Scarcity: The New Science of Having Less and How It Defines Our Lives

Does having too little money affect your life? Of course, it does. I started reading this book more out of curiosity as to what the authors could possibly say beyond that poverty affects your lifestyle adversely.This truly worthwhile book goes way beyond financial poverty and beyond the superficial effects of not having enough money to pay your bills.Scarcity comes in many forms - money scarcity, time scarcity, companion scarcity, calorie scarcity, sleep scarcity, and on. Scarcity can make us more effective and less effective. Either way it affects our functioning in profound ways.When you have a deadline, something happens to your brain that does not happen when you do not. The deadline forces you to choose to complete the report over browsing the internet or playing with your new puppy. The intense focus you have is a function of time scarcity, and ignoring distraction is not a choice.Self-imposed deadlines come with a different level of choice; you can always decide not to observe self-imposed deadlines in favour of browsing, or the puppy.In studies of business meetings, Connie Gersick observed that the first half of meetings is diffuse. Much of the conversation strays off the topic. The second half of the meeting nearly always produces more progress as the group realises they are running out of time.A study of the effects of location was undertaken on a New Haven school situated next to a noisy railway line. It revealed that only one side of the school was affected by the noise. 6th graders whose classes were on the noisy side where academically behind the students on the quiet side - by a full year!That interruption affects cognitive ability is no surprise, but how severely it does, is shocking.In a recent study, students were asked to come to the laboratory around lunchtime not having eaten for four hours. Half the group was served lunch, and the other half told to begin the experimental work.Words were flashed on a screen for one third of a second and then students were asked to identify the word they saw. Was it ‘rake’ or ‘take’. One might expect the hungry students to perform more poorly, but that was not the case. They did as well as the satiated students. However, they did better on words related to food.In this case of calorie scarcity and in others cases of scarcity, brain functioning was affected at a level beyond conscious awareness.Even theoretical decision-making is affected by scarcity. People in different economic strata were give this problem to solve: Your mechanic informs you that your car requires a repair that will cost $300 half of which will be covered by your auto insurance. You can still drive the car, but eventually the effect will necessitate a much more expensive repair.Both those subjects coming from a lower and an upper economic group said they would do the immediate repair. The sensible decision.However, when the sum involved was changed to $3000 the reactions of the different economic strata was stark. Those in the upper economic groups said they would repair now to avoid the higher cost later. Those in the lower economic groups said they would wait to repair the vehicle.The salient point is that this was a hypothetical question – it was not their car and not their money. They may not even have owned a car!Experiencing money scarcity would mean they had monetary issues close to top of mind. Once the experimenters stimulated that part of the brain, the all-too-real non-hypothetical thinking about scarcity came to the fore. Coming up with $ 1,500 was beyond them, the credit card was exhausted.. The minimum payment due is so large they would not be able to meet even that this month. Whom can they borrow from to this time?A little stimulation raises a racket in their brains, and this racket affected their performance on a hypothetical problem! This is little different to the debilitating effect of a noisy train outside of a classroom.The better off had no such stimulation, and so they could answer the hypothetical question more reasonably. The poor answered the question unreasonably. One could conclude that they were less intelligent or less capable of rational thought.The waiter brings you a still water when you asked for a sparkling water. Is he concerned about his mother or his rent at a level that is pre-conscious? What does that do to a student writing an exam? Is it scarcity that is distracting and causing the poor performance and not the lack of intelligence or diligence?The implications of scarcity go far beyond what I had thought. Therein lies the value of this book. It will make you think about the impact of various types of scarcity in ways you probably have never thought about before.Readability Light --+-- SeriousInsights High -+--- LowPractical High -+--- LowIan Mann of Gateways consults internationally on leadership and strategy

Extraordinary!

