Scarcity - Vignesh Prasad

- This resemblance is striking because the circumstances are so different. We normally think of time management and money management as distinct problems. The consequences of failing are different: bad time management leads to embarrassment or poor job performance; bad money management leads to fees or eviction. The cultural contexts are different: falling behind and missing a deadline means one thing to a busy professional; falling behind and missing a debt payment means something else to an urban low-wage worker. The surroundings differ. The education levels differ. Even aspirations can differ. Yet despite these differences, the end behavior is remarkably similar. - They were focused on food. Of course if you are starving, getting more food should be a priority. But their minds focused in a way that transcended practical benefits. The delusions of starting a restaurant, comparing food prices, and researching cookbooks will not alleviate hunger. If anything, all this thinking about food—almost a fixation—surely heightened the pain of hunger. - Scarcity captures the mind. Just as the starving subjects had food on their mind, 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. - When scarcity captures the mind, we become more attentive and efficient. There are many situations in our lives where maintaining focus can be challenging. We procrastinate at work because we keep getting distracted. We buy overpriced items at the grocery store because our minds are elsewhere. A tight deadline or a shortage of cash focuses us on the task at hand. With our minds riveted, we are less prone to careless error. This makes perfect sense: scarcity captures us because it is important, worthy of our attention. - But we cannot fully choose when our minds will be riveted. We think about that impending project not only when we sit down to work on it but also when we are at home trying to help our child with her homework. The same automatic capture that helps us focus becomes a burden in the rest of life. Because we are preoccupied by scarcity, because our minds constantly return to it, we have less mind to give to the rest of life. This is more than a metaphor. We can directly measure mental capacity or, as we call it, bandwidth. - In large-scale marketing experiments, some customers are mailed a coupon with an expiration date, while others are mailed a similar coupon that does not expire. Despite being valid for a longer period of time, the coupons with no expiration date are less likely to be used. - Scarcity of any kind, not just time, should yield a focus dividend. - It is very hard to fake scarcity. The scarcity dividend happens because scarcity imposes itself on us, capturing our attention against all else. We saw that this happened in a way that is beyond conscious control—happening in milliseconds. - Focus is a positive: scarcity focuses us on what seems, at that moment, to matter most. Tunneling is not: scarcity leads us to tunnel and neglect other, possibly more important, things. - Scarcity alters how we look at things; it makes us choose differently. This creates benefits: we are more effective in the moment. But it also comes at a cost: our single-mindedness leads us to neglect things we actually value. - Bandwidth measures our computational capacity, our ability to pay attention, to make good decisions, to stick with our plans, and to resist temptations. Bandwidth correlates with everything from intelligence and SAT performance to impulse control and success on diets. - Scarcity itself also captures attention via a bottom-up process. This is what we mean when we say it is involuntary, happening below conscious control. As a result, scarcity, too—like trains or sudden noises—can pull us away even when we are trying to focus elsewhere. - How smart do you feel after a night of no sleep? How sharp would you be the next morning? Our study revealed that simply raising monetary concerns for the poor erodes cognitive performance even more than being seriously sleep deprived. - Poverty itself taxes the mind. Even without an experimenter around to remind us of scarcity, poverty reduces fluid intelligence and executive control. - We all understand that dieting can be hard: resisting tasty foods can be difficult for all of us. The bandwidth tax, however, suggests that dieting is more than hard. It is mentally taxing. Dieters, when doing anything, should find they have fewer mental resources because they are partly preoccupied with food. - Scarcity, by its nature, is a clustering of several important concerns. Unlike a marital spat that can happen anywhere and to anyone, preoccupations with money and with time cluster around the poor and the busy, and they rarely let go. The poor must contend with persistent monetary concerns. The busy must contend with persistent time concerns. Scarcity predictably creates an additional load on top of all their other concerns. It consistently and predictably taxes bandwidth. - There is one question you don’t ask yourself: “If I buy this drink, what will I not buy instead?” You do not ask this question because it almost seems silly. It feels as if you can buy this cocktail without giving up any other purchase. It feels as if there is no trade-off. Think about how remarkable this is. As a matter of basic accounting, of course there is a trade-off. - Slack—in money, time, or calories—allows you the luxury of not choosing. It allows you to say, “I’ll take both.” Contrary to Milton Friedman’s ideal of “free to choose,” slack leaves us free not to choose. - Slack not only absolves you of the need to make trade-offs. It means mistakes do not entail real sacrifice. - temptation tax is regressive; it is levied more heavily on those who have less. - Scarcity not only raises the costs of error; it also provides more opportunity to err, to make misguided choices. It is harder to do things right, because many items—time commitments for the busy, expenses for the poor—must be carefully made to