Tuesday, January 14, 2020

Scarcity - Mullainathan, Sendhil; Shafir, Eldar (2012)



THE ORIGINAL SCIENCE OF SCARCITY

When we told an economist colleague that we were studying scarcity, he remarked, “There is already a science of scarcity. You might have heard of it. It’s called economics.”

Our approach to scarcity is different.

In economics, scarcity is ubiquitous. All of us have a limited amount of money; even the richest people cannot buy everything. But we suggest that while physical scarcity is ubiquitous, the feeling of scarcity is not. 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. Scarcity is not just a physical constraint. It is also a mindset. When scarcity captures our attention, it changes how we think—whether it is at the level of milliseconds, hours, or days and weeks. By staying top of mind, it affects what we notice, how we weigh our choices, how we deliberate, and ultimately what we decide and how we behave.

When scarcity captures the mind, we become more attentive and efficient.

We can directly measure mental capacity or, as we call it, bandwidth.

We can measure fluid intelligence, a key resource that affects how we process information and make decisions.

We can measure executive control, a key resource that affects how impulsively we behave.

And we find that scarcity reduces all these components of bandwidth— it makes us less insightful, less forward- thinking, less controlled.

And the effects are large. Being poor, for example, reduces a person’s cognitive capacity more than going one full night without sleep.

It is not that the poor have less bandwidth as individuals. Rather, it is that the experience of poverty reduces anyone’s bandwidth.

When we think of the poor, we naturally think of a shortage of money. When we think of the busy, or the lonely, we think of a shortage of time, or of friends. But our results suggest that scarcity of all varieties also leads to a shortage of bandwidth. And because bandwidth affects all aspects of behavior, this shortage has consequences. We saw this with Sendhil and Shawn.




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