Name: Gavin's review of Scarcity by Sendhil Mullainathan
Item: Scarcity
Rating: 4
Author: Gavin

Sendhil Mullainathan

Eldar Shafir

Why can we never seem to keep on top of our workload, social diary or chores? Why does poverty persist around the world? Why do successful people do things at the last minute in a sudden rush of energy? Here, economist Sendhil Mullainathan and psychologist Eldar Shafir reveal that the hidden side of all these problems is that they're all about scarcity. We've all struggled with packing a suitcase with too many items and not enough time to do it. In Scarcity, two intellectual adventurers show us that this simple idea explains the most fundamental problems in all walks of life. Using the new science of scarcity, they explain why obesity is rampant; why people find it difficult to sleep when most sleep deprived; and why the lonely find it so hard to make friends. Scarcity will change the way you think about both the little everyday tasks and the big issues of global urgency. Sendhil Mullainathan is a Professor of Economics at Harvard, and a recipient of a MacArthur Foundation "genius grant". He conducts research on development economics, behavioral economics, and corporate finance. He is Executive Director of Ideas 42, Institute of Quantitative Social Science, Harvard University. Eldar Shafir is William Stewart Tod Professor of Psychology and Public Affairs at Princeton University. Most of his work focuses on descriptive analyses of inference, judgment, and decision making, and on issues related to behavioral economics. 'Stars in their respective disciplines, and the combination is greater than the sum of its parts. Their project has a unique feel to it: it is the finest combination of heart and head that I have seen in our field', Daniel Kahneman, author of Thinking, Fast and Slow 'Scarcity is a captivating book, overflowing with new ideas, fantastic stories, and simple suggestions that just might change the way you live' Steven D. Levitt, coauthor of Freakonomics 'Here is a winning recipe. Take a behavioral economist and a cognitive psychologist, each a prominent leader in his field, and let their creative minds commingle. What you get is a highly original and easily readable book that is full of intriguing insights. What does a single mom trying to make partner at a major law firm have in common with a peasant who spends half her income on interest payments? The answer is scarcity. Read this book to learn the surprising ways in which scarcity affects us all', Richard Thaler, co-author of Nudge

Why having too little means so much

Scarcity

Caash

Based on cutting-edge research from behavioral science and economics, this eye-opening examination of how scarcity affects our daily lives reveals how individuals and organizations can better manage scarcity for greater satisfaction and success.

Why Having Too Little Means So Much

Gavin

Economics bills itself as 'the study of decisions under scarcity', though much of it is actually about excess: luxury substitution, savings rates, futures markets, conspicuous consumption, and so on. The psychological side - the panic, narrow focus, and sense of doom - was completely absent from my economics classes, but without it you can't really understand poverty, and thus can't value economic growth as the life-saving, mind-saving thing it has been. 

Reasons scarcity is bad:
1. Lower consumption is less good (and sometimes very bad)
2. Less freedom (fewer choices)
3. Anxiety (emotional penalty)
4. Cognitive penalty (bandwidth of worrying)
5. Excessive focus on present, no planning, compromising future ("tunnelling")
6. Have to spend time on careful allocation ("juggling")
7. Excess self-consciousness means worse performance ("choking")
8. It might also poison social interaction by encouraging zero-sum thinking and its attendent wasteful conflict. (Although see Junger for some positive social effects of shared adversity.)
9. It recurses: Mistakes lead to real sacrifice (debt; traps; no slack means penalties bite, further reducing slack). Scarcity causes more scarcity by screwing with your planning and implementation skills.

Economics only really handles costs (1) and (2). Psychology at its best handles (3-7). (9) is the author's new contribution, I think: this is cognitive economics.

 Without some spare resources it's impossible to be free, to be generous, to relax. That's obvious. Less obvious: Without slack you can't even think straight (there's a "bandwidth tax" on the poor, reducing their effective intelligence, willpower by perhaps an entire standard deviation). Most of the cited experiments are about money scarcity, but their ingenious move is to generalise to all of us, to all conditions where a person lacks some instinctively (evolutionarily) key resource: e.g. money, time, calories, friends. As well as a rare theoretical synthesis, this makes this book more evocative for its rich-world readers:

  We have used the psychology of scarcity to create an empathy bridge. We have used experience with one form of scarcity (say, time) to connect to another form (money). Having known what it’s like to badly need a little more time, we might start to imagine what it’s like to desperately need a little more money or even more friends. We used this bridge to draw a connection between a busy manager fretting about insufficient time before a deadline and a person short on cash fretting about insufficient funds to pay rent.


