Scarcity: Why Having Too Little Means So Much

by Sendhil Mullainathan

The contestants in Family Feud borrowed most when they were being most productive, when they were most engaged, when they really felt they needed more time. In a sense they were right to borrow: those extra seconds had a good chance of paying off. In another sense, they were wrong to borrow because that payoff did not compensate for the interest rate incurred. What they noticed in the tunnel—an extra second could really help right now—was accurate. Their mistake was to neglect what was outside the tunnel: how much would this extra second cost later in the game? It is worth noting that both the rich and the poor showed this pattern of borrowing when they were particularly productive and pressed. It’s just that the poor, with their fewer seconds, were in that state a lot more often.