Scarcity - Why Having Too Little Means So Much

Livre d’Eldar Shafir et Sendhil Mullainathan sur la Pénurie

Highlights

Introduction

Missed deadlines are a lot like over-due bills. Double-booked meetings (committing time you do not have) are a lot like bounced checks (spending money you do not have). The busier you are, the greater the need to say no. The more indebted you are, the greater the need to not buy. Plans to escape sound reasonable but prove hard to implement. They require constant vigilance—about what to buy or what to agree to do. When vigilance flags—the slightest temptation in time or in money—you sink deeper. Shawn ended up stuck with accumulating debt. Sendhil ended up stuck under mounting commitments.

Introduction

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.

Introduction

By scarcity, we mean having less than you feel you need

Introduction

The problem of obesity is also, perhaps counterintuitively, a problem of scarcity. Sticking to a diet requires coping with the challenge of having less to eat than you feel accustomed to—a tight calorie budget or calorie scarcity.

Introduction

Uncovering a common logic to scarcity would have big implications. Scarcity is a broad concept that extends well beyond these personal anecdotes. The problem of unemployment, for example, is also the problem of financial scarcity. The loss of a job makes a household’s budget suddenly tight—too little income to cover the mortgage, car payments, and day-to-day expenses

Introduction

The problem of increasing social isolation—“bowling alone”—is a form of social scarcity, of people having too few social bonds

SCARCITY CAPTURES THE MIND

Sharman Apt Russell describes a lunch scene in her book Hunger: The men became impatient waiting in line if the service was slow. They were possessive about their food. Some hunched over their trays using their arms to protect their meal. Mostly they were silent, with the concentration that eating deserved. … Dislikes for certain foods, such as rutabagas, disappeared. All food was eaten to the last bite. Then they licked their plates. This is largely what you might expect of people who are starving. But some mental changes they showed were more unexpected: Obsessions developed around cookbooks and menus from local restaurants. Some men could spend hours comparing the prices of fruits and vegetables from one newspaper to the next. Some planned now to go into agriculture. They dreamed of new careers as restaurant owners. … They lost their will for academic problems and became far more interested in cookbooks. … When they went to the movies, only the scenes with food held their interest. 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. They did not choose this.

SCARCITY CAPTURES THE MIND

Here is how one participant in the Minnesota study recalled the frustration of constantly thinking about food: I don’t know many other things in my life that I looked forward to being over with any more than this experiment. And it wasn’t so much … because of the physical discomfort, but because it made food the most important thing in one’s life … food became the one central and only thing really in one’s life. And life is pretty dull if that’s the only thing. I mean, if you went to a movie, you weren’t particularly interested in the love scenes, but you noticed every time they ate and what they ate. The hungry men did not choose to ignore the plot in favor of the food. They did not choose to put food at the top of their mind. Instead, hunger captured their thinking and their attention

SCARCITY CAPTURES THE MIND

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.

SCARCITY CAPTURES THE MIND

When a concept occupies our thoughts, we see words related to it more quickly. So when the hungry recognize CAKE more quickly, we see directly that food is at the top of their minds

SCARCITY CAPTURES THE MIND

half were hungry and half were sated. Their task in the study was simple: Watch a screen. A word will flash. Identify the word you just saw. So, for example, TAKE might flash and the subjects would have to decide whether they just saw TAKE or RAKE.

SCARCITY CAPTURES THE MIND

The speed and accuracy of their responses directly show us that scarcity has captured the hungry subjects’ minds. And it does so on a subconscious level. The tiny time scales in this task—outcomes measured in milliseconds—were devised to observe fast processes, fast enough to remain beyond conscious control. We now know enough about the brain to know what these time scales mean. Complex higher-order calculations require more than 300 milliseconds. Faster responses rely on more automatic subconscious processes

SCARCITY CAPTURES THE MIND

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. This phenomenon is not specific to hunger.

SCARCITY CAPTURES THE MIND

scarcity operates unconsciously. It captures attention whether the mind’s owner wishes it or not.

SCARCITY CAPTURES THE MIND

both thirst and hunger are physical cravings. Other, less visceral forms of scarcity also capture the mind

SCARCITY CAPTURES THE MIND

The capture of attention can alter experience. During brief and highly focused events, such as car accidents and robberies, for example, the increased engagement of attention brings about what researchers call the “subjective expansion of time,” a feeling that such events last longer, precisely because of the greater amount of information that is processed

SCARCITY CAPTURES THE MIND

scarcity’s capture of attention affects not only what we see or how fast we see it but also how we interpret the world.

THE ORIGINAL SCIENCE OF SCARCITY

When we told an economist colleague that we were studying scarcity, he remarked, “There is already a science of scarcity. You might have heard of it. It’s called economics.” He was right, of course

THE ORIGINAL SCIENCE OF SCARCITY

Economics is the study of how we use our limited means to achieve our unlimited desires; how people and societies manage physical scarcity. If you spend money on a new coat, you have less money for a dinner out. If the government spends money on an experimental procedure for prostate cancer, there is less money for highway safety

THE ORIGINAL SCIENCE OF SCARCITY

economic insights come from the recognition that physical scarcity responds to prices, sometimes in unexpected ways. European paleontologists in nineteenth-century China learned this the hard way. Seeking to acquire scarce dinosaur bones, they paid villagers for bone fragments. The result? Supply responded. More bone fragments. When peasants found bones, they would smash them to increase the number of pieces they could sell. Not quite what the paleontologists were hoping for.

THE ORIGINAL SCIENCE OF SCARCITY

In economics, scarcity is ubiquitous. All of us have a limited amount of money; even the richest people cannot buy everything. But we suggest that while physical scarcity is ubiquitous, the feeling of scarcity is not.

THE ORIGINAL SCIENCE OF SCARCITY

The feeling of scarcity is distinct from its physical reality.

THE ORIGINAL SCIENCE OF SCARCITY

Where does the feeling of scarcity come from? Physical limits, of course, play a role—the money in our savings account, the debts we owe, the tasks we must complete. But so does our subjective perception of what matters: how much do we need to accomplish? How important is that purchase? Such desires are shaped by culture, upbringing, even genetics. We may deeply desire something because of our physiology or because our neighbor has it. Just as how cold we feel depends not only on absolute temperature but also on our own private metabolism, so the feeling of scarcity depends on both what is available and on our own tastes.

THE ORIGINAL SCIENCE OF SCARCITY

What happens to our minds when we feel we have too little, and how does that shape our choices and our behaviors? As a blunt approximation, most disciplines, including economics, say the same thing about this question. The consequence of having less than we want is simple: we are unhappy

THE ORIGINAL SCIENCE OF SCARCITY

Having less is unpleasant. And it can have repercussions, for example, on health, safety, or education. Scarcity leads to dissatisfaction and struggle. While certainly true, we think this misses something critical. Scarcity is not just a physical constraint. It is also a mindset. When scarcity captures our attention, it changes how we think—whether it is at the level of milliseconds, hours, or days and weeks. 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

THE ORIGINAL SCIENCE OF SCARCITY

Scarcity, in every form, creates a similar mindset. And this mindset can help explain many of the behaviors and the consequences of scarcity.