Exciting! I've been reading development economics and behavioural science for years, and I still got a lot of new results and a whole gosh-darnit Practical Theory of Mind with moving parts from this. 

They compress all the complex constructs and determinants of their real theory into a lossy construct, "bandwidth". This is a shorthand for working memory & fluid intelligence & attention span & decision consistency & persistence & executive control & long-term planning inclination. They admit at the start it's a compression, so that's fine.

  With compromised bandwidth, we are more likely to give in to our impulses, more likely to cave in to temptations. With little slack, we have less room to fail. With compromised bandwidth, we are more likely to fail.



Lesson: To actually optimise your life, you can't optimise too hard, in the sense of pushing right up against your budgets. This idea is not new; a different book would tie this to queuing theory and distributed systems, trying to find general theoretical truths about systems. (What's the maximum sustainable load for a server? For a life?) Excess capacity, 'slack', is short-run inefficiency and long-term shock-tolerance and thus true efficiency. The point seems to apply to servers, hospitals, and a single human life viewed from inside.

This also adds to Taleb's critique of naive finance, encouraging 'risk-sensitive optimisation' (or, death-sensitive). Extends bounded rationality to limited attention, willpower, as well as computation and a search budget.

The book's big philosophical question is the old Essence vs Context chestnut ("the poor are worse parents, drivers, borrowers" vs "given these constraints, people are worse parents, drivers, borrowers"). But it's a new twist on it: rather than (as well as) a developmental deficiency, poverty is an active, situational force: 

  This shortfall is not of the standard physiological variety, having to do with a lack of nutrition or stress from early childhood hindering brain development. Nor is bandwidth permanently compromised by poverty. It is the present-day cognitive load of making ends meet: when income rises, so, too, does cognitive capacity. The bandwidth of the farmers was restored as soon as crop payments were received. Poverty at its very core taxes bandwidth and diminishes capacity.

This surprises me: I generally accept that people are hard to change, that engineered context is relatively weak. But then all attempts at self-improvement are a denial of essentialism about something, and I'm well into those.

  To explain why the poor borrow excessively, we do not need to appeal to a lack of financial education, the avarice of predatory lenders, or an oversized tendency for self-indulgence. To explain why the busy put off things and fall behind, we do not need to appeal to weak self-control, deficient understanding, or a lack of time-management skills. Instead, borrowing is a simple consequence of tunneling.


They don't sugarcoat it: they accept the massive body of evidence on how burdened the poor are, on dozens of axes. And they note that just giving them cash rarely solves the problem because this doesn't change the logic enough.

  The poor stay poor, the lonely stay lonely, the busy stay busy, and diets fail.



One big gripe: They use the word "scarcity" for both a physical shortage (i.e. the normal economic sense) and for this special psychological burden. (Not having, and having your mind captured by not having.) This needs two words; it muddies their thesis.

They've persuaded me that late fines are an extremely regressive tax. I'm open to the view that reducing poor people's options is sometimes best for them (e.g. if they are "hurt by the ability to borrow [at extortionate rates]" because it prevents them smoothing their income in a credit cycle). I agree that bandwidth is the deepest kind of human capital. 

Their treatment of the mental costs of education is important, given NGOs' blithe promotion of education over all else. (And it's a further argument for unconditional cash transfers.) 

  To capitalize on a bonus payment for a child’s medical checkup, a parent must set up the appointment, remember to keep it, find the time to get there and back, and coerce the child to go (no child likes the doctor!). Each of these steps requires some bandwidth. And this is just one behavior. Conditional cash transfer programs seek to encourage dozens, if not hundreds, of these good behaviors. Just understanding those incentives and making the necessary trade-offs—deciding which are worth it for you and which are not, and when—requires bandwidth.

We never ask, Is this how we want poor people to use their bandwidth? We never factor in this cost in deciding which behaviors are most worth promoting. When we design poverty programs, we recognize that the poor are short on cash, so we are careful to conserve on that. But we do not think of bandwidth as being scarce as well. Nowhere is this clearer than in our impulse to educate.


 
I'm a keen and cynical student of social research, and but I only recognised one spurious result in this whole book. (ego depletion, p.107 - and that only in a tangent explicitly phrased as hypothetical.) They did a pretty convincing within-subjects study on sugar farmers before and after harvest income which nails down the effect as far as I can see.

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Only not five stars because we can't give any social science book five stars until it is 20 years old and more severely scrutinised.

