Literary Insights

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Here is a summary of key points about Sendhil Mullainathan and Eldar Shafir’s book Scarcity:

The book examines how scarcity, defined as having less than you feel you need, impacts mindset and behavior. It argues scarcity leads people to behave in similar ways regardless of context.
It uses the examples of Sendhil feeling strapped for time due to work commitments, and Shawn feeling strapped for money due to financial difficulties, to show how scarcity can impact time management and financial decision making in analogous ways.
Scarcity is presented as a broader concept that underlies many societal problems like poverty, unemployment, social isolation, and obesity, which all involve lacking enough of a needed resource.
The book discusses a seminal study from WWII where soldiers were starved in a controlled experiment to understand how to safely reintroduce food to those on the edge of starvation. This helps illustrate how scarcity can “capture the mind.”
Key concepts developed include the “scarcity mindset” which involves tunnel vision and reduced cognitive bandwidth, and how scarcity breeds more scarcity through things like poor decision making and lack of expertise.
The book examines implications for public policy, organizational operations, and everyday life, with the goal of better understanding and addressing issues related to scarcity.
Researchers conducted a starvation study where men went without food for extended periods. This led to significant physical impacts like extreme weight loss and fatigue.
Mentally, the men became obsessed with food. They were fixated on recipes, menus, prices of food items, and dreamed of careers related to food like being restaurant owners. Food was the only thing they could think about.
Even mundane tasks like washing their hair exhausted them due to loss of strength. Their focus and interests shifted entirely to anything related to food.
Other studies showed similar mental impacts of scarcity beyond just hunger. Thirsty people detected the word “water” faster. Poor children overestimated the size of coins due to fixation.
Lonely individuals had better ability to read emotional expressions and recalled more social details, showing their minds were tuned to managing social connections due to loneliness.
Scarcity captures the attention subconsciously. It orients the mind automatically toward fulfilling unmet needs, changing what we notice, how we perceive the world, and altering our experiences. Scarcity psychologically “captures” our minds.

The passage discusses a new perspective on scarcity presented in the book “Scarcity”. While economics views scarcity as physical constraints due to limited resources, the authors argue scarcity is also a psychological mindset.

When scarcity captures our attention, it consumes our mental bandwidth. This negatively impacts cognitive functions like decision making and self-control. As a result, scarcity perpetuates itself by causing people to make poorer choices that maintain or worsen their scarce situation.

The scarcity mindset can help explain many behavioral problems like why the poor, busy, and lonely have difficulty improving their circumstances. Previous theories look at culture, preferences, or institutions, but scarcity creates its own cognitive traps that amplify over time.

While all forms of scarcity activate this mindset, the impact is not uniform. Poverty likely induces a larger bandwidth tax than busyness. The book presents various experiments and case studies across different scarce contexts to build the case for scarcity as a psychological phenomenon with wide-ranging consequences, especially for the poor. The goal is to develop a new framework for understanding how scarcity shapes human behavior.

Scarcity, like a looming deadline, can focus the mind and make us more effective by tunneling our attention onto the most important tasks.
Studies show that meetings, work, and other activities tend to become more productive in the second half once people realize time is running out and a deadline is approaching. This “midcourse correction” increases energy and focuses the group.
When working alone, deadlines prevent distractions and mind wandering, keeping us oriented on the task. Experiments found tighter deadlines led students to proofread essays more thoroughly and be more productive.
Scarcity from limited remaining time in college also motivated seniors to make the most of opportunities and relationships before graduation.
In general, scarcity focuses our attention on using what we have most effectively by tunneling out distractions and abstract thoughts in favor of concrete progress toward the deadline or goal.
The passage describes how scarcity of time impacts behavior and focus. It discusses an experiment where students had either a close or far deadline, and those with a close deadline tried to get more out of each day and spent more time on college activities.
Experiments with marketing coupons show those with expiration dates are more likely to be redeemed, as the scarcity of time captures attention. Salespeople also work hardest near the end of sales cycles.
The “focus dividend” refers to how scarcity, whether of time or other resources, increases focus and productivity. Experiments using a video game called “Angry Blueberries” found those with fewer virtual resources (“blueberry poor”) took more time and were more accurate on each shot.
This illustrates how scarcity itself can drive focus and performance, even in controlled lab conditions where other factors are held constant. It suggests scarcity captures attention in a way that is difficult to replicate voluntarily without the actual experience of scarcity. The passage discusses how this occurs across timescales from milliseconds to weeks/months.
Firefighter Brian Hunton died after falling out of a fire truck while responding to an emergency call. He was not wearing a seatbelt and was thrown from the vehicle when it turned a corner sharply.
His death was tragic because it could have been prevented with a seatbelt. Seatbelt usage is emphasized in firefighter safety training.
Vehicle accidents are a leading cause of firefighter fatalities, second only to heart attacks. Between 20-25% of firefighter deaths from 1984-2000 were from vehicle collisions, and 79% of those firefighters were not wearing seatbelts.
Firefighters face time pressures to quickly respond to calls and prepare en route. This focus on the emergency causes “tunneling” where unrelated considerations like seatbelt usage are neglected due to inhibition of competing thoughts/goals.
Scarcity/tunneling improves focus but neglects other important factors. While it helps firefighters respond rapidly, it also causes neglect of safety precautions like seatbelts through goal inhibition. Hunton’s death illustrates how tunneling can have detrimental outcomes.
In general, scarcity focuses our attention but also causes tunnel vision/neglect due to the cognitive process of inhibition, where the dominant goal crowds out other competing thoughts and considerations.
Subjects were shown 4 pictures containing different items/scenes and asked to memorize them.
They were then shown one item and asked to recall the other 3 items that were in the original picture together.
Subjects earned points for correct guesses but only had a limited number of guesses. This created “guess poor” and “guess rich” conditions.
Subjects played two reconstruction games side by side - they were guess poor in one and guess rich in the other. Total earnings depended on performance in both.
Subjects tended to “tunnel”, focusing intensely on the game they were guess poor in and neglecting the other game, even though this hurt their overall performance and earnings.
This “tunneling tax” shows that scarcity captures our minds automatically, leading us to overlook costs and benefits and focus narrowly on scarce resources within our “tunnel”, even when it’s not the most efficient choice overall. The studies demonstrate how tunneling can have both benefits and costs.

