Scarcity why having so little

Why do the lonely find it hard to make friends? These questions seem unconnected, yet Sendhil Mullainathan and Eldar Shafir show that they are all examples of a mind-set produced by scarcity. Drawing on cutting-edge research from behavioral science and economics, Mullainathan and Shafir show that scarcity creates a similar 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. While the book helps shine a light on a vexing problem, from the perspective of allocating philanthropic dollars and effort, we are still at the starting line.

All in all, this is an important book for any social entrepreneur thinking about poverty interventions. It should factor into program design and theories of change.

By closing this banner, scrolling this page, clicking a link or continuing to otherwise browse this site, you agree to the use of cookies. Prepare to Update Your Theory of Change. Stanford Social Innovation Review. Download RIS File. X SSIR. I Agree. Most of the academic traffic is concentrated at the busy crossroads between economics and psychology, where a nudge is as good as a blink.

The idea that we are defined by and subject to market forces is taken as a given in this work; the interest lies in the gap between the economist's faith in rational decision-making and the psychologist's stacked-up evidence of our less than rational behaviours: in the exposure of our almost comical inability to understand risk and reward and to do what is best for us.

This gap was first comprehensively explored in the pioneering work of Daniel Kahneman and the late Amos Tversky, through their Nobel-prize winning analysis of how man and woman, but mainly man is anything but a creature of logic in market places of all kinds. Kahneman's recent bestselling precis of his life's work, Thinking, Fast and Slow , was a catalogue of examples of people using the wrong kind of analysis when confronting pivotal problems: relying on instinct when precise weighing of probabilities would be crucial, and vice versa.

The seductive tone of Kahneman's writing comes in part from his understanding that no one is exempt from these failings. When I interviewed him about his ideas, he observed that the most useful subject for his study of internal biases and wonky reasoning had always been himself. Though he spent a lifetime proving the fundamental weakness of human beings in predicting the outcomes of any relatively complex choice, it happily didn't stop him making all sorts of errors of judgment in his own life.

Scarcity , the latest of the post-Kahneman adventures into this behaviourist world, comes with a quoted tribute from the master: "the finest combination of heart and head that I have seen in our field".

Some of that dichotomy is a result of this book being a collaboration between another distinguished double act: a Harvard economist and a Princeton psychologist. The duetting professors present their adventures in metaphor as a kind of quest, though it is not always clear who is Quixote and who Sancho Panza. Their journey begins with the sort of revelation common to all such quests, a leap from the personal to the universal. The hypothesis to be tested is this: do the patterns of behaviour they themselves show when under deadline pressure in busy academic lives bear relation to those displayed by those billions of people in the world struggling to survive on minimal resources?

In other words, do the stressed-out time-poor of the west have common cause with the actual dollar-a-day poor of the developing world? If they do, it is Mullainathan and Shafir's contention that the link between these two states is "scarcity".