THE ORIGINAL SCIENCE OF SCARCITY

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.

THE ORIGINAL SCIENCE OF SCARCITY

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.

THE ORIGINAL SCIENCE OF SCARCITY

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. We can measure fluid intelligence, a key resource that affects how we process information and make decisions. We can measure executive control, a key resource that affects how impulsively we behave. And we find that scarcity reduces all these components of bandwidth—it makes us less insightful, less forward-thinking, less controlled. And the effects are large.

THE ORIGINAL SCIENCE OF SCARCITY

Being poor, for example, reduces a person’s cognitive capacity more than going one full night without sleep. It is not that the poor have less bandwidth as individuals. Rather, it is that the experience of poverty reduces anyone’s bandwidth.

THE ORIGINAL SCIENCE OF SCARCITY

When we think of the poor, we naturally think of a shortage of money. When we think of the busy, or the lonely, we think of a shortage of time, or of friends. But our results suggest that scarcity of all varieties also leads to a shortage of bandwidth. And because bandwidth affects all aspects of behavior, this shortage has consequences.

THE ORIGINAL SCIENCE OF SCARCITY

We saw this with Sendhil and Shawn. The challenges of sticking to a plan, the inability to resist a new leather jacket or a new project, the forgetfulness (the car registration, making a phone call, paying a bill) and the cognitive slips (the misestimated bank account balance, the mishandled invitation) all happen because of a shortage of bandwidth. There is one particularly important consequence: it further perpetuates scarcity. It was not a coincidence that Sendhil and Shawn fell into a trap and stayed there. Scarcity creates its own trap.

THE ORIGINAL SCIENCE OF SCARCITY

This provides a very different explanation for why the poor stay poor, why the busy stay busy, why the lonely stay lonely, and why diets often fail. To understand these problems, existing theories turn to culture, personality, preferences, or institutions. What attitudes do the indebted have toward money and credit? What are the work habits of the overly busy? What cultural norms and constructed preferences guide the food choices of the obese? Our results suggest something much more fundamental: many of these problems can be understood through the mindset of scarcity. This is not to say that culture, economic forces, and personality do not matter. They surely do. But scarcity has its own logic, one that operates on top of these other forces.

THE ORIGINAL SCIENCE OF SCARCITY

Scarcity captures our attention, and this provides a narrow benefit: we do a better job of managing pressing needs. But more broadly, it costs us: we neglect other concerns, and we become less effective in the rest of life.

THE ORIGINAL SCIENCE OF SCARCITY

The circumstances of poverty can be far more extreme, often associated with contexts that are more challenging and less forgiving. The bandwidth tax, for example, is likely to be larger

AN INVITATION

One advantage of working on something so new is that it can be presented to experts and nonexperts alike. Because our argument relies on a variety of fields, from cognitive science to development economics, few people will be experts in all these areas, and most will be novices for at least some of the material we present.

1: Focusing and Tunneling

HOBBES: Do you have an idea for your story yet? CALVIN: You can’t just turn on creativity like a faucet. You have to be in the right mood. HOBBES: What mood would that be? CALVIN: Last-minute panic. —CALVIN AND HOBBES BY BILL WATTERSON

1: Focusing and Tunneling

The time pressure focuses the mind, forcing us to condense previous efforts into immediate output. Imagine working on a presentation that you need to deliver at a meeting. In the days leading up to the meeting, you work hard but you vacillate. The ideas may be there, but tough choices need to be made on how to pull it all together. Once the deadline closes in, though, there is no more time for dawdling. Scarcity forces all the choices. Abstractions become concrete. Without the last push, you may be creative without producing a final product.

GETTING THE MOST OUT OF WHAT YOU HAVE

scarcity can make us more effective. We all have had experiences where we did remarkable things when we had less, when we felt constrained.

GETTING THE MOST OUT OF WHAT YOU HAVE

In our theory, when scarcity captures the mind, it focuses our attention on using what we have most effectively. While this can have negative repercussions, it means scarcity also has benefits

GETTING THE MOST OUT OF WHAT YOU HAVE

This chapter starts by describing these benefits and then shows the price we pay for them, foreshadowing how scarcity eventually ends in failure.

GETTING THE MOST OUT OF WHAT YOU HAVE

meetings

GETTING THE MOST OUT OF WHAT YOU HAVE

They all begin unfocused, the discussions abstract or tangential, the conversations meandering and often far off topic. Simple points are made in lengthy ways. Disagreements are aired but without resolution. Time is spent on irrelevant details. But then, halfway through the meeting, things change. There is, as Gersick calls it, a midcourse correction. The group realizes that time is running out and becomes serious. As she puts it, “The midpoint of their task was the start of a ‘major jump in progress’ when the [group] became concerned about the deadline and their progress so far. [At this point] they settled into a … phase of working together [with] a sudden increase of energy to complete their task.” They hammer out their disagreements, concentrate on the essential details, and leave the rest aside. The second half of the meeting nearly always produces more tangible progress.

GETTING THE MOST OUT OF WHAT YOU HAVE

The midcourse correction illustrates a consequence of scarcity capturing the mind. Once the lack of time becomes apparent, we focus

GETTING THE MOST OUT OF WHAT YOU HAVE

As you finish lunch with the friend you haven’t seen in a while, you linger over coffee—after all, you have a couple of weeks for that chapter. And so the day continues; you manage to get in a little bit of writing, but far less than you had hoped. Now imagine the same situation a month later. The chapter is due in a couple of days, not in several weeks. This time when you sit down to write, you do so with a sense of urgency. When your colleague’s e-mail comes to mind, you press on rather than get distracted. And best of all, you may be so focused that the e-mail may not even register. Your mind does not wander to lunch, cholesterol checks, or life insurance policies. While at lunch with your friend (assuming you didn’t postpone it), you do not linger for coffee—the chapter and the deadline are right there with you at the restaurant. By day’s end this focus pays off: you manage to write a significant chunk of the chapter.

GETTING THE MOST OUT OF WHAT YOU HAVE

Psychologists have studied the benefits of deadlines in more controlled experiments. In one study, undergraduates were paid to proofread three essays and were given a long deadline: they had three weeks to complete the task. Their pay depended on how many errors they found and on finishing on time; they had to turn in all the essays by the third week. In a nice twist, the researchers created a second group with more scarcity—tighter deadlines. They had to turn in one proofread essay every week, for the same three weeks. The result? Just as in the thought experiment above, the group with tighter deadlines was more productive. They were late less often (although they had more deadlines to miss), they found more typos, and they earned more money.