The chapter discusses how scarcity not only affects our decisions in the moment, but also taxes our mental bandwidth or capacity over time. Scarcity continually draws our attention back into “tunneling” on immediate concerns, even when we try to focus on other unrelated tasks.

This is illustrated through vignettes of an executive distracted from her daughter’s softball game by focusing on an important work pitch, a student struggling to focus on an exam due to worrying about college tuition payments, and an employee unable to provide good customer service due to personal financial issues.

Scarcity functions like a constant internal distraction, pulling our thoughts back to pressing concerns even when we try to focus elsewhere. Just as external noise can hurt concentration and performance, these internal thoughts disrupt our attention and ability to fully engage with other tasks. Over time, this “bandwidth tax” from scarcity can compound and inhibit our decision-making, self-control and overall cognitive functioning. The chapter introduces the concept of bandwidth to capture this scarcity-induced reduction in our mental resources and capacities.

The passage discusses different types of cognitive processing - top-down (consciously directed) vs bottom-up (captured by external stimuli without conscious control). Scarcity can act as a bottom-up distracting stimulus that captures attention away from other tasks.
An early study showed that dieters were less likely to notice a red dot on screen if they had briefly seen a picture of food beforehand, due to the mental “attentional blink” caused by the food picture.
A follow-up study found that dieters searching a word search took 30% longer to find a word if the preceding word was something tempting like “donut” vs a neutral word, due to the tempting word still occupying their attention and causing “proactive interference”.
The passage argues that scarcity reduces available “bandwidth”, which refers to cognitive capacity (e.g. fluid intelligence, problem-solving abilities) and executive control (ability to focus attention, plan, inhibit impulses).
The Raven’s Progressive Matrices test is discussed as the prominent test of fluid intelligence, i.e. logical/abstract reasoning ability independent of knowledge. The passage indicates this test will be used to examine the effect of scarcity on cognitive capacity.

In summary, the passage introduces the concepts of top-down vs bottom-up attention and reviews studies showing how scarcity can act as a bottom-up distractor, occupying attention even on subsequent unrelated tasks. It proposes that scarcity reduces available “bandwidth” or mental resources in the domains of cognitive capacity and executive control.

The study tested people in a New Jersey mall on the Ravens Progressive Matrices test of fluid intelligence.
First, half the subjects were presented with a simple hypothetical scenario about a $300 car repair that insurance would cover half of. This did not reveal a significant difference in test scores between higher- and lower-income participants.
The other half were given the same scenario but with the cost being $3,000 instead of $300. This did reveal significantly lower scores for the lower-income participants compared to the higher-income and initial group.
Further replications also found the same effect - lower scores for lower-income participants only when the hypothetical involved a larger $3,000 cost instead of a smaller $300 cost.
The effect size corresponded to a difference of 13-14 IQ points, moving classifications from “average” to “superior” or vice versa.
This suggests that making monetary concerns salient through the scenario depleted cognitive resources and executive function for the lower-income participants, similar to the effects of sleep deprivation. Their performance reflected external constraints on bandwidth rather than inherent ability.
Two studies found that making people think about financial scarcity reduced their cognitive capacity and self-control. When asked to remember digits, people were more likely to choose cake over fruit. Under cognitive load, people made rude comments about revolting food served by a Chinese experimenter.
A follow-up study tested executive control of poor and wealthy shoppers at a mall. Those primed to think about financial hardship performed worse on impulse control tasks than those not primed.
To examine the real-world effects of scarcity outside experiments, the researchers studied Indian sugar cane farmers. Their income fluctuates seasonally, being rich after harvest and poor before.
Nearby farms have staggered harvest cycles, allowing a natural experiment. The same farmers could be studied when poor pre-harvest vs rich post-harvest.
As predicted, farmers reported more financial strain and borrowing pre-harvest when poor. Cognitive tests found farmers performed worse on measures of fluid intelligence and executive control pre-harvest compared to their post-harvest performance.
The magnitude of effects matched the mall study, suggesting scarcity inherently taxes cognitive resources, not just when experimentally induced. However, other pre-vs-post harvest factors need ruling out as alternative explanations.
The passage discusses three potential alternatives to explain the observed psychic changes in farmers pre- and post-harvest: 1) worse nutrition/hunger pre-harvest causing cognitive issues, 2) working harder pre-harvest causing mental exhaustion, 3) anxiety about income uncertainty pre-harvest. However, none of these fully explain the observations.
Farmers do not significantly cut back on food pre-harvest nor work harder pre-harvest. Their income is also relatively predictable based on the crops/timing.
Scarcity itself seems to tax cognitive bandwidth/capacity even without explicit reminders. Just like poverty reduces fluid intelligence, other forms of scarcity like dieting, loneliness, and artificial resource constraints can have similar effects.
Scarcity creates persistent concerns that use up mental bandwidth, unlike one-off events. The poor and busy are constantly dealing with monetary/time concerns respectively.
Scarcity’s effects on cognition are linked to increased worrying/stress, though the passage notes stress has a precise scientific meaning relating to biochemical/physiological responses.
Packing a suitcase serves as a metaphor for how we manage scarce resources like time, money, and calories.
When packing a large suitcase, there is room to spare and items can be packed casually without much thought.
However, packing a small suitcase requires trade-offs - not everything can fit so items must be carefully stacked and arranged. What to include and what to leave out requires deliberation.
This illustrates how scarcity changes how we “pack” and manage our limited resources. With a small suitcase, packing is done carefully and tightly with attention to trade-offs, whereas a large suitcase allows for a more careless approach with room to spare.
Understanding these differences in how we pack under conditions of scarcity or abundance is key to understanding how scarcity can create even more scarcity. It impacts how attentive we are to the trade-offs in our choices and allocations of limited resources.
The passage uses the metaphor of packing a suitcase to illustrate how scarcity promotes trade-off thinking. When packing a small suitcase, every item added requires removing another item to make room. This encourages weighing costs and benefits of each item.
With a large suitcase, there is excess space (“slack”) so items can be added without consciously making tradeoffs. Those with more resources experience more slack in time, money, etc. and are less inclined to consider opportunity costs.
A study found the poor report considering tradeoffs when purchasing big-ticket items like TVs far more than wealthier people. Both considered tradeoffs for TVs but only the poor did for cheaper items like blenders.
Slack acts like a buffer that allows the well-off to avoid feeling they must choose between options. The poor have less slack in their budgets so are more acutely aware of tradeoffs.
Bees and wasps are used as an analogy - bees precisely build hives out of scarce wax while wasps sloppily use plentiful mud, showing how scarcity incentivizes efficiency and consideration of costs.
The passage draws an analogy between packing suitcases and allocating resources. The rich have large suitcases with extra slack/space, while the poor have small suitcases that fill up quickly.
The slack/excess space that the rich have allows them to pack less valuably items and arrange things less efficiently. It also means they care less about items that don’t fit as there is less value associated with each additional item.
In contrast, the poor have to pack very efficiently with no extra space. Each additional item has high value so they are anxious about items that don’t fit.
This dynamic is applied economically - slack/space is cheap for the rich but expensive for the poor.
Slack brings inefficiency as it licenses indulgence in things like impulse purchases that sit unused as “cabinet castaways”. It allows avoiding hard choices by doing both options.
Importantly, slack provides a buffer for mistakes - the poor have to sacrifice necessities if they make a mistake, while mistakes don’t carry real costs for the rich due to their excess resources.