fit into a constrained budget. - Small budgets make for bulky items and for complex packing; large budgets make for granular items and for easier packing. - For most people, a $50 savings looks large for the $100 DVD player (50 percent off!), but small for the $1,000 laptop (a mere 5 percent savings). Yet those at the Trenton soup kitchen seemed unmoved by all this; their responses barely changed. How did scarcity—in this case in money—upend this traditional finding? - In one of his pioneering experiments, a blindfolded subject held in one hand a plate with weights on it and was asked to signal when he noticed a change in weight, as metallic filings were silently added. How much additional weight was needed for a person to detect it? What was the “just noticeable difference”? Weber found that the just noticeable difference is a constant fraction of the background amount. For weight, the constant is roughly one-thirtieth. So if you are holding a three-pound weight, at least one-tenth of a pound needs to be added for you to detect a difference. But if you were to hold a thirty-pound weight, a full pound would have to be added before you noticed. - One survey found that 25 percent of brands that offered more than one size imposed some form of quantity surcharge. These surcharges are not errors. Consumer Reports has called them a “sneaky consumer product trick.” The trick works best on consumers who don’t pay much attention to prices, who just assume the bigger package will be the better deal. - frugality does not capture the experience of scarcity. The frugal have a principled conscientiousness about money. The poor must be vigilant about trade-offs. When making a purchase, the frugal consider whether the price is “good.” The poor, in contrast, must ask themselves what they must give up to afford that price. Without engaging in real trade-offs, the frugal, like all those who live with abundance, have a hard time making sense of a dollar. - Abundance leaves us less able to know the value of a dollar. - busy people spend their time on tasks that are both urgent and important. This is what it means to be working on a deadline. We get a burst of output working on the tasks that matter and that are due very soon. We would call this a focus dividend. At the same time, he argues, busy people tend to neglect the important but not urgent tasks. - Juggling is why predictable events are treated like shocks. When you juggle, you tunnel on the balls that are about to drop, and you neglect those high in the air. When those balls “suddenly” descend, they are news to the tunneled juggler, a shock if you will. An observer might see the ball coming down for quite some time - Recent research shows that self-control may actually get depleted as we use it. - The core of the problem is a lack of slack. Even after our cash infusion, the vendor is still living on less than two dollars a day. After all, her income must feed more than just herself - the lives of the poor are full of instability and shocks; that those living on $2 a day are not able to come by $2 every day. They have some $3 days and some $1 days. Life at the bottom is volatile. - During periods of abundance, we waste time or money. We are too lax. - For a beginner, remembering to pull the elbow in on a free throw (or to follow through on a tennis shot) improves performance. The conscious attention helps. For a professional, these are all actions to be done automatically. At this level of skill, extra focus prevents muscle coordination from happening in the quickest, most natural way. Athletes choke because they focus. - the key feature of scarcity—that it grabs attention—turns into a hindrance. Dieters and the lonely struggle with their scarcity precisely because scarcity makes them focus on every detail. - The poor are not alone in having mandated scarcity. The dieter who faces a serious medical condition, the profoundly lonely, and those who are busy because they must work two jobs to pay the rent all have little choice. A lack of discretion makes for a particularly extreme form of scarcity. - Think of how striking this is. Decades of medical research transform a debilitating, deadly disease into a manageable one. But we trip up on the last mile, on the most trivial step: taking a pill or shot. This last mile plagues much of medicine. Twenty years ago, we would have been ecstatic to have the antiretroviral drugs for the treatment of HIV that we have today. Yet millions have died because they did not take the medications consistently. - For thousands of years, farmers have known that weeding dramatically improves crop yields. Weeds suck away nutrients and water from the main crop. Weeding requires little skill or machinery, merely some tedious work. Yet farmers in the poorest parts of the world fail to weed. Some estimate that losses from not weeding in parts of Africa are more than 28 percent of total yield. In Asia, uncontrolled weed growth has been estimated to cost up to 50 percent of total rice output. It’s possible that these estimates are too large. But even a 10 percent increase in yield would be a fantastic return for a couple of days of tedious work. - While research on child rearing is murky, there are a few things that emerge as clearly good, and they are pretty intuitive. Consistency is near the top of the list. It is tough and anxiety-producing for children to learn things—discipline, rules of conduct, a sense of comfort—if parents are inconsistent in their statement and application. - This is perhaps the most pernicious, long-term detrimental way in which scarcity may tax bandwidth: thoughts of scarcity erode sleep. Studies of the lonely show that they sleep less well and get fewer hours. These effects are quite strong for the poor: they too have lower-quality sleep. - We could ask the same question of anti-poverty programs. Consider the training programs, where absenteeism is common and dropout rates are high. What happens when, loaded and depleted, a client misses a