NOTE

Many short deadlines is better than one long deadline

GETTING THE MOST OUT OF WHAT YOU HAVE

This impact of time scarcity has been observed in many disparate fields. 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. Without the scarcity of time, the coupon does not draw focus and may even be forgotten.

NOTE

Scarcity of time is making us take action

GETTING THE MOST OUT OF WHAT YOU HAVE

Deadlines are effective precisely because they create scarcity and focus the mind.

GETTING THE MOST OUT OF WHAT YOU HAVE

Just as hunger led food to be top of mind for the men in the World War II starvation study, a deadline leads the current task to be top of mind.

THE FOCUS DIVIDEND

You do not linger at lunch when the chapter is due soon, you do not waste time on tangents when the meeting is about to end, and you focus on getting the most out of college just before graduating. When time is short, you get more out of it, be it work or pleasure. We call this the focus dividend—the positive outcome of scarcity capturing the mind.

THE FOCUS DIVIDEND

Scarcity of any kind, not just time, should yield a focus dividend. We see this anecdotally. We are less liberal with the toothpaste as the tube starts to run empty. In a box of expensive chocolates, we savor (and hoard) the last ones. We run around on the last days of a vacation to see every sight. We write more carefully, and to our surprise often better, when we have a tight word limit

THE FOCUS DIVIDEND

The observed effects of scarcity in controlled conditions show one more thing. In the real world, the poor and the rich differ in so many ways. Their diverse backgrounds and experiences lead them to have different personalities, abilities, health, education, and preferences. Those who find themselves working at the last minute under deadline may simply be different people. When they are seen to behave differently, scarcity may be one reason, but any of several other differences may be playing a role as well. In Angry Blueberries, a coin flip determined who was “rich” (in blueberries) and who was “poor.” Now, if these individuals are seen to behave differently, it cannot be attributed to any systematic inherent personal differences; it must be due to the one thing that distinguishes between them: their blueberry scarcity. By creating scarcity in the lab in this way, we can untangle scarcity from the knots that usually surround it. We know that scarcity itself must be the reason.

THE FOCUS DIVIDEND

the rich in Angry Blueberries could have employed a strategy that simulated being poor. They could have used only three shots each round (like the poor) and saved the rest. This would have led them to play twice as many rounds as the “truly” poor and thus allowed them to earn twice as many points. In actuality, the blueberry rich did not earn anywhere near twice as much in the course of each game. Of course, the players may not have realized this strategy. But even if they had, they would not have been able to do much about it. 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

THE FOCUS DIVIDEND

It is why an impending deadline lets us avoid distractions and temptations so readily—it actively pushes them away. Just as we cannot effectively tickle ourselves, it is exceedingly difficult to fool ourselves into working harder by faking a deadline. An imaginary deadline will be just that: imagined. It will never capture our mind the way an actual deadline does.

THE FOCUS DIVIDEND

scarcity captures attention at the level of milliseconds—the time it took the hungry to recognize the word CAKE. We see it at the scale of minutes (aiming blueberries) and of days and weeks (college seniors getting the most out of their time before graduation). The pull of scarcity, which begins at milliseconds, cumulates into behaviors that stretch over much longer time scales. Altogether, this illustrates how scarcity captures the mind, both subconsciously and when we act more deliberately. As the psychologist Daniel Kahneman would say, scarcity captures the mind both when thinking fast and when thinking slow.

TUNNELING

We’ve all had the experience of being so engrossed in a book or a TV show that we failed to register a question from a friend sitting next to us. The power of focus is also the power to shut things out. Instead of saying that scarcity “focuses,” we could just as easily say that scarcity causes us to tunnel: to focus single-mindedly on managing the scarcity at hand.

TUNNELING

The term tunneling is meant to evoke tunnel vision, the narrowing of the visual field in which objects inside the tunnel come into sharper focus while rendering us blind to everything peripheral, outside the tunnel

TUNNELING

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.

TUNNELING

Firefighters, it turns out, do not merely focus on getting to the fire prepared and on time; they tunnel on it. Unrelated considerations—in this case the seat belt—get neglected.

THE PROCESS OF NEGLECT

THE PROCESS OF NEGLECT Tunneling changes the way we choose. Imagine that one morning you skip your regular gym session in order to get some work done. You are facing a tight deadline and that is your priority. How did this choice come about? It is possible that you made a reasoned trade-off. You calculated how often you’ve been to the gym recently. You weighed the benefits of one more visit against the immediate needs of your project and decided to skip. The few extra hours of work that morning were more important to you than exercise. In this scenario, if you were free of the mental influence of scarcity, you still would have agreed that skipping the gym that day was the best choice.

THE PROCESS OF NEGLECT

When we tunnel, in contrast, we choose differently. The deadline creates its own narrow focus. You wake up with your mind focused on—buzzing with—your most immediate needs. The gym may never even cross your mind, never enter your already full tunnel. You skip the gym without even considering it. And even if you do consider it, its costs and benefits are viewed differently. The tunnel magnifies the costs—less time for your project now—and minimizes the benefits—those distant long-term health benefits appear much less urgent. You skip the gym whether or not it is the right choice, whether or not a neutral cost-benefit calculation would have led you to the same conclusion. For the very same reason that we are more productive under the deadline—fewer distracting thoughts intrude—we also choose differently

THE PROCESS OF NEGLECT

This is a basic feature of the mind: focusing on one thing inhibits competing concepts. Inhibition is what happens when you are angry with someone, and it is harder to remember their good traits: the focus on the annoying traits inhibits positive memories.

THE PROCESS OF NEGLECT

Focusing on something that matters to you makes you less able to think about other things you care about. Psychologists call this goal inhibition. Goal inhibition is the mechanism underlying tunneling. Scarcity creates a powerful goal—dealing with pressing needs—that inhibits other goals and considerations. The fireman has one goal: to get to the fire quickly. This goal inhibits other thoughts from intruding. This can be a good thing; his mind is free from thoughts about dinner or retirement savings, focusing instead on the upcoming fire. But it can also be bad. Things unrelated to the immediate goal (such as the seat belt) will not cross his mind;

THE PROCESS OF NEGLECT

Inhibition is the reason for both the benefits of scarcity (the focus dividend) and the costs of scarcity. Inhibiting distractions allows you to focus. In our earlier example, why were we so productive working under a deadline? Because we were less distracted. The colleague’s e-mail does not come to mind, and if it does it is easily dismissed. And goal inhibition is why we were less distracted. The primary goal—to finish writing the chapter—captured our mind. It inhibited all those distractions that create procrastination, like e-mail, a video game, or a light snack. But it also inhibited things we ought to have attended to, such as the gym or an important phone call. We focus and tunnel, attend and neglect for the same reason: things outside the tunnel get inhibited

THE PROCESS OF NEGLECT

To measure the cost of tunneling, we added a wrinkle. We had participants play two such games side by side. They were given two pictures to memorize and to reconstruct. And we made them poor (few guesses) in one game and rich (many guesses) in the other. So they experienced scarcity in trying to reconstruct one picture but not the other. Their total earnings depended on their performance on both games: they had to maximize total points earned.

