Scarcity of any kind, not just time, should yield a focus dividend. We see this anecdotally. We are less liberal with the toothpaste as the tube starts to run empty. In a box of expensive chocolates, we savor (and hoard) the last ones. We run around on the last days of a vacation to see every sight. We write more carefully, and to our surprise often better, when we have a tight word limit.
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Bandwidth measures our computational capacity, our ability to pay attention, to make good decisions, to stick with our plans, and to resist temptations. Bandwidth correlates with everything from intelligence and SAT performance to impulse control and success on diets.
Scarcity: Why having too little means so much
by Sendhil Mullainathan and Eldar Shafir
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 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.
Let’s say that you budget $200 for the heating bill. It turns out to be an unusually bad winter and you receive a bill for $300. What do you do?
Someone who is living paycheck to paycheck faces a very difficult situation. The extra money has to come out of other activities, or if there’s no extra money, it might end up financed on a credit card.
On the other hand, someone who is wealthy does not have to worry. The wealthy person has “slack” so that the extra expense can come out of savings without affecting anything else.
The interesting part is this: while both people face the same extra expense, the problem does not cause any worry for the wealthy person with slack. This is one of the reasons it is a great, great idea to build up a rainy day fund: it provides security and allows for one to deal with emergencies with less stress.
That’s the joy of slack, but there is a downside to slack too. In the same example, the person living paycheck to paycheck is probably more concerned with the heating bill and will pay more attention to lowering it by decreasing the temperature, wearing warm clothes, and using a thermostat. The wealthy person is more likely to be wasteful because it doesn’t matter if the heating bill ends up too much: the slack of savings can pay for it.