class? What happens when her mind wanders in class? The next class becomes a lot harder. Miss one or two more classes and dropping out becomes the natural outcome, perhaps even the best option, as she really no longer understands much of what is being discussed in the class. A rigid curriculum—each class building on the previous—is not a forgiving setting for students whose bandwidth is overloaded. Miss a class here and there and our student has started a slide from which she is unlikely to recover. The programs’ design presumes that if people are motivated enough, they will make no mistakes. Those who cannot be bothered to get to class on time, goes the implicit argument, must not care: they do not “deserve” the training. - Linear classes that must not be missed can work well for the full-time student; they do not make sense for the juggling poor. It is important to emphasize that fault tolerance is not a substitute for personal responsibility. On the contrary: fault tolerance is a way to ensure that when the poor do take it on themselves, they can improve—as so many do. Fault tolerance allows the opportunities people receive to match the effort they put in and the circumstances they - When we design poverty programs, we recognize that the poor are short on cash, so we are careful to conserve on that. But we do not think of bandwidth as being scarce as well. Nowhere is this clearer than in our impulse to educate. Our first response to many problems is to teach people the skills they lack. Faced with parenting problems, we give parenting skills programs. - We treat education as if it were the least invasive solution, an unadulterated good. But with limited bandwidth, this is just not true. While education is undoubtedly a good thing, we treat it as if it comes with no price tag for the poor. But in fact, bandwidth comes at a high cost: either the person will not focus, and our effort will have been in vain, or he will focus, but then there is a bandwidth tax to pay. - The St. John’s case illustrates something fundamental to the scarcity trap. The lack of rooms the hospital had experienced was really a lack of slack. Many systems require slack in order to work well. Old reel-to-reel tape recorders needed an extra bit of tape fed into the mechanism to ensure that the tape wouldn’t rip. Your coffee grinder won’t grind if you overstuff it. - A standard impulse when there is a lot to do is to pack tightly—as tightly as possible, to fit everything in. And when you are not tightly packed, there’s a feeling that perhaps you are not doing enough. In fact, when efficiency experts find workers with “unused” time on their hands, they often embark on making those workers use their time “more efficiently.” But the result is that slack will have been lost. When you are tightly packed, getting stuck in the occasional traffic jam, which for others is only mildly annoying, throws your schedule into total disarray. - Once you start firefighting, it is hard to emerge unscathed. When teams are frantically working on a project that should have already been done, they start late on the next project, which ensures they will firefight there as well and stay perpetually behind. - Having asked people what they were saving for and how much, we would send them, at the end of each month, a quick reminder—a text message or a letter. This benign reminder alone increased savings by 6 percent, a strikingly large effect given how infrequent and nonintrusive this was. (Messages, after all, are much less salient or vivid than an assistant standing in your doorway.) We were able to increase savings not through education or by steeling people’s willpower but merely by reminding them of something important that they tend to overlook when they tunnel. - The results were striking. Even three years later, there was a dramatic difference in enrollment rates. At those companies where new employees had to opt out, more than 80 percent had enrolled in the 401(k) plan. At those companies where new employees had to opt in, only 45 percent had enrolled. Changing the default—what happens when a decision is neglected—can have strikingly large effects. - Especially when you tunnel, it is much easier to do the right thing once than to have to repeat it. Yet so many good behaviors require vigilance: being a good parent, saving money, or eating right. To make matters worse, so many bad behaviors need be done just once to cause the pain: borrowing, taking on an ill-advised commitment, making an unwise purchase. - whenever possible, convert vigilant behaviors into one-time actions. - A willingness to commit to a less scarce future underlies the well-known Save More Tomorrow program, through which people who felt they were not currently able to save agreed to increase their savings deductions whenever their salary increased. There would be no new sacrifices now; only later, in that fuzzy future. The results have been stunning. In one firm, more than 75 percent of those offered the plan chose it over trying to save on their own, and only a minority ever opted back out. By the third pay raise, individuals had more than tripled their savings rates. - One of the wisest interventions we know of for dealing with scarcity’s trade-offs is the Jewish Sabbath. The Sabbath is an old concept. You do not work on the Sabbath, or e-mail, or write, or cook, or even drive. It is a day of tranquility, serenity, rejuvenation of the kind that many of us might not experience for years. And it’s ingenious for at least two reasons. One is that there are no options, no dilemmas; it’s a day of nothing but time off, no trade-offs. And the other is that it happens at the same time every week, - When our bandwidth is taxed, the simplest snags can do a lot of damage. - A way to fight the abundance-then-scarcity cycle is to even it out—to create long periods of moderation rather than spurts of abundance followed by heightened periods of scarcity. - As our island of knowledge grows, so does the shore of our ignorance.