Scarcity: Why Having Too Little Means So Much

by Sendhil Mullainathan

For example, if an intervention has an effect equivalent to one-third of a standard deviation, then that effect corresponds to about five IQ points. By that measure our effects correspond to between 13 and 14 IQ points. By most commonly used descriptive classifications of IQ, 13 points can move you from the category of “average” to one labeled “superior” intelligence. Or, if you move in the other direction, losing 13 points can take you from “average” to a category labeled “borderline deficient.” Remember: these differences are not between poor people and rich people. Rather, we are comparing how the same person performs under different circumstances. The same person has fewer IQ points when she is preoccupied by scarcity than when she is not. This is key to our story. The poor responded just like the rich when the car cost little to fix, when scarcity had not been rendered salient. Clearly, this is not about inherent cognitive capacity. Just like the processor that is slowed down by too many applications, the poor here appear worse because some of their bandwidth is being used elsewhere.