjusted for need. 

The authors do not hide the complexity of how scarcity captures the mind, but the problem is there is very little on how to put everything together.  Along the complexity comes some inconsistencies.

Questions to Consider while Reading the Book
•What is the raison d’etre of the book?  For what purpose did the author write the book?
•What are some limitations of the book?
•What is scarcity?
•How does scarcity change how people think?
•What are the benefits of scarcity?
•What are the costs of scarcity?
•What is the mental bandwidth?
•What happens to errors under scarcity?
•What is slack?  How does slack impact decisions?
•What is tunneling?
•Why do people borrow?
•What is the problem with poverty?  
•How were the experiments set up? 
•What is fault tolerance?
•What expectations of the individual do training programs have?

Book Details
Edition ISBN:  9780805092646
Pages to read:   234
Publication:     2013
1st Edition:      2013
Format:           Hardcover

Ratings out of 5:
Readability    5
Content          5
Overall           5