Scarcity: Why Having Too Little Means So Much

In Scarcity, Mullainathan and Shafir dissect the intricate ways in which scarcity shapes human cognition and behavior, proposing that understanding the psychology of scarcity is crucial for developing effective strategies to mitigate its adverse effects on decision-making and well-being.

The authors ground their initial exploration of the psychology of scarcity in the concept of the “bandwidth tax,” which posits that scarcity consumes cognitive resources, thereby limiting individuals’ mental capacity and decision-making abilities. Mullainathan and Shafir delve into how this cognitive tax manifests in various aspects of life, drawing on personal anecdotes, empirical research, and theoretical analysis. Their study involving sugarcane farmers in India starkly demonstrates how financial scarcity before harvest significantly reduces cognitive function, only for it to improve post-harvest.

Mullainathan and Shafir also illustrate the bandwidth tax through their own experiences, noting how their performance while playing games on their phone decreased when they were under the pressure of book deadlines: “Tense days of writing under deadline led to remarkably weak scores. This was a vivid illustration of how pervasive the bandwidth tax can be” (227). This example humanizes the concept of the bandwidth tax while providing a clear illustration of its impact on cognitive resources in daily life. By extending the bandwidth tax to their personal lives, Mullainathan and Shafir broaden the relevance of their findings, suggesting that the bandwidth tax is a universal condition that can influence a wide range of behaviors and outcomes.

Mullainathan and Shafir also examine how scarcity captures the mind, explaining that scarcity operates at a subconscious level that profoundly affects one’s focus. They illustrate this through the example of a WWII study on hunger conducted by researchers at the University of Minnesota. In this study, participants, who were subjected to controlled dietary restrictions, exhibited an overwhelming preoccupation with food, demonstrating how scarcity of a crucial resource commandeers attention and mental processes. The subjects found their thoughts and conversations invariably gravitating toward food, recipes, and eating establishments, highlighting how the lack of food dominated their cognitive landscape.

This historical example illustrates scarcity’s ability to capture the mind, redirecting mental resources and priorities involuntarily. Furthermore, the authors cite a contemporary study that tested the ability of subjects to identify words flashed in front of them for 1/30th of a second. Hungry participants excelled at identifying food-related words, showing that their minds were seized by a focus on food. As Mullainathan and Shafir emphasize, “when the hungry recognize CAKE more quickly, it is not because they choose to focus more on this word. It happens faster than they could choose to do anything. This is why we use the word capture when describing how scarcity focuses the mind” (9).

The authors thus argue that scarcity—whether it involves food, time, money, or other resources—narrows the field of cognitive focus, leading to a tunnel-like vision that prioritizes immediate scarcity-related concerns at the expense of broader perspectives and needs. This phenomenon, they assert, is a fundamental psychological response to scarcity that can explain a range of behaviors observed across different contexts and cultures, emphasizing the pervasive and often subconscious influence of scarcity on human cognition.