THE PROCESS OF NEGLECT

Consistent with the focus dividend, people were more effective guessers on the picture they were poor on. But they also tunneled: they neglected the other picture. And this was not efficient. They performed so much worse on the neglected picture that they earned, overall, fewer points than subjects who were poor on both pictures. They earned less even though they had more total guesses. A scarcity of guesses in both games meant they could not neglect either one, whereas abundance in one game led them to neglect that game in favor of the one they felt poor on. And they overfocused

THE TUNNELING TAX

Clearly they did not gauge the costs and benefits of tunneling. They simply tunneled, and in this environment it hurt them. We will call these negative consequences the tunneling tax. Naturally, whether this tax dominates the focus dividend is a matter of context and of payoffs

THE TUNNELING TAX

what the study shows is that cost-benefit considerations do not determine whether we tunnel. Scarcity captures our minds automatically. And when it does, we do not make trade-offs using a careful cost-benefit calculus. We tunnel on managing scarcity both to our benefit and to our detriment.

THE TUNNELING TAX

Researchers in poor countries have found it hard to get poor farmers to take up many kinds of insurance, from health insurance to crop insurance. Rainfall insurance, for example, would protect these farmers from the havoc that low (or very heavy) rainfall could do to their livelihood. Even with extremely large subsidies, most (in some cases more than 90 percent of farmers) do not insure. The same is true of health insurance. When asked why they are uninsured, the poor often explain they cannot afford insurance. This is ironic since you might think the exact opposite: that they cannot afford not to be insured. Here, insurance is a casualty of tunneling. To a farmer who is struggling to find enough money for food and vital expenses this week, the threat of low rainfall or medical expenses next season seems abstract. And it falls clearly outside the tunnel.

THE TUNNELING TAX

Insurance does not deal with any of the needs—food, rent, school fees—that are pressing against the mind right now. Instead, it exacerbates them—one more strain on an already strained budget.

THE TUNNELING TAX

When you think about the multitasking driver, you think of the driver who is talking on a cell phone. Indeed, studies have shown that talking on a (non-handheld) cell phone while you drive can be worse than driving at above legal alcohol levels

THE TUNNELING TAX

Sometimes when we tunnel, we neglect other things completely. When we are busy with a pressing project, we skimp on time with our family, put off getting our finances in order, or defer a regular medical checkup. When you are extremely rushed for time, it is easier to say, “I can spend time with the kids next week,” rather than, “Actually, the kids really need me. When exactly will I really have time next?” Things outside the tunnel are harder to see clearly, easier to undervalue, and more likely to get left out.

THE TUNNELING TAX

Looking back at how our time or money was spent during moments of scarcity, we are bound to be disappointed. Immediate scarcity looms large, and important things unrelated to it will be neglected. When we experience scarcity again and again, these omissions can add up. This should not be confused with a lack of interest; after all, the person himself regrets it.

THE TUNNELING TAX

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.

2: The Bandwidth Tax

One of your biggest clients has informed you that it will be taking its business elsewhere. You convince the account manager to listen to one last pitch. She agrees but says it must take place tomorrow. You cancel all your meetings and put off all your other tasks. You pour all your time into the pitch. One appointment, though, cannot be avoided. Your daughter has her city championship softball game tonight. For a moment you even consider skipping that, but your better side (barely) wins out: surely her pitches feel as important to her as your sales pitch feels to you. On the way to the game, your daughter realizes she forgot her lucky charm. You snap at her before turning around to pick it up. By the time you have regained your composure, it’s too late. She was already nervous for the game and now you’ve made her more nervous. Something fun has become tension filled. At the game, you can’t enjoy yourself. Your mind keeps turning to that presentation. Not that you can work on it now—you just can’t focus on the game. You’re distracted, and when your daughter occasionally catches a glimpse of you, you know she knows it.

IT’S LOUD IN HERE

New Haven that was located next to a noisy railroad line. To measure the impact of this noise on academic performance, two researchers noted that only one side of the school faced the tracks, so the students in classrooms on that side were particularly exposed to the noise but were otherwise similar to their fellow students. They found a striking difference between the two sides of the school. Sixth graders on the train side were a full year behind their counterparts on the quieter side. Further evidence came when the city, prompted by this study, installed noise pads. The researchers found that this erased the difference: now students on both sides of the building performed at the same level. A whole host of subsequent studies have shown that noise can hurt concentration and performance. Even if the impact of noise does not surprise you, the size of the impact (a full school year level at sixth grade) should. In fact, these results mirror many laboratory studies that have documented the powerful effects of even slight distraction.

IT’S LOUD IN HERE

One common distinction is between “top-down” processing, where the mind is directed by our conscious choice of what to focus on, and “bottom-up” processing, where attention is captured by one stimulus or another in ways that we find hard to control

IT’S LOUD IN HERE

Without our realizing it, the brain’s resting state—the default network—tends to pull us away from what we are doing. True to its name, this happens without our conscious input, when our mind “wanders.” So while we are often able to direct our brain’s activity, at other times we lose that control. For the kids in the school near the trains, the ability to remain focused in the presence of bottom-up distractors depends also on how much work the brain is doing, on how “loaded” it is

IT’S LOUD IN HERE

Behavioral and neuroimaging studies have shown that distraction along with brain activity related to the presence of distractors increase when the load is high

IT’S LOUD IN HERE

Top-down attention cannot prevent bottom-up intrusions. When someone says your name across the room at a party, your attention shifts no matter how intently you are trying to focus on something else.

NOTE

Subconscious attention patterns are more powerful than conscious attention patterns.

IT’S LOUD IN HERE

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.

NOTE

Scarcity mentality is subconscious

IT’S LOUD IN HERE

An early study tested this idea by giving subjects a simple enough task: push a button when you see a red dot on the screen. Sometimes, just before the dot appeared, another picture would flash on the screen. For nondieters, this picture had no effect on whether people saw the dot. For dieters, in contrast, something interesting happened. They were less likely to see the red dot if they had just seen a picture of food. Flashing a picture of a cake, for example, reduced dieters’ chance of seeing the red dot immediately afterward: it was as if the cake had blinded them. This happened only with pictures of food; nonfood pictures had no effect. Of course the dieters were not physically blinded; they were just mentally distracted. Psychologists call this an attentional blink. The food picture, now gone, had made them mentally blink. When the dot appeared, their minds were elsewhere, still thinking about the food. All of this happened in a fraction of a second, too quick to control. Too quick to even be aware of. The title of the study says it best: “All I Saw Was the Cake.”

