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Why Having Too Little Means So Much

Eldar Shafir and Sendhil Mullainathan

Paleontologists in China - villagers were digging up dinosaur bones, scientists paid them per piece of bone. So of course when they found a bone, they smashed it up to increase earnings. Not quite what they were planning.

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There is an upside to scarcity - focuses you to make best of what is available. Meetings start out vague and waffly, but as realize halfway through and nothing achieved, suddenly get more purposeful. Same effect with deadlines - you write far less when have weeks to go, then huge amount in last few days.

(London Times)

Scarcity got off to a good start before I even opened it. On the back cover it had a message from Daniel Kahneman the Nobel prizewinner that declared that the authors were stars in their respective disciplines and that their collaboration was greater than the sum of its parts. And one from Steven Levitt, one of the authors of Freakonomics, describing the volume as captivating.

And inside the dust jacket fold, I learnt that not only was Sendhil Mullainathan a Professor of Economics at Harvard, he has also received a “genius grant” from the MacArthur Foundation. I think it would be very nice to get a genius grant, don’t you? But if I can’t have one myself, I certainly regarded it as an enticement to read on.

So I began in high good spirits and optimistic about the reading journey. The basic idea of behavioural economists — that rational economic man is a poor guide to real human behaviour — is correct and important. This promised from the word go to be an entertaining and useful addition to the literature. I could see very quickly what had appealed to Kahneman. A little like his book Thinking Fast and Slow, Scarcity is proper science, carefully written. It advances an idea and presents evidence for it. And I could see what appealed to Levitt, too.

Since Freakonomics and Gladwell’s Tipping Point, publishers have been rolling out lots of these books which all work the same way — an arresting anecdote, an application of it, another arresting anecdote, and so on. The authors of Scarcity follow the plan with good clear pose, and a twinkle in their eye. Scarcity is a likeable book.

Which is why I am embarrassed to admit that my optimism began to wane by the time I was a quarter of the way through and my goodwill had largely dissipated by the half-way mark.

Essentially the point made by Scarcity is a very simple one. You know how your wife claims that women are better at multitasking than men? Yes? Well, they aren’t. The reason for this is that none of us, male or female, can multitask. If we concentrate on one thing, other things suffer. If you drive a car and use a hands-free phone at the same time, your driving concentration will have been impaired.

So if you face a serious problem — you have run out of money for instance — the attention required to set things right will make you worse at doing everything else. Thus poor people might have less attention to devote to, say, resisting tempting and fattening food because their mind is engaged elsewhere. Scarcity makes you focus (on saving money) but also makes you tunnel (ignoring things that would also benefit from attention).

Scarcity argues that we have limited intellectual bandwidth and this should effect how economists view us. People do not take rational decisions on all the choices in front of them because they are preoccupied. They run out of bandwidth. This is particularly a problem for the poor since their bandwidth is consumed worrying about their money problems.

The authors do a good job at proving this point. They also say that it is a fresh one and that they are writing at the frontiers of behavioural science. Who am I to argue? It seemed quite a familiar argument to me, but I haven’t got a genius grant.

Accepting that the point was original to begin with (and obviously the authors are entitled to respect and trust on this) my problem was that it was no longer original once I’d read a few chapters. I’d grasped it, to be honest, and I didn’t feel I needed the last 100 pages.

As with quite a lot of books, particularly American ones in this field, it is hard to escape the idea that a paper has been turned unnecessarily into a book. I’m not saying don’t read it and I’m certainly not saying ignore it. The argument is useful in all sorts of ways, I can quite see that. All I’m saying is, don’t feel you have to finish it.

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