So in summary, the passage draws on analogies to argue that slack/excess resources promote indulgence, inefficiency and allow avoiding hard choices, while also providing a safety net for mistakes. The poor lack this buffer and so face a much less forgiving environment.

The planning fallacy, where people underestimate how long projects will take, can have different consequences depending on one’s circumstances.
For less busy people, there is slack in their schedule to absorb errors without major issues. They can reschedule commitments to find extra time needed.
For very busy people without slack, making up time is much harder. They have to delay other important projects or risk their whole schedule collapsing, with negative consequences.
Slack acts as a buffer that insulates against errors and allows people room to maneuver when mistakes are made. Its absence makes errors costlier.
Studies show the costs of temptations or mistakes take a bigger toll on poorer people, as those costs represent a larger percentage of overall expenditures and available slack.
Scarcity not only raises the costs of errors but provides more opportunity to make mistakes due to a constrained budget. Decision-making becomes more complex when choices must carefully fit limited resources.
Abundance turns temptations into affordable luxuries and makes decision-making less complex, as items represent a smaller fraction of disposable income and resources.
Scarcity shapes how we perceive value and trade-offs. Having slack or excess capacity allows us to feel abundant and not worry about mistakes or limits. Abundance affords more mental luxury.
A small suitcase makes us feel scarcity through lack of space. It forces us to notice trade-offs and feel constrained. A bigger suitcase relieves this feeling and allows us to pack without limit.
The concept of slack relates to this - having excess space/resources allows a feeling of abundance where we don’t notice limits and trade-offs.
Research has shown people value money differently depending on context. They are more willing to spend time to save small amounts on inexpensive items but not big-ticket ones, even if total savings are the same.
A study found people of limited means at a soup kitchen were more consistent in their willingness to travel to save money, regardless of the total item price, whereas wealthier individuals valued the same savings less for more expensive items.
This shows how scarcity, like money scarcity for the soup kitchen visitors, can shape our perception of value and willingness to accept trade-offs like time for savings. It upends traditional economics findings on how we value money.

In summary, the key point is that scarcity affects our psychological experience and perception of value, trade-offs, and money in ways that change our decision-making behaviors from rational economic models. Having slack resources relieves this feeling of scarcity.

Weber found that the “just noticeable difference” for weight is roughly one-thirtieth of the total amount. So if holding a 3-pound weight, at least 0.1 more pounds needs to be added to detect a difference. For a 30-pound weight, a full 1 pound more would be needed.
Perception is relative - a match provides bright light in the dark but barely noticeable in daylight. Detergent caps look more empty the bigger they are, tricking people to use more detergent.
Experience can overcome relative perception. Musicians can judge time intervals absolutely rather than relatively, due to expertise. Experienced bartenders pour amounts less relative to bottle height.
The poor have greater expertise in prices due to scarcity. Low-income shoppers knew prices and totals better on surveys, despite rich shoppers shopping more. They are less influenced by relative context in valuations.
Sendhil developed using “bean burrito benchmarks” to make dollar values more tangible when deciding whether to buy a Walkman. Experts suggest similar techniques like translating costs into equivalent activities to overcome slack and make trade-offs clearer.
The passage discusses how people with abundance tend to lack a clear sense of the value of money, like $10 or $50, because they don’t face real trade-offs. Without trade-offs, small amounts seem insignificant.
Without needing to evaluate trade-offs, valuations become ambiguous and open to manipulation through comparisons. Marketing takes advantage of this by framing small costs as a fraction of larger, irrelevant amounts.
Experiments show those with abundance are more influenced by context in valuations. They will pay more for the same item if the context is fancier, like a resort vs grocery store.
In contrast, people who live with scarcity have a better “internal metric” for valuation from facing real trade-offs. They gave more consistent willingness to pay across contexts in experiments.
The passage argues scarcity gives a clearer sense of monetary value that protects from biases abundance leads to, like inconsistency and manipulation through selective comparisons. Context has less influence on valuations for those used to real trade-offs.

So in summary, the key point is that scarcity provides a clearer, more consistent sense of monetary value due to direct experience with trade-offs, while abundance lacks this and leads to more manipulation and biases in valuation.

