Scarcity: Why Having Too Little Means So Much

by Sendhil Mullainathan

In one study, psychologists asked college seniors to estimate the time required to finish their senior theses. The average estimate was thirty-four days. When probed for the possibility of good and bad turns of events, they agreed it could range from twenty-seven days (if everything went really well) to forty-eight days (if things went badly). In reality, it took them fifty-five days on average. This is not just the folly of inexperienced undergraduates. Everyone from managers to movie producers suffers from the planning fallacy: we are all much too optimistic with our future plans. Even top-notch chess players can allocate too much time to earlier rounds and end up in “time trouble,” with too little time on the clock later in the game.