Economics as a discipline examines the allocation of scarce resources. It focuses on the division of output among the factors of production including labour and capital. It assumes for the most part that the individuals who make up an economy act consistently in time; this is a dubious assumption. We all know that our tired selves can be more irritable and short sighted than our post holiday selves. Scarcity is an explorations of some of the psychological aspects of how we manage our scarce time and our scarce resources. It is an important addition to the way of thinking about decision making from a behavioural standpoint.Scarcity- Why Having too little means so much, is split into 3 parts. The first part is called The Scarcity Mindset. This chapter sets the stage by familiarizing the reader with themselves by providing examples based around looming deadlines. The authors remind the reader how they can focus on the task at hand with greater efficiency with a looming deadline compared to one that is far in the future. At the same time though the focus that comes with a due date comes at the expense of peripheral awareness and we tend to tunnel. The authors give examples of how when tunneling we ignore most things not immediately relevent to the task at hand to our own peril (the authors use the examples of fireman fatality arising from not fastening their seatbelts, as that is outside one's tunnel). The authors also introduce the idea of bandwith from a psychological standpoint. By this they mean how much mental capacity we can run and the spillovers from over taxing ourselves in terms of efficiency and productivity.The authors get into the next session by going one step further in exploring the repurcussions of over taxed bandwith. The authors introduce the idea of scarcity begets scarcity as one's efficiency is lowered in such a state of scarce time which ends up perpetuating the trap. They use commonsense examples like packing a suitcase and the differences in attitude when packing a large suitcase and a small one. The concept of slack is introduced and the large asymmetry that arises due to having slack. They discuss the irrational economics of borrowing at high rates from predatorial lenders but the inevitability of it when faced with having no economic slack. The cases used create natural sympathy from the readers as the examples are easy to associate with. The authors discuss the scarcity trap and the reduced efficiency while out of bandwith perpetuating the scarcity trap. The authors also discuss poverty through this lense and articulate how poverty is self-sustaining through reduced individual efficiency and overtaxed bandwith.The authors then discuss policy responses to try to prevent scarcity traps. They focus on ideas for trying to stop people from overtaxing their bandwith. Occasionally the solutions come in unintuitive forms like forcing slack to allow for the unexpected on a structural basis. By this they describe a solution to perpetually full hospital calendars was found by leaving operating rooms unconditionally open for emergeny use only to keep scheduled operations on time thus reducing the need for constant rescheduling and delays. Such a simple solution of forcing slack for resource usage increased overall efficiency by over 10% despite from a scheduling perspective appear to force more surgeries into the future. The idea the authors keep on reinforcing is that the lost efficiency on low bandwith work can be less productive in aggregate than more targeted work on higher bandwith (ie 10 ours of working unproductively is less valuable than 8 on high efficiency).Scarcity discusses the important reality that we act inconsistenty and that inconsistency is often a function of our mental state which can broadly be put into a state of scarcity or abundance. Each of these states creates different behavioural outcomes of complacense for abundance and low efficiency for scarcity. Recognizing this behavioural fact should increase our sympathy for the overworked and need for regiment for those with excess. Policy responses to activities surrounding scarcity should appreciate the psychological aspects of what scarcity does to ones mental state rather than purely on the scarce good itself. I think the book is articulate in clear in presenting the psychology of scarcity. It is not particularly revolutionary and most of us already know this, but by introducing it in an economic sense it creates a new avenue for work and policy focus.

GOOD: This book was certainly insightful. The similarities between people whose heads are full with not having enough time, and those whose heads are full with not having enough money are linked strongly and convincingly by this discussion. It gives a new angle on pay day loans, an important problem in the modern west. The general theme of the book is reasonably convincing. I really liked reading about some of the experiments that were discussed, which often gave surprising and counter intuitive results. If you want to learn how strongly the scarcity of something important can affect your mind and life this book is a good insight.BAD: However, despite being a fresh view on an interesting subject I only finished reading it through stubbornness. By the end, every few paragraphs are introduced and concluded with summaries that feel extremely familiar. This book could easily have been 25% shorter and said all the same things. Alternative factors which could explain phenomenon discussed were rarely seen and fairly quickly dismissed, which left me feeling unconvinced when some of the weaker arguments came around. And although the book starts with a promising claim that the psychology of scarcity of all things works in a similar way, the focus was heavily on money and time.

The authors - an economist and a psychologist senior in their respective fields - set out to prove that scarcity, whether that be a dearth of funds, calories or time, focuses the mind to the extent that it produces positive short-term and often negative long-term results. While this is hardly a jaw-dropping theory, their experiments yield interesting results in the magnitude of focus, or in their speak, how 'scarcity' reduces 'bandwidth' (cognitive ability) causing the sufferer to 'tunnel', such as in the case of someone in debt who takes out a high-interest loan just to pay the rent, or a busy professional who puts off all impending deadlines in favour of the only one due today. Bringing a lack of something top of mind can reduce your abilities at other tasks as much as the deprivation of a night's sleep, and the pair argue cogently that behaviours often attributed to other causes - stress, lack of will, fecklessness - can be laid at the door of our innate subconscious reactions.Accessible, compelling stuff, and the experiments and anecdotes are fun (I am an 'Angry Blueberries' convert) and if I haven't given it the 5-star treatment it's only because I think their claims for scarcity as a new science, and the universal driver of so many things, may prove to be a little too grand and sweeping. Their suggestions for counterbalancing your tunneling instinct are solid, requiring only a bit of thought, but for anyone aware of what they lack, the preceding chapters on the consequences of this behaviour are enough to nudge the reader towards change.

This book made me realize how important it is to have savings. Money is very important not because you can buy things with it but because it can help you get a calm mind and not to worry about surviving from day to day. If you have no daily worries then you can concentrate easier on the big picture of your situation.

fascinating, absorbing revelatory study of a subject that touches and affects us all. Time, money, resources, diet - we have all experienced scarcity at some point, but how does this affect us on a daily basis? why is it so hard to break out of the vicious spiral of deprivation that scarcity provokes?The answers contained within these pages will change your world view, will change your life.Read on!

Truly insightful, well written - makes you rethink what you thought you knew