The story of Sandra Harris is presented, who took out a payday loan to pay for car insurance when her husband lost his job. She ended up rolling over the loan repeatedly by taking new loans to pay off old ones, accumulating large fees.
Payday loans often lead to cycles of debt as people take out new loans to pay off old ones rather than being able to pay them back fully. Three-quarters of payday loan volume comes from rollovers.
The data shows stories like Sandra’s are typical, as there were over 23,000 payday lender branches in the US in 2006, more than McDonald’s and Starbucks combined.
Rather than just debating personal responsibility vs predatory lending, the example provides a window into how scarcity affects decisions. The cash-strapped borrow in many ways beyond just payday loans, such as late bill payments, reconnect fees, and tax payment delays.
The poor worldwide often resort to informal high-interest loans when in need, facing similar debt cycles. The example illustrates how scarcity shapes financial behaviors and decision making.
Borrowers pay high interest rates on things like payday loans, but they often find themselves having to continually roll over the debt and pay those high rates again and again, setting them on a slippery slope.
This phenomenon of continually borrowing and paying high rates is not unique to the financially poor. Busy people also effectively “borrow time” by putting off tasks, often with a “fee” of increased time/effort needed later to complete the postponed work.
Like payday loan borrowers, busy people often end up continually rolling over their time debts by delaying tasks again and again.
The article describes an experiment using the game show Family Feud to simulate scarcity of time. Participants with less time (the “poor”) had to work under greater time pressure.
Those with less time focused more and earned more points per second, showing they worked more efficiently under pressure. However, they were more likely to “borrow” additional time at a cost, setting themselves up for greater scarcity later.
This shows how tunneling on immediate scarcity can lead both the financially and time-poor to borrow excessively, worsening their longer-term situations through accumulating interest/fees.
The study looked at how poor and rich subjects played a game show called Family Feud, where the poor had less time to respond to questions.
The poor tended to “tunnel” and focus intensely on the game, leading them to borrow more time through loans at a high interest rate. This made extra time seem very attractive in the moment.
However, borrowing ultimately hurt the poor’s performance, as repaying loans with interest ate up much of their limited time. When borrowing was prohibited, the poor did much better.
Recreating a “payday loan trap” had similar effects - early borrowing created a cycle where more time was needed to pay off previous loans, leaving little time for actual gameplay.
This shows how scarcity and tunneling can lead to destructive borrowing behaviors. Both poor and rich borrowed more when they were performing well, but scarcity meant it impacted the poor far more.
The study suggests poverty itself, not personal traits, causes increased borrowing under scarcity. Providing short-term relief through loans can end up worsening the long-term effects of poverty through accumulated interest and debt.
Putting off important but non-urgent tasks is like borrowing future time, and can lead to negative long-term consequences, similar to how destructive borrowing behaviors emerge from tunneling under scarcity.
The passage describes how scarcity and lack of time/resources can lead people to focus only on urgent/immediate needs and put off important but non-urgent investments and tasks. This is known as “tunneling” or the “tunneling tax.”
Examples given include neglecting things like cleaning your office, getting preventative health screenings, writing a will, and general lack of planning for the future due to being consumed with present demands.
Research on poverty finds people frequently fail to make high-return investments that could substantially improve their situations over time, like Indian rag collectors who don’t buy their own pushcarts despite the financial benefits.
Scarcity limits people’s cognitive bandwidth and ability to think beyond the present moment. Experiments showed poor subjects couldn’t take advantage of preview information about future tasks like richer subjects could.
The tendency to be short-sighted is not a personal failing, but a result of the scarcity context that captures people’s attention on immediate needs. Everyone is susceptible to tunneling under pressure of scarce time/resources.
The passage then discusses street vendors in India who borrow daily for inventory despite opportunities to cut small expenses and pay off debt much faster through compound interest, thus trapping themselves in an ongoing cycle of poverty.
Scarcity is not just about a lack of physical resources, but can also be a result of human behaviors through what are called “scarcity traps.” Scarcity traps perpetuate and amplify initial scarcity through behaviors.
The scenarios of Felix and Oscar illustrate how two people with the same resources can experience different levels of scarcity depending on how they manage and deploy those resources. Oscar is constantly “one step behind” due to taking on debt and not properly planning for scheduled expenses.
This puts Oscar in a scarcity trap where he is juggling multiple financial demands and obligations with no slack. It leads him to treat predictable expenses as emergencies and focus only on the most immediate problems, neglecting the future.
Over time, this pattern of “tunneling” on short-term fixes without regard for the future creates a complex and messy balance sheet of assets and obligations. Decisions become more difficult to navigate this complexity perpetuated by one’s own behaviors.
Juggling multiple financial balls keeps people locked in a state of scarcity as they struggle to meet obligations without proper savings or planning for the future. This behavioral aspect of scarcity traps helps perpetuate and amplify an initial lack of resources.
Studies show that people in situations of scarcity have lower fluid intelligence and diminished executive control. However, farmers during idle crop seasons have little work but a lot on their minds as they juggle various tasks and considerations.
This state of being one step behind and constantly juggling defines the “scarcity trap” - living with even less than possible due to playing catch-up and patchwork solutions.
Tunneling and high-interest borrowing are major reasons people get stuck in this trap. Planning to get out requires stepping back mentally, which scarcity inhibits. Following through on plans is difficult due to lack of bandwidth and weak willpower.
Researchers gave out cash grants to relieve debt for some vegetable vendors in India to test if a one-time infusion could get them out of the cycle. They tracked the vendors’ behavior to understand the root causes of scarcity traps, testing explanations like lack of savings options, short-sightedness, or not understanding compound interest. The key was to see if vendors with debt relief would return to the trap or maintain financial stability.
Researchers gave a cash infusion to vendors in India to pay off their debts. At first, the vendors seemed to understand the costs of living in debt and stayed out of it.
However, over time each vendor gradually fell back into debt, accumulating as much debt by the end of the year as those whose debt was not paid off.
The vendors did not immediately relapse but did so one by one over several months, as if being “picked off” by shocks. Many reported a shock as triggering their renewed borrowing.
The core issue is a lack of slack/buffer in their budgets to weather unexpected shocks like family events requiring gifts. With little savings, they turn to borrowing when faced with such shocks.
Periods of instability and volatility are a threat for those living at the edge of a scarcity trap, as instability is likely to push them back in without enough slack.
To truly escape the scarcity trap, it’s not just about average resources exceeding needs, but having buffers like savings or insurance to handle shocks when slack is lacking.
The vendors relapse shows scarcity is not just about average shortages but also instability, as periods of abundance don’t provide enough buffer against later scarcity due to shocks. Better management of resources during good times could prevent cycles of scarcity.

The passage discusses different types of scarcity traps. The traditional scarcity trap involves things like borrowing to meet needs, neglecting savings, and not leaving enough slack or buffers to handle unexpected shocks. This places people one step away from falling into a deeper trap due to a lack of resources.

