The Cognitive Consequences Of Scarcity

In this week’s edition of my e-newsletter, The Brilliant Report, I quote from a very interesting new book by Sendhil Mullainathan and Eldar Shafir, titled Scarcity: Why Having Too Little Means So Much:

“Scarcity captures the mind. Just as [people who are hungry can only think about food,] when we experience scarcity of any kind, we become absorbed by it. The mind orients automatically, powerfully, toward unfulfilled needs. For the hungry that need is food. For the busy it might be a project that needs to be finished. For the cash-strapped it might be this month’s rent payment; for the lonely, a lack of companionship. Scarcity is more than just the displeasure of having very little. It changes how we think. It imposes itself on our minds . . . Scarcity is not just a physical constraint. It is also a mind-set. When scarcity captures our attention, it changes how we think. By staying top of mind, it affects what we notice, how we weigh our choices, how we deliberate, and ultimately what we decide and how we behave. When we function under scarcity, we represent, manage, and deal with problems differently.”

As Mullainathan, a Harvard economist, and Shafir, a Princeton psychologist, point out, “scarcity” can refer to a lack of any quantity we value. I’m especially interested in their research on what happens to the way we think and act when we have a scarcity of time. When we feel time-pressured, the authors note, we tend to “tunnel” in on the project that’s most pressing, ignoring other tasks that are “important but not urgent.” We need, they say, to find ways to expand our “mental bandwith” so that we can take a more encompassing view of what has to get done and how best to do it. (Here’s a related piece Mullainathan wrote for the website of Time magazine, about “The Mistake Busy People Make.”)

Also fascinating—and sobering—is their work on how a scarcity of economic resources affects the way we think. The poor sometimes act in puzzlingly self-defeating ways; Mullainathan and Shafir explain that this is not due to a character defect or any of the other flaws imputed to the poor, but to the influence of poverty itself. In a just-published article in the journal Science, titled “Poverty Impedes Cognitive Function,” Mullainathan and Shafir, along with coauthors Mani Anandi and Jiaying Zhao, lay out some evidence. Here’s the abstract of the study:

The poor often behave in less capable ways, which can further perpetuate poverty. We hypothesize that poverty directly impedes cognitive function and present two studies that test this hypothesis. First, we experimentally induced thoughts about finances and found that this reduces cognitive performance among poor but not in well-off participants. Second, we examined the cognitive function of farmers over the planting cycle. We found that the same farmer shows diminished cognitive performance before harvest, when poor, as compared with after harvest, when rich. This cannot be explained by differences in time available, nutrition, or work effort. Nor can it be explained with stress: Although farmers do show more stress before harvest, that does not account for diminished cognitive performance. Instead, it appears that poverty itself reduces cognitive capacity. We suggest that this is because poverty-related concerns consume mental resources, leaving less for other tasks. These data provide a previously unexamined perspective and help explain a spectrum of behaviors among the poor.

This is an extremely important example of my favorite theme: situations have cognitive consequences. Our situations cause us to act, and even to think, in particular ways. What we take to be a fixed, internal quality (e.g., the persistent assumption that poor people must be lazy or stupid) may well be a product of circumstances. And circumstances can be changed. With reference to my recent post defending “serious self-help”: Scarcity has been added to my list of favorites, with its chapters on “Managing Scarcity In Organizations” and “Scarcity In Everyday Life.” Check it out—this book will change the way you think.

One Response to “The Cognitive Consequences Of Scarcity”

  1. anniempaul says:

    A reader named George adds this comment:

    On your email version of this article your “scarcity” quote and insights related strongly to the work of Robert Cialdini in his book Influence: The Psychology of Persuasion. One of his 6 methods of influencing others is to tie to the SCARCITY of what you are trying to promote. Whether it is a product, a service or both, you will get stronger, quicker reactions to buy/acquire if you show there is a limit, a scarcity attached to it. If we have a desire for something and we think we may not get it due to the scarcity of it, we move much more quickly and decisively.

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