I predict this idea of scarcity is going to have a long shelf life. It is novel, seems to describe a number of different puzzling behaviours and applies both to the rich and the poor.
The authors - economist Mullainathan and psychologist Shafir – make a deceptively simple argument: if you lack something, your mind focusses on that lack both in a productive and an unproductive way.
So, if you lack money, you think about money a lot at the expense of other things you ought to be thinking about, such as your performance at work, or the way you raise your children (reading to them at bedtime, putting in place consistent rules rather than unpredictable ones which are only sporadically enforced) and dressing smartly and preparing for job interviews.
If you lack time, you tend to lurch from one project to another, always behind, never organising yourself and becoming frustrated and possibly ill as a result.
The theory is attractive, because it links us with the rest of mankind. As the authors put it: "This after all is our thesis. If scarcity evokes a unique psychology irrespective of its source, then we are free to treat the varieties of scarcity all the same. If there is a common psychology of scarcity, shouldn't everything we observe about the poor also hold for the busy or for dieters?"
In other words, we are all scarce is something. The scarcity could be artificial – we might be trying to diet, denying ourselves calories and yet finding that the more we deny ourselves food, the more we focus upon it. Or it might be real – many suffer from loneliness, friends are scarce.
In bridging the divide, the authors invite us to feel sympathy towards those we might otherwise have looked down upon. Yet they aren't afraid to talk about what they term the "elephant in the room".
"One broad theme emerges from decades of… research: the poor are worse parents. They are harsher with their kid, they are less consistent, more disconnected, and this appear less loving... We now know what makes for a good home environment, and the poor are less likely to provide it."
And the authors don't stop there - "the poor fall short in many ways" - and point out that the poor in the US who are on Medicaid pay nothing for medication, yet "fail to take them".
Bravely the authors suggest that, far from all of this confirming our prejudices, failure causes poverty
They write: "The poor are poor because they are less capable. If your earnings depend on making good choices, then it follows naturally that those who fail end up poor." Instead, what they say is "our data suggest causality runs at least as strongly the other direction: that poverty – the scarcity mind-set – causes failure."
And they demonstrate this by showing a study that air traffic controllers, after a hard day at work – bad weather, lots of planes diverting etc - come home, and being preoccupied, and tired, are worse parents than on days when they have an easy day at work. It is plausible.
The authors liken it to trying to talk to someone on the phone when that other person is also working on their computer. If you are not aware of their multitasking, they sound disinterested and less engaged. Well that is what the poor are like, much of the time. They lack what the authors call sufficient "bandwidth". They are focussed on pressing and immediate problems of money, of juggling numerous debts and impossible claims on their resources.
And so other things suffer. "When scarcity taxes our bandwidth, we become ever more focussed on the here and now. We need cognitive resources to gauge future needs, and we need executive control to resist present temptations. As it taxes our bandwidth, scarcity focuses us on the present, and leads us to borrow."
The final chapters lead to some suggestions as to what to do about this, and are less convincing, but then you can't solve all the world's problems in just a few chapters.
It's a great read, and has the attraction of making many diverse problems suddenly explicable using what is often called in strategy terms, a "lens". In other words, a new way of looking at the data, adding an overarching theory to explain it.
The approving quotes from Daniel Kahneman, author of Thinking, Fast and Slow, Richard Thaler, co-author of Nudge, and Steven D Levitt, co-author of Freakonomics, add weight to the idea that this is the new "must-read" for those interested in the crossover between behavioural psychology and economics.
Or as Tim Adams put it in The Guardian: "The efforts to find a metaphor that unifies rich and poor, a shared humanity, if you like, has become both a lucrative and a slightly desperate publishing enterprise. Most of the academic traffic is concentrated at the busy crossroads between economics and psychology, where a nudge is as good as a blink."
Allen Lane £20
Tom Otley
I predict this idea of scarcity is going to have a long shelf life. It is novel, seems to describe a number of different puzzling behaviours and applies both to the rich and the poor.
The authors - economist Mullainathan and psychologist Shafir – make a deceptively simple argument: if you lack something, your mind focusses on that lack both in a productive and an unproductive way.
So, if you lack money, you think about money a lot at the expense of other things you ought to be thinking about, such as your performance at work, or the way you raise your children (reading to them at bedtime, putting in place consistent rules rather than unpredictable ones which are only sporadically enforced) and dressing smartly and preparing for job interviews.
If you lack time, you tend to lurch from one project to another, always behind, never organising yourself and becoming frustrated and possibly ill as a result.
The theory is attractive, because it links us with the rest of mankind. As the authors put it: "This after all is our thesis. If scarcity evokes a unique psychology irrespective of its source, then we are free to treat the varieties of scarcity all the same. If there is a common psychology of scarcity, shouldn't everything we observe about the poor also hold for the busy or for dieters?"
In other words, we are all scarce is something. The scarcity could be artificial – we might be trying to diet, denying ourselves calories and yet finding that the more we deny ourselves food, the more we focus upon it. Or it might be real – many suffer from loneliness, friends are scarce.
In bridging the divide, the authors invite us to feel sympathy towards those we might otherwise have looked down upon. Yet they aren't afraid to talk about what they term the "elephant in the room".
"One broad theme emerges from decades of… research: the poor are worse parents. They are harsher with their kid, they are less consistent, more disconnected, and this appear less loving... We now know what makes for a good home environment, and the poor are less likely to provide it."
And the authors don't stop there - "the poor fall short in many ways" - and point out that the poor in the US who are on Medicaid pay nothing for medication, yet "fail to take them".
Bravely the authors suggest that, far from all of this confirming our prejudices, failure causes poverty
They write: "The poor are poor because they are less capable. If your earnings depend on making good choices, then it follows naturally that those who fail end up poor." Instead, what they say is "our data suggest causality runs at least as strongly the other direction: that poverty – the scarcity mind-set – causes failure."
And they demonstrate this by showing a study that air traffic controllers, after a hard day at work – bad weather, lots of planes diverting etc - come home, and being preoccupied, and tired, are worse parents than on days when they have an easy day at work. It is plausible.
The authors liken it to trying to talk to someone on the phone when that other person is also working on their computer. If you are not aware of their multitasking, they sound disinterested and less engaged. Well that is what the poor are like, much of the time. They lack what the authors call sufficient "bandwidth". They are focussed on pressing and immediate problems of money, of juggling numerous debts and impossible claims on their resources.
And so other things suffer. "When scarcity taxes our bandwidth, we become ever more focussed on the here and now. We need cognitive resources to gauge future needs, and we need executive control to resist present temptations. As it taxes our bandwidth, scarcity focuses us on the present, and leads us to borrow."
The final chapters lead to some suggestions as to what to do about this, and are less convincing, but then you can't solve all the world's problems in just a few chapters.
It's a great read, and has the attraction of making many diverse problems suddenly explicable using what is often called in strategy terms, a "lens". In other words, a new way of looking at the data, adding an overarching theory to explain it.
The approving quotes from Daniel Kahneman, author of Thinking, Fast and Slow, Richard Thaler, co-author of Nudge, and Steven D Levitt, co-author of Freakonomics, add weight to the idea that this is the new "must-read" for those interested in the crossover between behavioural psychology and economics.
Or as Tim Adams put it in The Guardian: "The efforts to find a metaphor that unifies rich and poor, a shared humanity, if you like, has become both a lucrative and a slightly desperate publishing enterprise. Most of the academic traffic is concentrated at the busy crossroads between economics and psychology, where a nudge is as good as a blink."
Allen Lane £20
Tom Otley
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