It then introduces a new concept - a social scarcity trap. This involves people who are lonely or isolated. Their scarcity (lack of social connections) causes them to overfocus on social interactions when they occur. Studies show lonely people do worse in conversations when they think they are being judged, as they focus too much on coming across well rather than listening. They “choke” under pressure due to their scarcity mindset.

The passage draws parallels to athletes choking during high-pressure moments in sports. It explains how excessive focus and arousal can negatively impact performance for experts due to moving past the peak of an inverted U-curve relationship between attention and skill. Lonely people experience this as well - their scarcity mindset causes overfocus that undermines their natural social skills. Just as athletes perform best with automatic skills, lonely people would benefit from focusing less on their scarcity. But scarcity drives their mind to the place that hurts them the most. Diets face a similar challenge, as thinking about forbidden foods hinders self-control. In summary, the passage introduces a “social scarcity trap” caused by overfocus due to feelings of scarcity.

Poverty is one of the most widespread forms of scarcity, impacting billions of people globally through lack of resources, education, healthcare, etc.
While different forms of scarcity (e.g. time pressure, loneliness) may share common psychological effects, poverty is a unique case that is particularly difficult to cope with.
Unlike other forms of scarcity which may be somewhat discretionary, poverty leaves very little choice in reducing needs and wants. Basic needs like food and shelter cannot easily be reduced.
Money scarcity is also uniquely difficult as money is what underlies alleviating other scarcities. Those with more money can compensate for time scarcity through hiring help, for example.
The psychology of scarcity can help build empathy across different forms, but poverty’s effects are of a greater magnitude given the central role of money and lack of discretion. Managing poverty requires addressing its societal and structural roots.
Compliance with managed treatments for issues stemming from poverty, like medication for diabetes, faces unique challenges compared to other forms of scarcity due to psychological impacts of long-term poverty.
The passage discusses several examples where the poor seem to “fail” or underperform compared to wealthier groups. This includes not taking medications consistently, not weeding crops effectively, and not providing optimal parenting/home environments.
These patterns of poorer outcomes among the poor have been extensively documented across contexts and countries. However, potential explanations like access/costs or lack of skills cannot fully account for the differences.
There is a natural instinct to question or dismiss the data, seeing potential bias in how “failure” is defined or interpreted. However, the data comes from diverse sources without clear agendas and shows robust correlations.
The passage argues the causality may run in the opposite direction - that poverty and the “scarcity mindset” can lead to failures in behaviors and decision-making, rather than failure causing poverty.
One study on air traffic controllers found high-stress work days led to poorer parenting that evening, suggesting situational scarcity can impact behaviors. This supports the view that poverty and scarcity drive failure, not just the other way around.
In many examples, the poor seem to “leave money on the table” through suboptimal choices, suggesting poverty constrains mindsets and decision-making rather than just ability.
The parent felt bad for yelling at their children to turn off the TV, despite previously promising they could watch it if they finished their homework. They couldn’t help themselves in the moment.
Consistency in parenting is very important for children’s development and well-being, but it is also hard to consistently maintain discipline, rules, etc. due to the challenges of being a parent.
Good parenting requires substantial time, energy, and mental bandwidth. It involves complex decisions, scheduling activities, communicating with teachers, providing support for homework, and more. This takes a toll.
Financial struggles consume much of the “bandwidth” and mental capacity of those living in poverty. They have many demands on their limited resources like bills, loans, and worries about basic needs like rent and food.
Studies have shown parenting is hardest for poor families at the ends of months when financial resources are lowest. Children are more likely to misbehave in school during these times due to issues at home.
In general, poverty reduces bandwidth and cognitive capacity due to the mental load of ongoing financial stresses and scarcity. This can negatively impact many areas of life, from parenting to productivity to self-control and problem-solving. It is a vicious cycle.

The passage discusses how addressing poverty requires understanding the challenges of living with limited resources or “bandwidth.” It draws an analogy to how psychologist Alphonse Chapanis solved the problem of pilots mistakenly retracting wheels instead of flaps after landing.

Chapanis realized the issue was not with the pilots themselves, but with the similar design of the wheel and flap controls in bomber cockpits. This led to an approach of designing cockpits to prevent errors rather than just training pilots.

Similarly, failures of poor individuals in programs like job training or microfinance are often seen as personal faults. But the passage argues for taking a design perspective - looking at how programs could better account for the constraints of poverty, like limited bandwidth.

Just as cockpit errors were really design errors, much poor behavior may stem from program designs that do not consider the challenges of scarcity. A better approach is designing “for scarcity” by making programs more supportive and error-proof, rather than blaming failures on personal deficits like lack of motivation. This could improve outcomes for the poor in social programs.