NOTE

If you make a diet, you are in scarcity mode about food, then you are distracted…

IT’S LOUD IN HERE

Dieters took 30 percent longer to find CLOUD after they had just searched for DONUT. Dieters were not slow overall—they found CLOUD just as quickly as nondieters when it was preceded by PICTURE. The DONUT was the problem. What is happening here is clear. It is a version of what psychologists call proactive interference. The mention of a donut brings it top of mind. The nondieter searches for it, finds it, and moves on. The dieter, in contrast, finds it hard to move on. Even while searching for the next word, for CLOUD, that donut, every bit as disruptive as a passing train, is still there, drawing attention. And it is hard to find CLOUD when your mind is elsewhere.

NOTE

There is longer mental remanence of things related to your scarcity mentality

IT’S LOUD IN HERE

By constantly loading the mind with other processes, it leaves less “mind” for the task at hand. This leads us to the central hypothesis of this chapter: scarcity directly reduces bandwidth—not a person’s inherent capacity but how much of that capacity is currently available for use.

COGNITIVE CAPACITY

we will continue to use the blanket term bandwidth to refer to two broad and related components of mental function, which we will now explain in greater depth. The first might be broadly referred to as cognitive capacity, the psychological mechanisms that underlie our ability to solve problems, retain information, engage in logical reasoning, and so on. Perhaps the most prominent in this category is fluid intelligence, the ability to think and reason abstractly and solve problems independent of any specific learning or experience. The second is executive control, which underlies our ability to manage our cognitive activities, including planning, attention, initiating and inhibiting actions, and controlling impulses

COGNITIVE CAPACITY

executive control is essential to our ability to function well. It determines our ability to focus, to shift attention, to retain things in memory, to multitask, to self-monitor. Cognitive capacity and executive control are multifaceted and rich in nuance. And scarcity affects both.

COGNITIVE CAPACITY

A 2011 study found that close to half of all Americans reported that they would be unable to come up with $2,000 in thirty days even if they really needed it

COGNITIVE CAPACITY

The poorer subjects, on the other hand, did significantly worse. A small tickle of scarcity and all of a sudden they looked significantly less intelligent. Preoccupied by scarcity, they had lower fluid intelligence scores.

NOTE

Scarcity reduces intelligence. Cercle vicieux

COGNITIVE CAPACITY

The effect is specific to hard problems that are financial in nature (for those who are short on money). It is also not the result of a lack of motivation. In one replication of the study, we paid people for every correct answer on the Raven’s test. Presumably the lowincome participants have a greater incentive to do better: after all, the money matters to them more. But they did not do any better; in fact, they did just a tiny bit worse than before

NOTE

Poor become poorer because money scarcity reduced their intelligent decision making

COGNITIVE CAPACITY

To see the effect of scarcity on fluid intelligence, we ran some studies with our graduate student, Jiaying Zhao, in which we gave people in a New Jersey mall the Raven’s Progressive Matrices test.

Notes

In general, a large body of research has shown the detrimental effects of lack of sleep on a variety of cognitive processes, from attention and memory to planning and decision making. A compendium of the latest research is in Gerard A. Kerkhof and Hans Van Dongen, Human Sleep and Cognition: Basic Research 185 (Amsterdam: Elsevier Science, 2010).

COGNITIVE CAPACITY

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.

EXECUTIVE CONTROL

our effects correspond to between 13 and 14 IQ points. By most commonly used descriptive classifications of IQ, 13 points can move you from the category of “average” to one labeled “superior” intelligence. Or, if you move in the other direction, losing 13 points can take you from “average” to a category labeled “borderline deficient.” Remember: these differences are not between poor people and rich people. Rather, we are comparing how the same person performs under different circumstances. The same person has fewer IQ points when she is preoccupied by scarcity than when she is not. This is key to our story. The poor responded just like the rich when the car cost little to fix, when scarcity had not been rendered salient. Clearly, this is not about inherent cognitive capacity. Just like the processor that is slowed down by too many applications, the poor here appear worse because some of their bandwidth is being used elsewhere.

EXECUTIVE CONTROL

Self-control remains one of the more difficult parts of the study of psychology. We know many ingredients go into the manufacturing of self-control. It depends on how we weigh the future. And we appear to do it inconsistently. Immediate rewards (a marshmallow now) are salient and receive a heavy weight. Rewards in the distant future (two marshmallows later) are less salient and thus receive lower weight. So when we think about one versus two marshmallows in the abstract future, two is better than one. But when one marshmallow is right in front of us now, it suddenly beats two. Selfcontrol also depends on willpower, a resource whose functioning we do not fully understand, but which is affected, among other things, by personality, fatigue, and attention. Self-control relies heavily on executive control. We use executive control to direct attention, initiate an action, inhibit an intuitive response, or resist an impulse. In fact, a less publicized but often replicated part of Mischel’s study is highly instructive here. The children who were most successful in resisting the marshmallow temptation did so by focusing their attention elsewhere. Instead of looking at and thinking about the marshmallow, they thought about other things. Instead of having to resist the desire, they simply arranged not to notice it. As Mischel put it, “Once you realize that willpower is just a matter of learning how to control your attention and thoughts, you can really begin to increase it.”

NOTE

Méditation increase willpower then

EXECUTIVE CONTROL

One experiment gave subjects a memory task. Some were asked to remember a two-digit number; some were given a seven-digit number. The subjects were then led to a lobby where they would await further testing. In front of them in the waiting area were slices of cake and fruit. The real test was what they would choose while they waited, while rehearsing those numbers in their heads. Those whose minds were not terribly occupied by the two-digit number chose the fruit most of the time. Those whose minds were busy rehearsing the seven-digit number chose the cake 50 percent more often. The cake is the impulsive choice. It requires conscious action to prevent the automatic choice. When our mental bandwidth is used on something else, like rehearsing digits, we have less capacity to prevent ourselves from eating cake.

NOTE

We are drawn towards eating the cake. Resisting costs effort.

EXECUTIVE CONTROL

a tax on bandwidth makes it harder for us to control our impulses. And because scarcity taxes bandwidth, this suggests that scarcity not only can lower fluid intelligence but can also reduce self-control.

HARVESTS

Using these tasks, we found that farmers performed much worse before harvest than after harvest. The same farmer fared worse on fluid intelligence and executive control when he was poor (preharvest) than when he was rich (postharvest). Much like the subjects at the mall, the same person looked less intelligent and more impulsive when he was poor. Yet in this case it was not us who triggered scarcity-related thoughts or even tried to bring them to the surface. These thoughts were there naturally when the farmers were poor (the harvest money dissipated to a small amount) but not when they were rich (still flush with cash from the harvest). And again the magnitudes were large. The postharvest farmers got about 25 percent more items correct on Raven’s. Put in IQ terms, as in the earlier mall study, this would correspond to about 9 or 10 IQ points

OTHER FORMS OF SCARCITY

the bottom line is clear. Poverty itself taxes the mind. Even without an experimenter around to remind us of scarcity, poverty reduces fluid intelligence and executive control. Returning to where we started, this suggests a major twist in the debate over the cognitive capacity of the poor. We would argue that the poor do have lower effective capacity than those who are well off. This is not because they are less capable, but rather because part of their mind is captured by scarcity.

