Scarcity: Why Having Too Little Means So Much

By Sendhil Mullainathan, Eldar Shafir

Categories: Business & Money, Politics & Social Sciences

Economist Sendhil Mullainathan and psychologist Eldar Shafir explain how scarcity, whether of money, time or food, affects our thinking. They show that scarcity captures the mind, narrowing focus on urgent needs while reducing bandwidth for everything else. This helps explain why poor people, busy people and dieters make similar mistakes. The authors suggest how individuals and organizations can manage scarcity better.

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• Shane Parrish: “When something you need is scarce or not there (say time if you’re a busy person, money if you’re poor) it narrows what your mind can see. This has negative effects, such as amplifying cognitive biases. This, in turn, increases the odds of making poor decisions”