Anti-poverty programs like training and welfare are often not designed to be fault-tolerant. They assume people will make no mistakes, attending every class and meeting all requirements.
But living in poverty means coping with scarcity, which taxes people’s bandwidth and makes small errors inevitable. Missed classes can spiral into dropping out of otherwise helpful programs.
Programs could be redesigned to be more forgiving of inevitable mistakes, through modular courses that allow catching up or alternative start dates if someone falls behind. This would prevent small errors from derailing progress.
Lifetime limits on welfare meant to incentivize work may backfire by residing outside people’s bandwidth-constrained tunnels of focus. Distant deadlines are ignored until too late. More frequent, smaller limits could work better.
Conditional cash transfers can work but tax limited bandwidth by requiring efforts to understand and meet many behavior requirements. We should consider how programs use up the bandwidth of the poor.
Education is not necessarily costless - it taxes already limited bandwidth if not designed carefully. There may be a bandwidth price to pay for focusing on training versus family responsibilities. Programs should economize on bandwidth use.
ADOPEM, a microfinance institution in the Dominican Republic, provided standard financial literacy education to its small business clients to improve their accounting and financial management skills. However, the module was very lengthy and complex, focused on traditional accounting techniques.
Prof. Schoar observed more successful local entrepreneurs were using simple rules of thumb rather than complex accounting, like keeping business and personal money separate. She designed a shorter class focused on these practical rules of thumb.
Attendance was higher in Schoar’s class and clients were more engaged. In follow-up surveys, students were more likely to implement the rules of thumb than accounting techniques. Businesses saw higher revenues, especially in bad weeks, after taking the rules of thumb class compared to no impact from the traditional class.
This showed designing education to economize on “bandwidth” or cognitive load can yield better returns than more complex approaches. Understanding the psychology of scarcity is important for designing effective anti-poverty programs. Building “bandwidth” through various interventions, like childcare, stable incomes, shock insurance, can help alleviate scarcity struggles.
St. John’s Regional Health Center was struggling with scheduling operating rooms efficiently due to too many planned and emergency surgeries and not enough rooms. This caused delays, late work hours, and inefficiency.
An advisor recommended leaving one operating room unused, which seemed counterintuitive since they were already short on rooms.
However, the real issue was not a lack of rooms overall, but a lack of slack or buffer room to accommodate emergency surgeries without disrupting planned schedules.
By dedicating one room solely to emergency cases, it allowed all other rooms to run planned surgeries on schedule without disruptions.
This led to significant benefits - they were able to perform 5.1% more surgeries, late surgeries dropped 45%, revenue increased, and volume grew 7-11% annually over the next two years.
It illustrates how scarcity problems are often not truly a lack of resources, but a lack of buffer/slack to accommodate unexpected disruptions or variation. Leaving unused capacity/slack can paradoxically increase overall efficiency and capacity.
Slack, or extra unused capacity, helps systems absorb small disturbances and avoid gridlock or failure. Examples given include extra tape in tape recorders, not overfilling a coffee grinder, and leaving some space between cars on a road.
Overstuffing schedules and eliminating slack leaves no room for error. An assistant who was sometimes underutilized provided valuable flexibility, but reorganizing to keep him busier full-time eliminated that slack.
While the present demands attention, failing to build slack for future contingencies can cause problems. Small delays spiral as tightly packed schedules lack flexibility.
Companies can become “fat” with excess cash, but leveraged buyouts intended to impose discipline through scarcity also risked leaving too little slack and endangering long-term viability.
NASA’s Mars Orbiter crashed in 1999 because its thruster units were receiving commands in pounds of force while its central processor was outputting in newtons, due to a mismatch between metric and imperial measurement units used by different subcontractors. This caused the thrusters to fire much more strongly than intended during the critical orbital insertion burn.
NASA’s Mars orbiter mission failed because the spacecraft was sent towards Mars instead of into orbit due to a unit conversion error (pounds instead of Newtons) during programming.
The engineers were under tight deadlines and working long hours due to being understaffed and falling behind schedule. This led to “tunneling” where they focused only on meeting deadlines and neglected other important tasks and checks.
Potential errors and inconsistencies in the data were overlooked in the rush to meet launch timelines. Key joint simulations that would have caught the error were not performed.
Prior reports warned that staff overwork and shortcuts taking due to schedule delays were risks, and this pattern of neglecting important non-urgent tasks ultimately led to the mission failure.
The emphasis on “Faster, Better, Cheaper” timelines and cost savings at NASA contributed to teams being overworked and falling into a “firefighting trap” where urgent tasks are prioritized over important preventative tasks.
Strict deadlines that cannot be negotiated, like launch windows, make it easy for tunneling and firefighting traps to occur if projects fall behind schedule initially.
Nearly a century ago, Henry Ford instituted a 40-hour workweek after determining through experiments that it increased worker productivity and output compared to longer hours like 10-hour days or 6-day weeks. His decision was motivated by both profits and humanitarian reasons.
Several later studies have found similarly that while increased hours may yield short-term gains, sustained overwork leads to declining productivity as fatigue sets in. Working more than 40-60 hours per week has been shown to reduce output, increase errors, lower quality of work, and delay project completion timelines.
Overwork also taxes mental bandwidth and depletes cognitive resources, similarly to how the body gets physically exhausted. Unstructured break time is important to let the mind rest and recover, yet organizations often fail to manage bandwidth and instead focus only on increasing hours. This can compound negative impacts on individual and team performance over the long run.
The restaurant business is focused on seating capacity and turnover because most costs are fixed overhead rather than food costs. Maximizing seatings and turning tables faster increases profits.
Benihana’s communal tables and theatrical cooking style allow for more efficient seating and faster table turnover. This increases their seatings and profits significantly compared to other restaurants.
Researcher Sheryl Kimes found that while a Chevys Mexican restaurant seemed busy, data showed low table usage and long waits between parties at tables. Implementing more small tables for 1-2 person parties increased profits over 5% by better utilizing seating capacity.
Scarcity challenges like scheduling appointments can create a “time-debt trap” if not managed. A foundation president’s assistant prevents this by enforcing meeting end times, short-circuiting the scarcity psychology without needing to change habits.
Small interventions can “scarcity-proof” environments against the psychology of scarcity through cues like rumble strips. Reminders about savings brought savings back into people’s tunnels and increased savings in studies without changing behaviors or willpower. Products should ensure important financial tasks regularly enter people’s scarcity tunnels.
Negligence is often unavoidable when people are busy or “tunneled” on other pressing matters. Instead of fighting negligence, it can be more effective to alter the outcomes it leads to.
Defaults and automatic enrollment/payment systems can help ensure important tasks still get done even when people neglect them. For example, automatically deducting savings from paychecks means people can save without actively thinking about it.
Reminders are also powerful for combating negligence but are often underutilized. Changing policies so people are enrolled in savings/insurance plans by default unless they actively opt out increases participation rates dramatically.
Automating repetitive, predictable tasks like bill payment insulates people from forgetting due to tunneling. Having only healthy food options at home can help avoid neglecting diet during busy periods.
Vigilance, or continuously repeating good behaviors, is much harder than one-time actions. Systems that harness people’s existing spending habits, like rounding up purchases to auto-transfer to savings, can help with behaviors requiring vigilance like saving money.

The passage discusses how scarcity taxes our limited cognitive bandwidth, or ability to process information and make decisions. It suggests economizing on bandwidth by simplifying decisions whenever possible.

Some strategies discussed include:

Synthesizing complex data into simple, clear takeaways to reduce cognitive load. People processing loans were less likely to borrow when shown costs in dollars rather than abstract interest rates.
Simplifying nutrition labels that overwhelm with exotic metrics. Concrete numbers like calories are easier to understand than percentages of daily values.
Linking good future decisions, like saving more, to expected events like salary raises through programs like Save More Tomorrow. This commits people when bandwidth is available rather than relying on vigilance later.
Pre-emptively arranging desired behaviors, like filling the house with healthy food, when focused on goals like eating well. Otherwise other priorities will likely take over later when bandwidth is lower.
Economizing decision-making by automating regular tasks through bill pay or maid services rather than relying on continuous willpower and vigilance.

