Scarcity: Why Having Too Little Means So Much

by Sendhil Mullainathan

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

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 matters: how much do we need to accomplish? How important is that purchase? Such desires are shaped by culture, upbringing, even genetics.

As a blunt approximation, most disciplines, including economics, say the same thing about this question. The consequence of having less than we want is simple: we are unhappy. The poorer we are, the fewer nice things we can afford—be it a house in a good school district or as little as salt and sugar to flavor our food. The busier we are, the less leisure time we can enjoy—be it watching television or spending time with our families. The fewer calories we can afford, the fewer foods we can savor.

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.

But we cannot fully choose when our minds will be riveted. We think about that impending project not only when we sit down to work on it but also when we are at home trying to help our child with her homework. 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 call it, bandwidth. We can measure fluid intelligence, a key resource that affects how we process information and make decisions. We can measure executive control, a key resource that affects how impulsively we behave. And we find that scarcity reduces all these components of bandwidth—it makes us less insightful, less forward-thinking, less controlled. And the effects are large.

Being poor, for example, reduces a person’s cognitive capacity more than going one full night without sleep. It is not that the poor have less bandwidth as individuals. Rather, it is that t...

But our results suggest that scarcity of all varieties also leads to a shortage of bandwidth. And because bandwidth affects all aspects of behavior, this shortage has consequences.

The challenges of sticking to a plan, the inability to resist a new leather jacket or a new project, the forgetfulness (the car registration, making a phone call, paying a bill) and the cognitive slips (the misestimated bank account balance, the mishandled invitation) all happen because of a shortage of bandwidth. 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.

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.

most dire consequences. This was how we had initially conceived of this book—the poor mired in debt; the busy perpetually behind on their work. Amanda Cohen’s experience illustrates another side of scarcity, a side that can easily go undetected: scarcity can make us more effective. We all have had experiences where we did remarkable things when we had less, when we felt constrained.

But then, halfway through the meeting, things change. There is, as Gersick calls it, a midcourse correction. The group realizes that time is running out and becomes serious. As she puts it, “The midpoint of their task was the start of a ‘major jump in progress’ when the [group] became concerned about the deadline and their progress so far. [At this point] they settled into a … phase of working together [with] a sudden increase of energy to complete their task.” They hammer out their disagreements, concentrate on the essential details, and leave the rest aside. The second half of the meeting nearly always produces more tangible progress.

The midcourse correction illustrates a consequence of scarcity capturing the mind. Once the lack of time becomes apparent, we focus. This happens even when we are working alone.

Deadlines are effective precisely because they create scarcity and focus the mind.

It is not that the rich, simply because they had more rounds, got bored and decided to spend less time on the task. Nor is it that they became fatigued. Even on the first shots they were already less focused and less careful than the poor. This matches our prediction. Having fewer blueberries, the blueberry poor enjoyed a focus dividend.

Those who find themselves working at the last minute under deadline may simply be different people. When they are seen to behave differently, scarcity may be one reason, but any of several other differences may be playing a role as well. In Angry Blueberries, a coin flip determined who was “rich” (in blueberries) and who was “poor.” Now, if these individuals are seen to behave differently, it cannot be attributed to any systematic inherent personal differences; it must be due to the one thing that distinguishes between them: their blueberry scarcity. By creating scarcity in the lab in this way, we can untangle scarcity from the knots that usually surround it. We know that scarcity itself must be the reason.

The focus dividend—heightened productivity when facing a deadline or the accuracy advantage of the blueberry poor—comes from our core mechanism: scarcity captures the mind. The word capture here is essential: this happens unavoidably and beyond our control. Scarcity allows us to do something we could not do easily on our own.

It is very hard to fake scarcity. The scarcity dividend happens because scarcity imposes itself on us, capturing our attention against all else. We saw that this happened in a way that is beyond conscious control—happening in milliseconds. It is why an impending deadline lets us avoid distractions and temptations so readily—it actively pushes them away. Just as we cannot effectively tickle ourselves, it is exceedingly difficult to fool ourselves into working harder by faking a deadline. An imaginary deadline will be just that: imagined. It will never capture our mind the way an actual deadline does.