OTHER FORMS OF SCARCITY

About that time, it occurred to me that I was succeeding in the world with only part of my brain engaged. While a tenth of it was devoted to school, a tenth devoted to my daughter, and perhaps another tenth devoted to family crises and illnesses, the other 70 percent of my mind was constantly focused on food—the calorie count of a grape, the filling bulk of popcorn, the clever use of water as a placebo. “How much farther,” I thought, “can I go in the world if I use that 70 percent more wisely?” —NATALIE KUSZ, “THE FAT LADY SINGS”

OTHER FORMS OF SCARCITY

Across a variety of cognitive tests, they find that people simply perform worse when they are dieting. And when psychologists interview the respondents, they find a common pattern: concerns related to dieting are top of mind for these dieters and interfere with their performance.

OTHER FORMS OF SCARCITY

More research will be needed to quantify the size of the bandwidth tax for dieters, but it is striking that the results around calorie scarcity mirror what we have found in studying income scarcity. Something similar happens with the lonely

SCARCITY AND WORRY

Scarcity predictably creates an additional load on top of all their other concerns. It consistently and predictably taxes bandwidth. Everyone can be preoccupied: rich and poor people fight with their spouses; rich and poor people can be flustered by their bosses. But whereas only some people who experience abundance will be preoccupied, everyone experiencing scarcity will be preoccupied.

SCARCITY AND WORRY

We now have a firmer grasp of the biochemistry of the generalized stress response. We can even identify several of the molecules involved—glucocorticoids (such as cortisol), norepinephrine, and serotonin—as well as some of their function

SCARCITY AND WORRY

In the harvest study, for example, we found that postharvest farmers were less stressed than they were before harvest. We also found sizable reductions in heart rate variability, a frequently used measure of stress.

WHAT THE BANDWIDTH TAX MEANS

Finally, to think of all of this as stress and worry misses a deeper point. The bandwidth tax is not a finding in isolation. It emerges from the same core mechanism as the focus dividend or the way tunneling shapes our choices. A focus on stress alone would miss these deeper connections and ultimately limit our understanding of the scarcity mindset.

WHAT THE BANDWIDTH TAX MEANS

. A taxed bandwidth leads to carelessness

WHAT THE BANDWIDTH TAX MEANS

The restaurant manager looks to all the usual places to explain his employees’ behavior—lack of skill, no motivation, or insufficient education. And a taxed bandwidth can look like any of these

WHAT THE BANDWIDTH TAX MEANS

Recall the metaphor of the computer slowed down by programs open in the background. Imagine you are sitting at that computer unaware of these other programs.

WHAT THE BANDWIDTH TAX MEANS

Similarly, it is easy to confuse a mind loaded by scarcity for one that is inherently less capable

WHAT THE BANDWIDTH TAX MEANS

We are saying that all people, if they were poor, would have less effective bandwidth.

WHAT THE BANDWIDTH TAX MEANS

When we think of having very little (time, money, calories), we focus on the physical implications of scarcity: less time for fun, less money to spend. The bandwidth tax suggests there is another, perhaps more important, shortfall. We must now get by with fewer mental resources. Scarcity doesn’t just lead us to overborrow or to fail to invest. It leaves us handicapped in other aspects of our lives. It makes us dumber. It makes us more impulsive. We must get by with less mind available, with less fluid intelligence and with diminished executive control—making life that much harder.

TRADE-OFF THINKING

Scarcity forces trade-off thinking. All those unmet needs capture our attention and become top of mind. When we are tight on cash, we are highly attentive to all the bills that must be paid. So when we consider buying something else, all the bills are there, making the trade-off apparent. When we are working on a tight deadline, all the things we must get done are foremost on our mind. So when we think about spending an hour on anything else, the trade-offs again are salient. When time or money is not so tight, we are not as focused and the trade-off is less apparent. By this account, trade-off thinking is an inherent consequence of scarcity.

SLACK

During good times, we don’t meticulously account for every dollar.

POOR BEES AND RICH WASPS

This mindset is a feature of abundance, and slack is the result

POOR BEES AND RICH WASPS

Why do bees create such precise structures and the wasps such messy ones? Scarcity. The wasps build with material that is abundant: mud. The bees build with material that is scarce: wax. The bees’ wax—like space in a tight suitcase or dollars during hard times—must be conserved. Building badly means wasting wax, which is an incentive to be efficient, to pack well. The wasps, on the other hand, have abundant material, plenty of mud to waste. Wasps can afford slack—to build sloppily—because their building material is cheap. The bees cannot because theirs is expensive.

WHAT WE BUY WITH SLACK

Kitchen cabinets across the United States are full of soups, jams, and canned food that have not been used for ages. So common is this phenomenon that food researchers have a name for it: they call these items cabinet castaways. Some estimates suggest that one in ten items bought in the grocery store is destined to become a cabinet castaway. In fact, many of our houses are castaway museums.

WHAT WE BUY WITH SLACK

over $12 billion is spent annually on self-storage, three times as much as is spent on music purchases. In fact, the United States has more than two billion square feet allocated to self-storage space

WHAT WE BUY WITH SLACK

“Human laziness has always been a big friend of self-storage operators,” Derek Naylor, president of the consultant group Storage Marketing Solutions, told me. “Because once they’re in, nobody likes to spend all day moving their stuff out of storage. As long as they can afford it, and feel psychologically that they can afford it, they’ll leave that stuff in there forever.”

WHAT WE BUY WITH SLACK

people are given more attractive options, yet, they are less likely to choose any of them. It happens because choice is hard. When the choice is between the lecture and the library, you can decide which is more important that day—studying or leisure. But when there are two leisure activities, you have one more choice: which is the leisure activity that’s right for you? Faced with this additional choice, people simply say, “Forget it. I’ll just stick with the library.” They avoid the burden of choosing by sticking with the original plan, in effect choosing not to choose

WHAT WE BUY WITH SLACK

Slack provides an easy way to avoid the burden of choosing. The only reason you must choose between the lecture and the movie is that your time budget is tight. If you had slack, you could do both.

WHAT WE BUY WITH SLACK

Contrary to Milton Friedman’s ideal of “free to choose,” slack leaves us free not to choose.

ROOM TO FAIL

How will the $200temptationbefinanced?Forwell-offAlex,hisslackpaysforit.Evenbeforetheill-advisedpurchase,hewasnotspendinguptohisfullbudget.The$200 will come from that left-over space. The financially tight Ben, on the other hand, has no slack. His $200 must come at the expense of something he had planned on, something he thought was essential. His mistake costs him something real. Slack not only absolves you of the need to make trade-offs. It means mistakes do not entail real sacrifice.

