You Review: Scarcity by Sendhil Mullainathan and Eldar Shafir

Reviewed by Oona Juutinen

Scarcity: Why Having Too Little Means So Much is about what the authors call a “science in the making”: the science of scarcity, the shortage or lack of something, and the effects it has on us. The book touches on so many topics that it’s simply impossible to sum it up shortly and the authors, Mullainathan and Shafir (an economist and a psychologist, respectively), have chosen to tackle several very big questions. Like why is it so difficult to fight poverty? And why do we keep doing things at the last minute? Amazingly enough, the explanations to both question have to do with scarcity.

In order to explore and and eventually explain the exact effects of scarcity, Mullainathan and Shafit introduce several new terms. One of them is “tunneling” – the intense focus created in our minds by the lack of something. Tunneling is the reason someone with financial trouble might not make the wisest decisions when trying to come up with the money to pay the next bills. It also explains the way we might completely neglect a project or a paper for weeks, only to finish it in one feverish flurry once time is about to run out. (Admit it, we’ve all been there.)

And though tunneling can momentarily pump up our productivity, it also harms us. Such a preoccupation in our mind “taxes our bandwidth”, making us unable to think of much else. This renders us less capable of seeing the big picture and thinking ahead. And so, in order to pay the next bill, the poor might take a loan with a too-high interest; the busy are likely to push other important projects aside in order to finish the one with the pressing deadline. Tunneling and taxed bandwidth make us all act in a shortsighted way.

Already the idea itself is fascinating, but the most important chapters of Scarcity are the ones where these concepts are connected to poverty and improving the lives of the poor. With their numerous examples Mullainathan and Shafir clearly illustrate how things like the poor taking ill-advised loans or performing worse in certain kinds of IQ tests are not caused by the poor being somehow less able, let alone stupid. Instead it’s a matter of scarcity: worrying about money has severely taxed their bandwidth and for the time being affected their cognitive capacities. So why are such things not considered when planning social programs? And could this failure be one of the reasons why poverty persists so?

Scarcity is very interesting in general, but it would be worth a read even for these chapters alone.

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Ebook of Scarcity available here.