We saw in the introduction that scarcity captures attention at the level of milliseconds—the time it took the hungry to recognize the word CAKE. We see it at the scale of minutes (aiming blueberries) and of days and weeks (college seniors getting the most out of their time before graduation). The pull of scarcity, which begins at milliseconds, cumulates into behaviors that stretch over much longer time scales. Altogether, this illustrates how scarcity captures the mind, both subconsciously and when we act more deliberately. As the psychologist Daniel Kahneman would say, scarcity captures the mind both when thinking fast and when thinking slow.

Focusing on one thing means neglecting other things. We’ve all had the experience of being so engrossed in a book or a TV show that we failed to register a question from a friend sitting next to us. The power of focus is also the power to shut things out. Instead of saying that scarcity “focuses,” we could just as easily say that scarcity causes us to tunnel: to focus single-mindedly on managing the scarcity at hand.

Focus is a positive: scarcity focuses us on what seems, at that moment, to matter most. Tunneling is not: scarcity leads us to tunnel and neglect other, possibly more important, things.

Research shows that there is one way to make this task easier for you—and that is not to give you “milk” and “snow.” In experiments, people given these “helpers” name fewer total items, even counting the freebies. This perverse outcome is a consequence of what psychologists call inhibition. Once the link between “white” and “milk” is activated in your mind, each time you think, “things that are white,” that activated link draws you right back to “milk” (and activates it further). As a consequence, all other things white are inhibited, made harder to reach. You draw a blank.

This is a basic feature of the mind: focusing on one thing inhibits competing concepts. Inhibition is what happens when you are angry with someone, and it is harder to remember their good traits: the focus on the annoying traits inhibits positive memories.

Focusing on something that matters to you makes you less able to think about other things you care about. Psychologists call this goal inhibition. Goal inhibition is the mechanism underlying tunneling. Scarcity creates a powerful goal—dealing with pressing needs—that inhibits other goals and considerations.

Inhibition is the reason for both the benefits of scarcity (the focus dividend) and the costs of scarcity. Inhibiting distractions allows you to focus. In our earlier example, why were we so productive working under a deadline? Because we were less distracted. The colleague’s e-mail does not come to mind, and if it does it is easily dismissed.

We focus and tunnel, attend and neglect for the same reason: things outside the tunnel get inhibited. When we work on a deadline, skipping the gym may or may not make sense. We just don’t think (or think enough) about it that way when we decide to forgo the gym for the deadline. Our mind is not on that subtle cost-benefit problem; it is on the deadline.

Consistent with the focus dividend, people were more effective guessers on the picture they were poor on. But they also tunneled: they neglected the other picture. And this was not efficient. They performed so much worse on the neglected picture that they earned, overall, fewer points than subjects who were poor on both pictures. They earned less even though they had more total guesses.

Another manifestation of tunneling is the decision to multitask. We may check e-mail while “listening in” on a conference call, or squeeze in a bit more e-mail on the cell phone over dinner. This has the benefit of saving time, but it comes at a cost: missing something on the call or at dinner or writing a sloppy e-mail. These costs are notorious when we drive. When you think about the multitasking driver, you think of the driver who is talking on a cell phone. Indeed, studies have shown that talking on a (non-handheld) cell phone while you drive can be worse than driving at above legal alcohol levels. But you might also want to think about that driver eating a sandwich. Studies show that eating while driving can be as big a danger. And

When you are extremely rushed for time, it is easier to say, “I can spend time with the kids next week,” rather than, “Actually, the kids really need me. When exactly will I really have time next?” Things outside the tunnel are harder to see clearly, easier to undervalue, and more likely to get left out.

