Scarcity: Why Having Too Little Means So Much

by Sendhil Mullainathan

As he said, “There is always more month than money.”

Sometimes at dinner he would put in less than his fair share because he was short. His friends understood, but it didn’t feel good.

His finances were a mess. He was in the deep end of the debt pool and barely staying afloat.

It did not take long for us to notice the resemblance between Sendhil’s and Shawn’s behavior. Missed deadlines are a lot like overdue bills. Double-booked meetings (committing time you do not have) are a lot like bounced checks (spending money you do not have).

This resemblance is striking because the circumstances are so different. We normally think of time management and money management as distinct problems.

each of them was feeling the effects of scarcity. By scarcity, we mean having less than you feel you need.

Uncovering a common logic to scarcity would have big implications.

The loss of a job makes a household’s budget suddenly tight—too little income to cover the mortgage, car payments, and day-to-day expenses. The problem of increasing

social isolation—“bowling alone”—is a form of social scarcity, of people having too few social bonds.

Scarcity connects more than just Sendhil’s and Shawn’s problems: it forms a common chord across so many of society’s problems.

Could there be a common logic to scarcity, one that operates across these diverse backdrops?

Not only did their bodies weaken; their minds changed as well. Sharman Apt Russell describes a lunch scene in her book Hunger:

Obsessions developed around cookbooks and menus from local restaurants. Some men could spend hours comparing the prices of fruits and vegetables from one newspaper to the next. Some planned now to go into agriculture. They dreamed of new careers as restaurant owners.… They lost their will for academic problems and became far more interested in cookbooks.… When they went to the movies, only the scenes with food held their interest.

They were focused on food. Of course if you are starving, getting more food should be a priority. But their minds focused in a way that transcended practical benefits.

I don’t know many other things in my life that I looked forward to being over with any more than this experiment. And it wasn’t so much … because of the physical discomfort, but because it made food the most important thing in one’s life … food became the one central and only thing really in one’s life.

Scarcity captures the mind. Just as the starving subjects had food on their mind, when we experience scarcity of any kind, we become absorbed by it. The mind orients automatically, powerfully, toward unfulfilled needs. For the hungry, that need is food. For the busy it might be a project that needs to be finished. For the cash-strapped it might be this month’s rent payment; for the lonely, a lack of companionship. Scarcity is more than just the displeasure of having very little. It changes how we think. It imposes itself on our minds.

But on this particular task, they did as well as the sated subjects. Except in one case. The hungry did much better on food-related words.

When a concept occupies our thoughts, we see words related to it more quickly.

So when the hungry recognize CAKE more quickly, it is not because they choose to focus more on this word. It happens faster than they could choose to do anything. This is why we use the word capture when describing how scarcity focuses the mind.

In

all these cases, scarcity operates unconsciously. It captures attention whether the mind’s owner wishes it or not.

During brief and highly focused events, such as car accidents and robberies, for example, the increased engagement of attention brings about what researchers call the “subjective expansion of time,” a feeling that such events last longer, precisely because of the greater amount of information that is processed.

Similarly, scarcity’s capture of attention affects not only what we see or how fast we see it but also how we interpret the world.

Bradley Smith, unlucky in love and lacking close friends, finds his perception changes after a divorce.

Suddenly, Bradley cannot escape noticing connections between people—couples and families—in exquisite and painful detail.

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.”

It is remarkable how frequently otherwise clever discussions tend to overlook trade-offs (an oversight that our theory helps explain).

But we suggest that while physical scarcity is ubiquitous, the feeling of scarcity is not.

The feeling of scarcity is distinct from its physical reality.

Where does the feeling of scarcity come from? Physical limits, of course,

play a role—the money in our savings account, the debts we owe, the tasks we must complete. But so does our subjective perception of what mat...

How important is that...

Just as how cold we feel depends not only on absolute temperature but also on our own private metabolism, so the feeling of scarcity depends on both what is available and on our own tastes.

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 procrastinate at work because we keep getting distracted. We buy overpriced items at the grocery store because our minds are elsewhere.

A tight deadline or a shortage of cash focuses us on the task at hand. With our minds riveted, we are less prone to careless error. This makes perfect sense: scarcity captures us ...

The same automatic capture that helps us focus becomes a burden in the rest of life.

Because we are preoccupied by scarcity, because our minds constantly return to it, we have less mind to give to the rest of life. This is more than a metaphor.

We can directly measure mental capacity or, as we ca...

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

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

But our results suggest that scarcity of all varieties also leads to a shortage of bandwidth.

Note: Scarcity is like a program running in the background that is stealing processing capabilities. It slows the computer down.

There is one particularly important consequence: it further perpetuates scarcity. It was not a coincidence that Sendhil and Shawn fell into a trap and stayed there. Scarcity creates its own trap.

Our results suggest something much more fundamental: many of these problems can be understood through the mindset of scarcity. This is not to say that culture, economic forces, and personality do not matter. They surely do. But scarcity has its own logic, one that operates on top of these other forces.

The bandwidth tax, for example, is likely to be larger for the poor than for the busy or for dieters.

Scarcity captures our attention, and this provides a narrow benefit: we do a better job of managing pressing needs. But more broadly, it costs us: we neglect other concerns, and we become less effective in the rest of life.

We also use anecdotes and vignettes extensively. Of course, these never serve as substitutes for careful evidence, but they are used to make concepts intuitive, to bring ideas to life.

This book is not meant to be the final word. It raises a new perspective on an age-old problem, one that ought to be seriously entertained. Anytime there is a new way of thinking, there are also new implications to be derived, new magnitudes to be deciphered, and new consequences to be understood.

HOBBES: Do you have an idea for your story yet? CALVIN: You can’t just turn on creativity like a faucet. You have to be in the right mood. HOBBES: What mood would that be? CALVIN: Last-minute panic.