The overall message is that scarcity increases the value of simplicity and minimizing complex decisions to preserve limited cognitive resources.

Bandwidth, or mental capacity, varies over time due to factors like stress levels, money constraints, and tasks/deadlines. It is important to be aware of natural fluctuations in bandwidth and arrange tasks accordingly.
Bandwidth tends to be lower at specific points in the month/season for those with variable incomes, like farmers and low-income workers paid monthly. Tasks should be scheduled for periods when bandwidth is likely higher.
A study showed getting Kenyan farmers to pre-purchase fertilizer during harvest when they had money increased usage, by moving the decision to a time of higher bandwidth.
When scheduling tasks, it’s important to consider bandwidth requirements, not just time availability. High-bandwidth tasks should be allocated to high-bandwidth time slots.
‘Snags’ like forms that require filling out can derail important actions if done when bandwidth is low. Helping low-income students directly fill out financial aid forms dramatically increased college enrollment rates compared to just providing information. Minor steps can become major stumbling blocks without support.
The chapter discusses how scarcity often stems from a period of initial abundance that goes underutilized, leading to crunch time later on. Things like long deadlines, large lump sum payments, and lack of emergency savings allow this pattern to emerge.
Dividing tasks, payments, etc. into smaller, more frequent chunks helps smooth things out and avoids boom-bust cycles of abundance then scarcity. This is better for productivity and resilience against shocks.
People tend to underestimate the likelihood of low-probability events and therefore don’t leave enough “slack” or buffer in their schedules, budgets, etc. to account for potential shocks and disruptions that scarcity can exacerbate. Building slack during times of abundance is important.
Even knowing the science, it’s hard to overcome the “tug of scarcity” and properly account for and manage one’s limited bandwidth and cognitive resources. People are often unaware of how taxed their minds can become and the downstream effects on performance and decision-making.

So in summary, it discusses how scarcity stems from initial abundance not being utilized well, the importance of smoothing things out over time, leaving slack as a buffer, and the challenges of self-awareness around cognitive bandwidth and capacity.

While we know a lot about the effects of scarcity on individuals and societies, we know little about how to maximize our limited cognitive capacity, especially for jobs focused on ideas rather than physical labor.
Just as individuals’ cognitive bandwidth fluctuates, a society’s bandwidth likely fluctuates as well. However, social scientists focus on measuring material dimensions like unemployment and GDP, not cognitive dimensions.
During economic downturns like the 2008 recession, cognitive bandwidth may have declined significantly along with increased unemployment, but there is no data on this. Measuring societal cognitive bandwidth could provide useful insights.
Factors like productivity and decision-making depend on cognitive bandwidth, so downturns in bandwidth today may reduce productivity in the future. Bandwidth impacts all aspects of life from parenting to relationships.
Thinking about bandwidth could lead to better social programs, policies, and solutions to problems by addressing cognitive issues rather than just material ones. It prompts asking different questions and solving problems differently.
When a deadline is far away, people tend to be less focused, more complacent, and more overconfident about their ability to complete the task on time.
During boom times like the housing bubble of the late 1990s/early 2000s, it was difficult to imagine house prices declining significantly. This overconfidence led to risky investment decisions.
Abundance, like the housing boom, reinforces tendencies toward procrastination, wasted time, and overconfidence. It sets the stage for problems later caused by scarcity, like the financial crisis.
Just as scarcity creates common behaviors across different problems, abundance may also create common behaviors and biases that propagate problems later on when scarcity hits. But when the deadline is distant, people are less motivated to address these potential future problems.

So in summary, the passage discusses how abundant or “good” times can breed complacency and overconfidence that lay the groundwork for problems when scarcity or a crisis eventually occurs, because people are less motivated to prepare when the deadline feels far away.

Here are the key points summarized from the passages:

Kandel (2007) discusses the structure of human memory and the science of memory formation at the neurological level.
The full story “Calvin and Hobbes” illustrates a creativity technique of focusing intensely on a single idea or story to develop it fully.
Dirtcandy restaurant in NYC is known for innovative dishes like “crispy tofu”. The chef Amanda Cohen had developed this dish over time through experience rather than just for publicity.
Creativity under time pressure is complex - it can inhibit new idea generation but help with synthesizing existing ideas.
Connie Gersick studied group dynamics and found that imposing a deadline near the midpoint of a project spurred reassessment and progress.
Studies have shown that intermediate deadlines and the impending scarcity of time can increase motivation and performance for various tasks like proofreading essays.
People work harder as deadlines approach, like salespeople near fiscal quarters or payday. Churchill was said to be mentally sharpest under impending time scarcity.
Psychological studies show that having too many demands depletes bandwidth and self-control, impacting decision making and task performance.
A 2005 firefighter fatality in Texas illustrates how tunnel vision due to intense focus on a task can have deadly consequences by missing wider threats or options.

The results were from an unpublished experiment where subjects earned 7% less when given one guess and three guesses compared to when given just one guess in both cases, even though they had more total guesses in the first condition. This suggests that having multiple guesses, even though it provides more opportunities, can be less effective than a single guess. The results were statistically significant with a sample size of 33 and p < 0.05.