It tells us, for example, that we should be cautious about inferring preferences from behavior. We might see the busy person neglect his children and conclude that he does not care as much about his kids as he does about his work. But that may be wrong, much as it would be wrong to conclude that the uninsured farmer does not particularly care about the loss of his crop to the rains. The busy person may be tunneling. He may value his time with his children greatly, but the project he is rushing to finish pushes all that outside the tunnel. He may look back later in life and report a great deal of anguish about not having spent more time with his children. This is genuine anguish and not merely compliance with a social norm. It is the predictable disappointment of anyone who tunnels.

Scarcity alters how we look at things; it makes us choose differently. This creates benefits: we are more effective in the moment. But it also comes at a cost: our single-mindedness leads us to neglect things we actually value.

These anecdotes illustrate a central hypothesis: because the focus on scarcity is involuntary, and because it captures our attention, it impedes our ability to focus on other things. The executive is trying to focus on her daughter’s baseball game, but scarcity keeps pulling her mind away. Even when we try to do something else, the tunnel of scarcity keeps drawing us in. Scarcity in one walk of life means we have less attention, less mind, in the rest of life. The concept of less mind is well studied by psychologists. Though careful research in psychology employs several fine distinctions to capture this idea, we will use the single umbrella term bandwidth to cover them all. 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.

A whole host of subsequent studies have shown that noise can hurt concentration and performance. Even if the impact of noise does not surprise you, the size of the impact (a full school year level at sixth grade) should. In fact, these results mirror many laboratory studies that have documented the powerful effects of even slight distraction.

The persistent concern pulls at the mind, drawing us in. Just like an external noise that distracts us from thinking clearly, scarcity generates internal disruption.

Behavioral and neuroimaging studies have shown that distraction along with brain activity related to the presence of distractors increase when the load is high. Top-down attention cannot prevent bottom-up intrusions. When someone says your name across the room at a party, your attention shifts no matter how intently you are trying to focus on something else.

Of course the dieters were not physically blinded; they were just mentally distracted. Psychologists call this an attentional blink. The food picture, now gone, had made them mentally blink. When the dot appeared, their minds were elsewhere, still thinking about the food. All of this happened in a fraction of a second, too quick to control. Too quick to even be aware of. The title of the study says it best: “All I Saw Was the Cake.”

For most subjects, changing the odd-numbered words had no effect. Not so for dieters. Dieters took 30 percent longer to find CLOUD after they had just searched for DONUT. Dieters were not slow overall—they found CLOUD just as quickly as nondieters when it was preceded by PICTURE. The DONUT was the problem. What is happening here is clear. It is a version of what psychologists call proactive interference. The mention of a donut brings it top of mind.

Imagine that you are surfing the web on your laptop. On a reasonably fast computer, you easily go from page to page. But imagine now that there are many other programs open in the background. You have some music playing, files downloading, and a bunch of browser windows open. Suddenly, you are crawling, not surfing, the web. These background programs are eating up processor cycles. Your browser is limping along because it has less computing power to work with. Scarcity does something similar to our mental processor. By constantly loading the mind with other processes, it leaves less “mind” for the task at hand. This leads us to the central hypothesis of this chapter: scarcity directly reduces bandwidth—not a person’s inherent capacity but how much of that capacity is currently available for use.

The first might be broadly referred to as cognitive capacity, the psychological mechanisms that underlie our ability to solve problems, retain information, engage in logical reasoning, and so on. Perhaps the most prominent in this category is fluid intelligence, the ability to think and reason abstractly and solve problems independent of any specific learning or experience. The second is executive control, which underlies our ability to manage our cognitive activities, including planning, attention, initiating and inhibiting actions, and controlling impulses. Much like a central processor, executive control is essential to our ability to function well. It determines our ability to focus, to shift attention, to retain things in memory, to multitask, to self-monitor. Cognitive capacity and executive control are multifaceted and rich in nuance. And scarcity affects both.

While IQ tests are complex and variegated, most agree that the Raven’s Progressive Matrices test is one of the most important and reliable components. Raven’s requires no knowledge of world events and little formal study. It is the most common way that psychologists, educators, the military, and others measure what is called fluid intelligence, the capacity to think logically, analyze and solve novel problems, independent of background knowledge.