ROOM TO FAIL

The same dollar mistake is proportionally more expensive for Ben. As the economist Abhijit Banerjee describes it, the temptation tax is regressive; it is levied more heavily on those who have less.

ROOM TO FAIL

If errors are more costly and there are more chances to fail, might scarcity not make us more careful? This is easier said than done. Effort often is not sufficient to reduce error.

ROOM TO FAIL

Many of these mistakes do not stem from carelessness but are deeply rooted in our mental processes. Effort and attentiveness alone cannot rid us of the planning fallacy, remind us of things that are out of mind, or provide us with an iron will to resist all temptation

ROOM TO FAIL

If anything, scarcity will lead us to greater errors. The bandwidth tax places us in a position where we are prone to make mistakes

ROOM TO FAIL

With compromised bandwidth, we are more likely to give in to our impulses, more likely to cave in to temptations. With little slack, we have less room to fail. With compromised bandwidth, we are more likely to fail.

ROOM TO FAIL

Late fees are a penalty for misplanning or forgetting, yet they create an even more hostile environment for those living with scarcity

ROOM TO FAIL

Readily available junk food may cause obesity in the poor and the busy, who are, in turn, more exposed and less attentive; it is less of a threat for the rich and the relaxed.

ROOM TO FAIL

The hard-to-read disclosures on low-cost mortgage forms will be particularly misunderstood (and carry bigger consequences) for those living with financial scarcity.

ROOM TO FAIL

Environments that create room for errors, which are then penalized, are a challenge for us all. But they are particularly challenging for those in contexts of scarcity.

ROOM TO FAIL

Scarcity does not just mean less room to fail. It also means a greater opportunity to fail.

SCARCITY AND SLACK

the concept of slack cuts to the core of the psychology of scarcity. Having slack allows us the feeling of abundance. Slack is not just inefficiency; it is a mental luxury. Abundance does not just allow us to buy more goods. It affords us the luxury of packing poorly, the luxury of not having to think, as well as the luxury of not minding mistakes

4: Expertise

By varying the price, one can change the value of an hour from $5.64(forthoseconsideringa$3 pen) to $1,364(forthoseconsideringa$30,000 car). This means our frugality has a perverse consequence. We pinch pennies on small items, yet we blow dollars on big ones. Our frugality is thereby largely wasted. We spend hours surfing the web to save $50ona$150 pair of shoes. Yet we forgo a few hours’ search to save a couple of hundred dollars on a $20,000 car.

4: Expertise

Imagine you have spent the day shopping. One item you have been shopping for is a DVD player. At the end of the day, you find yourself at a store that has the brand and model you want for $100.Thisisagoodpricebutnotthebestyouhaveseentoday.Onestore—athirty-minutedetouronyourwayhome—hasitfor$65. Do you buy the $100DVDplayerandgohome,ordoyouinsteaddecidetotakethedetourtobuyitfor$65 at the other store? Think about what you would do. Imagine you have spent the day shopping. One item you have been shopping for is a laptop. At the end of the day, you find yourself at a store that has the brand and model you want for $1,000.Thisisagoodpricebutnotthebestyouhaveseentoday.Onestore—athirty-minutedetouronyourwayhome—hasitfor$965. Do you buy the $1,000laptopandgohome,ordoyouinsteaddecidetotakethedetourtobuyitfor$965 at the other store? Think about what you would do. Both scenarios offer a chance to travel a half hour in order to save $35. And what you find is that most people choose to take the detour for the DVD player but not for the laptop. This contradicts the standard economic model

THE EFFECT OF SCARCITY

Along with a PhD student, Crystal Hall, we ran a version of the laptop/DVD question: Imagine that a friend goes to buy an appliance priced at $100.Althoughthestore’spricesaregood,theclerkinformsyourfriendthatastoreforty-fiveminutesawayoffersthesameitemonsalefor$50 less. Would you advise your friend to travel to the other store to save $50onthe$100 expense? As with the laptop/DVD question we manipulated what people saw. For some, the appliance was priced at $100;forothers,itwas$500, and for others still, it was $1,000.Thesavingswasalwaysthesame($50). We began by testing a sample of relatively well-off people. When we ran this study among commuters at the Princeton, New Jersey, train station, we found what many others before us had found: 54 percent of people would recommend going to the other store when the appliance cost $100;39percentwhenitcost$500, and only 17 percent when it cost $1,000.The$50 savings looked smaller and smaller as the background price got bigger and bigger; for a big-ticket item, it seemed hardly worth the effort.

THE EFFECT OF SCARCITY

But then we ran the exact same study twelve miles away, in a soup kitchen in Trenton, New Jersey. As with most American soup kitchens, the visitors to this soup kitchen varied greatly in age, gender, and race, but they shared one trait: for them money was very tight. This led us to predict that they would be more willing to travel to save money. In fact, that’s what we found. For the $100item,76percentnowthoughtoneshouldtraveltosave$50. Now, this is not 100 percent and could be so for a variety of reasons. Perhaps time was also tight, or there were other things to take care of, or perhaps travel is unappealing, since many of the poor do not have cars. Perhaps the people at the soup kitchen—like anyone else—put some value on their time. What made the study remarkable, though, is what happened when we raised the background price. When the appliance cost $500,thepercentagewillingtotravelbarelychanged;itwas73percent.Andwhenitroseto$1,000, the percentage willing to travel actually went up slightly, to 87 percent. The slight increase may be due to the feeling that one really must try to save when spending so much.

THE EFFECT OF SCARCITY

How did scarcity—in this case in money—upend this traditional finding? To understand how, we need to take a detour into the psychophysics of perception.

A LITTLE ABOUT PERCEPTION

Weber showed that perception was highly relative. For example, the eye is not a light meter. It judges luminosity relative to the background. When you stand in a dark cave, a struck match can produce a bright flare of light, powerful enough to illuminate your surroundings. That same match struck at an outdoor cafe on a sunny afternoon would be barely detectable

A LITTLE ABOUT PERCEPTION

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

NOTE

Le ‘pas’ minimum requis pour percevoir un contraste

A LITTLE ABOUT PERCEPTION

While relative perception is inherently part of how the mind processes information, experience and expertise allow us to transcend it

A LITTLE ABOUT PERCEPTION

expertise, a deeper understanding of the units, can alter perception. Musicians who are expert in time intervals have an internal metric—they do not rely on intuitive heuristic estimates of time lengths. Studies have shown that more experienced bartenders are better at pouring and are less likely to be affected by bottle height when asked to pour a certain amount.

A LITTLE ABOUT PERCEPTION

Scarcity also makes us experts—expert packers. Without the luxury of slack, we come to understand the value of each inch of space in our suitcases. The poor ought to know the value of a dollar, the busy the value of an hour, and dieters the value of a calorie.

