Have you ever felt like you had less than you needed? Well that’s the definition of scarcity1 and what Scarcity by Sendhil Mullainathan and Eldar Shafir is all about. Throughout the book the authors will look at what causes scarcity and how it captures you in it’s clutches sometimes causing a spiral into more and more scarcity.

The simplified main argument for the book is captured in this quote.

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. 2

Scarcity is broken up into three main parts. Part one tackles the benefits and drawbacks of the scarcity mindset. Part two deals with how scarcity creates more scarcity for people. The final part of the book is designed to help you design programs and life rules that will help combat scarcity.

The Scarcity Mindset

The scarcity mindset has some benefits. As the end of a project or deadline approaches it helps you focus on the task at hand3. Daniel Pink echoed this idea when he talked about midpoints in When. Pink said that you either jump when the deadline approaches or slump because the problem of finishing is just too big4.

Sendhil and Eldar call the way a deadline focuses you the “focus dividend”5, but it also has an evil twin akin to the slump term that Daniel Pink used. Sendhil and Eldar call it tunnelling, which is when your vision on the deadline blocks out all other concerns, even things that are about the fall apart the day after the deadline6. They illustrated this with firefighters and seatbelts. As a firefighter rushes to a scene they easily forget their own safety as they tunnel on the upcoming threat. Firefighters are regularly thrown from moving emergency vehicles simply because they didn’t buckle up as the raced to the fire.

Sendhil and Eldar call this negative of the focus dividend “tunnelling tax”. This is the price we pay for not bothering with anything else around us.

One of the final ideas that they introduce in part one and carry throughout the book is the idea of your bandwidth for things. When something like money is scarce, all we can do is focus on getting money. This makes being a good parent hard, because kids are hard and we don’t have the bandwidth to step back and realize they’re kids7. They even said that people in scarcity have constant low grade stress, which was a concept also introduced in Lab Rats. There, Dan Lyons, used the idea that the scarcity of focus found in open offices because you get constant distractions leads to low grad constant stress. He equated that to PTSD in it’s affects on worker productivity.

Part 2: Scarcity Creates Scarcity

Scarcity forces trade-off thinking. All those unmet needs capture our attention and become top of mind. When we are tight on cash, we are highly attentive to all the bills that must be paid. 8

The second part of the book looked at the real world results of scarcity and enjoyably used the metaphor of a suitcase as you pack for a trip. Those in scarcity have a small suitcase in which not even all the necessities will fit. If they need to put something else in, something crucial must come out.

Think of it like a kid needing medication, but to pay for that you can’t get your car serviced and you know it’s going to be trouble soon. That’s the route you go because you can’t say no to your kid, but then the car goes and you have a harder time making it to the job you need to pay for the medication. Without slack in the system it’s very easy for one or two relatively small things to break the whole thing9.

Compare that with someone that has financial slack. Maybe they too put off the care expense this month, but save half of it and then next month complete the car repairs needed. Maybe they didn’t purchase family ski passes this year, yes they removed something, but it wasn’t something that crucial to keeping the whole life thing going10.

Another key idea with scarcity and slack is that those with financial slack can purchase time slack. As I write this I’m doing this exact thing. We are paying someone to watch our children while my wife works and I attend a meeting in an hour in another town. We purchased slack of time with our money, but if you have no extra money then there can be no slack in time because you can’t get any11.

Scarcity not only raises the costs of error; it also provides more opportunity to err, to make misguided choices. It is harder to do thins right, because many items — time commitments for the busy, expenses for the poor — must be carefully made to fit into a constrained budget. 12

Thinking back to Invisible Women, transit causes lack of slack in a specific demographic, women. Most transit systems are hub and spoke with the hub being the main working area of town. Most trips that women need to make are around the perimeter of the wheel, which means they have to travel in and out of the hub. Transit planners create scarcity of time for women because of this design.

Part 3: Designing for Scarcity

So now that we know the impact of scarcity on our lives, what can we do to improve it so that there is more slack to go around?

One thing the authors proposed was when you’re offering courses, offer staggered classes. When someone in the first class has to miss a day because their childcare fell through, they can come back and start exactly where they were the following week. They call this idea fault tolerance in your course planning13.

They also remind us that incentives for “good” actions must enter the tunnel of those you’re trying to reach14. They told the story of farmers that if they showed up to learn about growing crops better were given a seed credit to use. Since the group of farmers they were trying to reach struggled to pay for everything, the seed credit entered their tunnel.

They also reminded us to address the bandwidth issues of those we serve15. I’m on two volunteer organizations. In one I have to wrangle childcare and cars and a whole bunch of stuff to make it. The other provides child care, snacks, and is trivial to get to. Guess which one I’m quitting.

For those trying to get more done, make sure you leave a section of each day to do nothing on the list16. Something will always come up so packing out your day in a way that doesn’t allow for this will only make you further behind.

A standard impulse when there is a lot to do is to pack tightly — as tightly as possible, to fit everything in. And when you are not tightly packed, there’s a feeling that perhaps you aren’t doing enough. 17

Without this slack in your systems you’re stuck in what Sendhil and Eldar call the firefighting trap18. Always worrying about the problems of right now and never able to work ahead for tomorrow. Putting in more hours only helps in the very short term, and within a few weeks you’re further behind and should have just stayed at the standard work hours19.

As you think about your systems, remember that scarcity often starts with mismanaged abundance20. When you have extra money, you purchase a bunch of stuff21

Should You Read Scarcity by Sendhil Mullainathan and Eldar Shafir

Before I give you a recommendation take a minute to read this quote and sit with it.

One cannot take a vacation from poverty. Simply deciding not to be poor — even for a bit — is never an option. 22

If you’re working with any group that has a scarcity problem then this is a must read book. For those of us that don’t work with these groups regularly, it’s still a must read book to help us understand where we can get to if we’re not careful. The simply fact that you have free time to read this post and consider this book means you have slack in your schedule.

How can you help someone you know create slack in their schedule? Maybe take your neighbour’s new baby for an hour so they can do dishes. Trust me we’ve been in that position in the last few years and they’ll thank you for it.

In many ways Scarcity provided the best argument I’ve heard for universal income. By giving people a base income that will take care of their needs we’ve freed up some bandwidth for them to make better decisions. I’m not saying it sold me, but that it made sense, even though the authors never actually made that argument specifically.

Other good reading to go with this book is:

Purchase Scarcity on Amazon
Purchase Scarcity on Book Depository

  1. Page 4 
  2. Page 14-15 
  3. Page 21 
  4. For remedies to this go look at that review of the book 
  5. Page 24 
  6. Page 29 
  7. Page 41 
  8. Page 72 
  9. Page 72 
  10. Page 76 
  11. Page 76 
  12. Page 84 
  13. Page 171 
  14. Page 172, 173 
  15. Page 181 
  16. Page 187 
  17. Page 187 
  18. Page 193 
  19. Page 197 
  20. Page 222 
  21. Yes I do this which is why I use Profit First to help curb that issue 
  22. Page 148 

Related Content