In all the replications, the effects were equally big. To understand how big these effects are, here is a benchmark from a study on sleep. In this study, one group of subjects was put in bed at a normal time. Another group was forced to stay awake all night. Pulling an all-nighter like this is terribly debilitating. Imagine yourself after one night without any sleep. The next morning, the sleeping group was awakened, and both groups were given a Raven’s test. Not surprisingly, the sleep deprived did much worse. In comparison, how big was our effect at the mall? It was even bigger. How smart do you feel after a night of no sleep? How sharp would you be the next morning? Our study revealed that simply raising monetary concerns for the poor erodes cognitive performance even more than being seriously sleep deprived.

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.

EXECUTIVE CONTROL The second component of bandwidth is executive control. As discussed above, executive control is multifaceted, so we begin by considering one of the many important functions to which it contributes, namely, self-control.

We know many ingredients go into the manufacturing of self-control. It depends on how we weigh the future. And we appear to do it inconsistently. Immediate rewards (a marshmallow now) are salient and receive a heavy weight. Rewards in the distant future (two marshmallows later) are less salient and thus receive lower weight. So when we think about one versus two marshmallows in the abstract future, two is better than one. But when one marshmallow is right in front of us now, it suddenly beats two. Self-control also depends on willpower, a resource whose functioning we do not fully understand, but which is affected, among other things, by personality, fatigue, and attention. Self-control relies heavily on executive control. We use executive control to direct attention, initiate an action, inhibit an intuitive response, or resist an impulse. In fact, a less publicized but often replicated part of Mischel’s study is highly instructive here. The children who were most successful in resisting the marshmallow temptation did so by focusing their attention elsewhere.

As Mischel put it, “Once you realize that willpower is just a matter of learning how to control your attention and thoughts, you can really begin to increase it.”

Whether it is eating cake we would rather resist or saying things we do not mean to say, a tax on bandwidth makes it harder for us to control our impulses. And because scarcity taxes bandwidth, this suggests that scarcity not only can lower fluid intelligence but can also reduce self-control. Hence, the Australian student snaps at the Chinese experimenter, the executive consumed by the impending presentation snaps at her daughter, and the employee thinking about his unpaid bills snaps at a rude customer.

The poorer subjects, on the other hand, now did significantly worse. They were more impulsive, mistakenly hitting the same side as the flower more often. While they had hit the correct key 83 percent of the time in the context of the financially easy scenarios, correct key presses went down to 63 percent in the context of scenarios that were financially more challenging. A small tickle of scarcity and they were suddenly more impulsive. Beyond fluid intelligence, scarcity appears to reduce executive control.

Using these tasks, we found that farmers performed much worse before harvest than after harvest. The same farmer fared worse on fluid intelligence and executive control when he was poor (preharvest) than when he was rich (postharvest). Much like the subjects at the mall, the same person looked less intelligent and more impulsive when he was poor. Yet in this case it was not us who triggered scarcity-related thoughts or even tried to bring them to the surface. These thoughts were there naturally when the farmers were poor (the harvest money dissipated to a small amount) but not when they were rich (still flush with cash from the harvest). And again the magnitudes were large. The postharvest farmers got about 25 percent more items correct on Raven’s. Put in IQ terms, as in the earlier mall study, this would correspond to about 9 or 10 IQ points. Not as big a gap as at the mall, but that is to be expected. After all, here we hadn’t induced them to think about money. We simply measured their mental state at an arbitrarily selected point in time, their latent tendency to have their bandwidth taxed by scarcity. On the executive control task, they were 11 percent slower in responding and made 15 percent more errors while poor, quite comparable to the mall study. Had we met a farmer when he was poor, we would have been tempted to attribute his limited capacity to a personal trait. But we know from our study that his limitation has little to do with his genuine capacity as a person...

We all understand that dieting can be hard: resisting tasty foods can be difficult for all of us. The bandwidth tax, however, suggests that dieting is more than hard. It is mentally taxing. Dieters, when doing anything, should find they have fewer mental resources because they are partly preoccupied with food.