Scarcity: And How to Avoid It?
“The poor are not just short of cash. They are short on bandwidth. With scarcity on mind, they simply had less mind for everything else.”
– Scarcity: Why Having Too Little Means So Much by Sendil Mullinathan and Shafir Eldar
By the mid-nineties, pagers had become a popular medium of instant communication. I had one attached to my belt. You had to ring a number and dictate the message to a telephone operator. It was frustrating at times. How wonderful it would be to send your messages straight from your pagers rather than passing through the call center agent, I thought. Mobile phones existed in those times, but they were beyond the reach of common men.
Within five years, mobile phones had been introduced at the same price as pagers. And although calling was expensive, one could send and receive instant messages via SMS. By the year 2000, the internet was ubiquitous, and in the next five years, it was available on the phone. Everyone had a Blackberry to send and receive messages via email — a rich text format in 2010. We now watch HD movies on our phones and indulge in video calls.
Internet, 3D printing, robotics, drones, electronic surveillance, social media, e-commerce, food delivery, and online dating supported by geolocation and artificial intelligence form part of our lives. There are 5.2 billion phones in the world today — and 4.7 billion internet users.
If scarcity can be so easily eliminated from our lives, why does poverty remain an intractable problem to solve?
The Scarcity Trap
A 1946 study of hunger(prompted by a need to understand and feed Europe’s starving after the war) among American volunteers revealed not only the obvious — that, faced with starvation, food of any kind would be eaten and plates licked clean — but also that the brain was hijacked entirely by this need. The subjects of the study who watched movies were interested only in the scenes in which food was mentioned; when they talked, they made plans to open restaurants or become farmers when the study was ended; they hoarded cookbooks.
Further research demonstrated that a similar fixation occurs in even less intense situations. In one experiment, participants were split into two groups: those who had eaten lunch and those who hadn’t eaten since breakfast. Both groups viewed words flash on a screen at a rate of one-thirtieth of a second. The hungry group identified as many of the terms as the others, with the exception of “cake,” which they were considerably more likely to identify than their fully fed counterparts.
The researchers proceed to count the ways in which scarcity of any type — sleep, security, time, food, money — alters thought processes. Sometimes the outcomes are unexpected. The lonely and isolated are significantly more aware of facial gesture nuances than the popular and sociable.
The “tunneling” of vision can be more creative in some cases: as an artist or writer can attest, an impending deadline will focus the mind like nothing else. Yet, such narrowing always comes at a cost.
The price is an overemphasis on the immediate need, which leads to a lack of interest in larger concerns and an inability to envision long-term ramifications. This scarcity-induced “loss of bandwidth” has disastrous consequences, particularly in terms of money. While the poor have a much sharper sense of value and cost, an obsessive focus on where the next meal is coming from leads not only to poor judgment and a reduced ability to make rational decisions but also to a loss of intelligence (even “feeling poor” lowers IQ by the same amount as a night without sleep), as well as a reduction in resistance to self-destructive behavior.
This “Scarcity Trap” provides an explanation for unpalatable truths, the authors Mullinathan and Eldar, in their book ‘Scarcity’ argue. It shows why the “poor are more likely to be obese, less likely to send their children to school… [why] the poorest in a village are the ones least likely to wash their hands or treat their water before drinking it.”
And the explanation is that “the poor are not just short of cash. They are short on bandwidth.” When an individual, any individual, is concerned about money troubles, his ability to perform other tasks is measurably reduced. Reminded that they are poor, individuals “showed less flexible intelligence, less executive control. With scarcity on his mind, they simply had less mind for everything else.”
The implications of such discoveries, namely that poverty of any kind diminishes one’s inventiveness and ability to shape one’s own life, are considered revolutionary.
The authors propose a series of nudge-like interventions to “create bandwidth” — for the time-poor, this could be as simple as setting up direct debits; for the cash-poor, it could be as simple as providing some kind of insurance against “small shocks” (a puncture, a sick cow, a rent rise) that can lead to moneylenders and loan sharks, or providing regular working days rather than the debilitating vacation days. Such solutions aren’t really novel.
The Scarcity Trap, Tunneling, and Loss of Bandwidth are some of the problems that can be solved with income. Adequate social security could lift millions in India out of poverty overnight. So why is this solution ignored?
Partly because we continue to believe that poverty is a result of irrational behavior and that suffering can change that behavior.