Education can explain only a small fraction of gains in IQ scores over time. Environmental and cultural influences play an important role, as argued by Richard Nisbett in his book Intelligence and How to Get It.
Experiments showing that poverty influences cognitive function are summarized in a working paper by Mani et al. with details on sample sizes and statistical significance.
A study by Lusardi et al. found that about 50% of respondents were unable to come up with $2,000 in 30 days, indicating financial fragility.
The effects of poverty on cognitive function in the Mani et al. study were as large as the effects found in other studies on lack of sleep deprivation.
Childhood self-control, as measured in Mischel’s marshmallow test, correlates with later life outcomes and is influenced by situational factors according to follow up studies.
Stress, hunger, loneliness and other factors associated with poverty have been shown in various studies to influence cognition through biological and psychological mechanisms.
There was a sixfold difference in income between two groups in a study. The difference for purchases of a blender was statistically significant, but the difference for purchases of a TV was not economically or statistically significant (58.6% vs 60.8%).
Expertise can help reduce the impact of scarcity by providing skills, knowledge or credentials that increase earning power or job opportunities. Having more skills and knowledge allows people to navigate limitations and constraints more effectively.
However, expertise is unevenly distributed in society. Not everyone has equal access to opportunities to develop skills and expertise that could alleviate the pressures of scarcity. Scarcity itself can also limit the ability to invest in developing expertise due to costs like education or lost wages from time spent learning.
The article describes a study of 93 shoppers exiting a supermarket in Spain. It found that shoppers’ attitudes towards prices, demographics, and socio-cultural characteristics affected their price knowledge and ability to recall prices. High involvement in price searching was associated with increased price knowledge.
Another study of 93 commuters in Boston found a statistically significant difference (p < 0.05) in correct answers about gasoline prices between high-income (>$100k) and low-income (<$30k) respondents, with high-income responding more accurately.
A study of rich and poor smokers found both could decipher that taxes were increasing total prices of cigarettes, but the poor were better at determining the total tax burden versus just the change in per-pack taxes.
25% of consumers in another study could not identify surcharges on quantities of goods. Studies also found “sneaky” practices like reduced package sizes without price changes were more common in low-income neighborhoods.
A 2002 study found payday lending fees represented nearly 5% of annual income for the poor. Poor families also often rely on informal high-cost moneylenders when facing hardships.
Scarcity seems to focus attention on prices and costs for the poor, though this greater attention could paradoxically influence decision-making in ways that perpetuate the scarcity.

Here is a summary of the key points about poverty and myopia from the referenced sources:

Poverty can contribute to myopia (short-sightedness) in children due to factors like poor nutrition, lack of access to eye care, and exposure to indoor pollution. Poor children frequently do not receive regular eye exams or glasses if needed. (Ray)
A study in rural India found that over 127 jewel loans were taken out at an annual interest rate of 13%, showing high demand for small loans. (Faye and Mullainathan)
The poor rely on an average of 10 different financial instruments to manage their risk and cash flows. (Collins et al.)
Time use studies in developing countries show that the poor often work irregular hours and have very few hours of leisure on work days due to unstable incomes. (Wodon and Blackden)
There is little evidence that willpower or self-control capacity increases with repeated use and remains depleted after exertion of self-control. Experiments depleting self-control found increased temptation giving in. (Muraven and Baumeister, Vohs and Heatherton)
The references provide context on the economic precarity and stress of poverty, including inability to come up with $2 per day for basic needs, lack of savings to cover unexpected expenses, and financial fragility without $2,000 in liquid assets. (Collins et al., New Amsterdam Consulting, Lusardi et al.)

Here are the key points from the summaries:

R. L. Repetti (2006) studied the links between job stressors and father-child interactions, finding both short-term and long-term processes.
Gennetian et al. (2004) synthesized evidence from experimental studies on how welfare policies affect adolescents’ school outcomes, including that those living in more financially stressful environments are most likely to act out.
Siahpush et al. (2009) found that smokers experiencing financial stress are more likely to want to quit smoking but less likely to try or succeed in quitting.
Ludwig et al. (2011) studied a housing voucher program and found that moving to lower-poverty neighborhoods led to drops in extreme obesity and diabetes rates.
Gross and Borkovec (1982) had 38 good sleepers go to bed earlier than usual and found it disrupted their sleep-onset latency, or time to fall asleep.
Watts et al. (2011) found people are more likely to be worriers and perceive more threat if they sleep less well or get fewer hours of sleep.
Cacioppo et al. (2002) discovered lonely days seem to invade lonely people’s nights through lower-quality sleep.
Patel et al. (2010) associated poverty, ethnicity, and poor sleep quality.
Belenky et al. (1998) discussed how sleep deprivation can lead soldiers to fire on their own troops.
The Exxon Valdez oil spill was in part caused by the sleep-deprived ship’s captain.
Van Dongen et al. (2003) equated the effects of chronic sleep restriction to going without sleep for two nights in a row.
Blair et al. (2011) found that early childhood poverty negatively impacts brain development but rising income boosts cognitive capacity.

Here is a summary of the key points about slack for organizations from the provided quote and context:

It is possible to make an organization more efficient by driving out slack, or unused resources and excess capacity. However, this does not necessarily make the organization better.
Driving out all slack can prevent an organization from reinventing itself and making necessary changes when needed.
Organizations need some level of slack or inefficiency to allow them to “breathe,” adapt to changes, and improve over time.
Reintroducing a moderate amount of slack gives an organization flexibility and capacity for innovation and change when needed to remain effective in the long run.
Too much focus only on short-term efficiency can restrict an organization’s ability to evolve and thrive as external conditions change over time. Maintaining some slack promotes long-term viability and performance.

So in summary, while driving out slack can increase short-term efficiency, organizations also need some degree of slack or inefficiency to maintain flexibility, innovation potential, and the ability to change and improve over the long run in response to new challenges and opportunities. Both short-term efficiency and long-term adaptability are important.

Here is a summary of the paper “Information Framing and Consumer Choices: Field Experiment on the Effects of Graph-Based Nutrition Labels”:

The paper analyzes the results of an experiment conducted by H&R Block on how access to financial information impacts college enrollment decisions.
H&R Block randomly assigned some of their tax clients to receive information and assistance filling out the Free Application for Federal Student Aid (FAFSA). Others did not receive this extra assistance.
They found that simply providing information and assistance with the FAFSA led to a 6.2% increase in college enrollment among eligible recent high school graduates, with larger effects for low-income students.
This suggests that lack of information, rather than lack of financial resources, is an important barrier to college enrollment for some students. Just providing help navigating the financial aid process can make college seem more accessible and increase enrollment.
The results provide support for policies that increase transparency and simplify financial aid processes to expand college access, such as streamlining the FAFSA form and providing assistance programs. Improving access to information may be an effective way to promote educational opportunities.

#book-summary

Scarcity Why Having Too Little Means So Much - Sendhil Mullainathan & Eldar Sharif