Nelson Zagalo

"Scarcity: Why Having Too Little Means So Much" já é de 2013, ou seja pertence a uma época em que economia comportamental, dos vieses cognitivos sobre a racionalização, se estava a afirmar. Aqui, o enfoque, de Sendhil Mullainathan e Eldar Shafir, é todo realizado sobre a ideia de escassez, algo que já conhecemos do mundo da persuasão social, mas aqui é analisado de uma perspectiva distinta. Ou seja, sabemos que as pessoas reagem de forma mais interessada quando um produto é escasso (ex. o ouro; daí a criação dos NFT). Ou seja, as pessoas tendem a focar-se no que há pouco, nomeadamente no que lhes faz falta. Daí, Mullainathan e Shafir tentaram compreender como é que essa focagem cognitiva afeta as nossas vidas, e fá-lo não só a partir do caso financeiro, mas também das dietas, da solidão, ou da falta de tempo. 

O que Mullainathan e Shafir encontraram pode sintetizar-se em poucas palavras. A percepção de falta de recursos - seja tempo, dinheiro ou mesmo amizade - influencia a nossa tomada de decisões, podendo mesmo mudar a forma como concebemos a realidade que nos rodeia. Quando algum recurso se torna escasso, o nosso cérebro concentra todo o seu esforço na gestão desse recurso. Como tal, dirige para o mesmo todo o seu esforço, procurando a qualquer custo reduzir essa escassez. Deste modo, quando uma pessoa tem falta de dinheiro, o seu cérebro começa a bloquear todas as questões além desta, conduzindo a pessoa a tomar decisões erradas apenas com o fim de suprimir de forma o mais imediato possível essa escassez. Os empréstimos rápidos entram aqui que nem uma luva. Não pensamos nos 15% que vamos ter de pagar daqui a 1 mês, porque o nosso cérebro não dedica qualquer esforço a esse cálculo, apenas interessa suprimir a necessidade atual. 

Este ponto conduziu Mullainathan e Shafir a definir o conceito de "armadilha da escassez", que nos diz que que os nossos cérebros se concentram tão desesperadamente no que falta que pensar em qualquer outra coisa se torna quase impossível. E o que impressiona mais, é que este modo atua perante a escassez de qualquer recurso. Quando entramos em dietas, focamo-nos de tal modo em não consumir calorias a ponto de esgotar a nossa reserva de força-de-vontade e acabar por cair na tentação. Ou quando temos falta de tempo para nos dedicar à família, focamo-nos de tal modo em realizar as tarefas para ganhar tempo que acabamos por nos sobrecarregar com ainda mais detalhes que tornam impossível terminar e conseguir ter tempo livre.

Mullainathan e Shafir oferecem algumas pistas sobre como trabalhar o viés, e naturalmente que o desvio do foco é essencial, parar mentalmente de pensar em, ou pensar noutra coisa, procurar secundarizar aquilo que nos faz falta. O problema maior acontece com a falta de dinheiro em quem não o tem, porque o problema não desaparece apenas esquecendo que ele falta. Contudo, a ação aqui deve partir da sociedade, sabendo que quanto mais o pobre se esforça para não ser pobre menos conseguirá dedicar-se ao resto, nomeadamente a educação e saúde dos seus. Cria-se um ciclo de pobreza que se repete a cada geração, por isso cabe-nos a nós, sociedade, criar as condições de suporte para que aquilo que fica para trás — a educação, saúde, segurança, etc. — possa ser garantido enquanto as pessoas se concentram na busca das condições financeiras para os seus.

https://virtual-illusion.blogspot.com...

Maggie Delano

The premise of the book was pretty interesting, but there wasn't a ton of substance. I felt that the authors were struggling to make the book longer and kept repeating themselves.

Luca Conti

Ben Roberts

Drew Spartz

Zarul Nazli Zulkhurnain

Rohini Anandamurugan

In this provocative book based on cutting-edge research, Sendhil Mullainathan and Eldar Shafir show that scarcity creates a distinct psychology for everyone struggling to manage with less than they need. Busy people fail to manage their time efficiently for the same reasons the poor and those maxed out on credit cards fail to manage their money. The dynamics of scarcity reveal why dieters find it hard to resist temptation, why students and busy executives mismanage their time, and why the same sugarcane farmers are smarter after harvest than before. Once we start thinking in terms of scarcity, the problems of modern life come into sharper focus, and Scarcity reveals not only how it leads us astray but also how individuals and organizations can better manage scarcity for greater satisfaction and success.

Caash &
Scarcity by Sendhil Mullainathan

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