Scarcity: Why Having Too Little Means So Much by Sendhil MullainathanAudiobook: 8 hrs and 47 mins
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 are examples of a mind-set produced by scarcity.
Drawing 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 focus.
Mullainathan 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.
This is Why The Poor Are Happier
How Scarcity Affects the Poor
Scarcity refers to the basic economic problem, the gap between limited — that is, scarce — resources and theoretically limitless wants. This situation requires people to make decisions about how to allocate resources efficiently, in order to satisfy basic needs and as many additional wants as possible. Any resource that has a non-zero cost to consume is scarce to some degree, but what matters in practice is relative scarcity. Scarcity is also referred to as "paucity. There would be no need to make decisions about how to allocate resources, and no tradeoffs to explore and quantify.
In economics, scarcity refers to limitations—limited goods or services, limited time, or limited abilities to achieve the desired ends. Life would be so much easier if everything were free! Why does everything cost so much and take so much effort? Figuring out how individuals, families, communities, and countries might best handle this to their benefit is fundamental to what economics is about. You are probably used to thinking of natural resources such as titanium, oil, coal, gold, and diamonds as scarce.
Sendhil Mullainathan: The Psychological Lives of the Poor
They argue that the poor — and the rich — react similarly to scarcity, whether when confronting starvation or dieting, despite how different those problems are in the real world. The fight to endure with insufficient resources, whether time in the day, food on the table, or money in your pocket, concentrates the mind both for better and for worse. For the poor that shows up everywhere from the recurrence of payday loans in America to the interest rates and borrowing practices of small farmers and rag collectors in India. Making it that day or month is the test, the devil take the hindmost. Scarcity in essence reduces the mental bandwidth that might be accessible for what people not involved in such stressful or survival contests might see as higher priorities or rational choices like planning ahead, using self-control, or solving other life problems, which all lead to trade-offs, crises, and other problems. The authors cite studies that compare the issues of the poor and others facing scarcity with the same loss of mental computing power or IQ points as losing a night without sleep.