A LITTLE ABOUT PERCEPTION

Marketing researchers have studied this expertise in a very specific way. They stop shoppers exiting a supermarket for a quick survey. They take the shoppers’ receipts and ask questions like, “How much was the Crest toothpaste you just bought?” Affluent shoppers do not do well on this quiz. “The price of the Crest toothpaste? Something like three dollars? Maybe five?” Most don’t even know how much they spent in total, the size of the bill they had just paid minutes before. But the lower-income shoppers do. They are more accurate in knowing both how much they spent and the prices of the items they bought.

A LITTLE ABOUT PERCEPTION

The poor, in short, are expert in the value of a dollar. They have their own internal metric by which to assess a dollar’s worth. They do not rely on the environment to get a sense of how much to pay.

A LITTLE ABOUT PERCEPTION

Think of how striking this is. The poor in these studies behave more “rationally.” They are closer in this case to the rational economic ideal, closer to homo economicus.

WHAT IS THIS REALLY COSTING ME?

Abundance means freedom from trade-offs. When we buy something under abundance, we do not feel we have to give anything up. Psychologically, this is pleasing. But it can be a hindrance when making decisions. If you do not know what you are giving up, it is hard to figure out what something costs and whether it’s worth it. Slack, and the absence of trade-offs, means we have no intuitive, easy way of valuing things.

WHAT IS THIS REALLY COSTING ME?

Since we do not actually make many trade-offs, they remain largely an invention. Without such trade-offs, the value of small amounts is not something you ever really need to bother yourself with. If you had $20 more, what would you buy that you haven’t bought thus far? If you are financially well off, that is a question you never really need to answer—or even think of asking. If you wanted that small something, you would have bought it.

WHAT IS THIS REALLY COSTING ME?

Purchases can be made to look more or less attractive through judicious comparisons. Upgrading to a better room on your vacation is a pittance if you think of it as a fraction of what you pay in rent. But it can seem a fortune if you think of it in terms of the terrific desserts you could eat instead. Marketing agencies—and nonprofits—use this strategy. Supporting a child in Africa or buying a vacuum cleaner only costs you pennies a day. With slack, of course, those pennies feel like they come from nowhere.

WHAT IS THIS REALLY COSTING ME?

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. So they rely on context. Such was the case with Alex and the rickshaw. He sold his time so cheaply (and inconsistently) because he used his context to determine the “reasonable” price for a rickshaw ride. Alex was frugal but not poor.

WHAT IS THIS REALLY COSTING ME?

Many biases and inconsistencies uncovered by behavioral economics are really about people struggling to make sense of a dollar.

OPPORTUNITY COSTS

economics is meant to follow the logic of scarcity. It is fitting then that its predictions are truer for those who actually have the scarcity mindset.

NOTE

Ça suggère que les pauvres sont les plus prévisibles. Rappelle-toi aussi que la violence permet de rendre les gens prévisibles. Notre système économique est adapté aux pauvres car c’est eux qu’il cherche à contrôler

5: Borrowing and Myopia

There is nothing in the prospect of a sharp, unceasing battle for the bare necessities of life, to encourage looking ahead, everything to discourage the effort. —JACOB RIIS, HOW THE OTHER HALF LIVES

5: Borrowing and Myopia

there is often a “fee” for borrowing time as well: putting off work can increase the time it takes to do it. Mailing your tax returns via certified mail would have taken minutes, but on the last day, there’s a line around the block at the post office. Because of an impending deadline, you put off typing up your handwritten notes from an interview. Later, you must decipher those notes, which takes longer than it would have when the interview was fresh in your mind.

LET’S PLAY THE FEUD

The poor focused. Per second, they were more effective than the rich; they made more guesses and earned more points. This was especially true in the later rounds, as they were running out of total time: the poor made 50 percent more guesses per second and earned more per guess. Had the rich stayed as intensely focused as the poor, they could have earned many more points. Since we gave the rich more than three times as many seconds, they could have played three times as many rounds and earned three times as many points. Instead, they only earned 1.5 times as much as the poor.

LET’S PLAY THE FEUD

Having created the rich and the poor, we added the element of real interest to us: we gave them the option to borrow, with interest. Each additional second they chose to use on a round cost them two seconds deducted from their total time. We also allowed them to “save”: if they finished a round early, the remaining time was “deposited” back into their total.

LET’S PLAY THE FEUD

We recruited Princeton undergraduates to play Family Feud in a controlled setting. Participants played several rounds in a fixed amount of time—the amount of time they were allocated determined their “wealth.” The “rich” had more time; the “poor” had less. In every round, they saw a new question. At the end of all the rounds, the total number of points they accumulated was converted to dollars.

LET’S PLAY THE FEUD

The poor were more effective because they tunneled. As a result, they borrowed much more than the rich. Despite the high interest rate, loans looked extremely attractive in the tunnel, much more attractive than a view from the outside would warrant. So the poor resorted to borrowing often, to help themselves right now. But in the end they were hurt by it. When we took away the ability to borrow—you now played each round as best you could and then moved to the next one—the poor earned 60 percent more points; the rich were unaffected

NOTE

Ça suggère que les prêts sont des pièges à pauvres, ni plus ni moins

LET’S PLAY THE FEUD

Early borrowing created a vicious cycle for the poor. Pressed for time, too rushed to make productive guesses, they borrowed more. Most of their time was just going to paying off early loans (plus interest). And as before, when they were permitted to borrow, the poor did much worse than when they were not allowed to borrow, an effect that was missing for the rich.

NOTE

Peut-être on peut communiquer aux pauvres quand emprunter ou quand ne pas. Emprunter si taux d’intérêt est < inflation (3% est nécessaire pour la survie du système capitaliste de croissance) Sinon ne pas.

LET’S PLAY THE FEUD

researchers have documented a bias toward the here and now, which they call hyperbolic discounting, or present bias. We overvalue immediate benefits at the expense of future ones: this is why it is hard to save, to go to the gym, or to do your taxes early. Of course, present bias would also generate borrowing. Perhaps the poor borrow simply because they are more present biased. In fact, some have tried to explain actual borrowing in the world using this argument. What is striking in our data is that subjects were randomly assigned to be poor: they were no different from the “rich” except for the flip of a coin

NOTE

Scarcity instantly causes us to be ‘present biased’ or rather ‘urgent-based’

LET’S PLAY THE FEUD

results are consistent: scarcity, in whatever form, always leads to borrowing.

LET’S PLAY THE FEUD

These studies support our more general hypothesis about the world: the reason the poor borrow is poverty itself. No need to resort to myopia or to financial ineptitude for an explanation.

LET’S PLAY THE FEUD

The powerful impulse to borrow, the demand for high interest and potentially spiraling borrowing, the kind that creates a slippery slope and looks so ill advised, is a direct consequence of tunneling.

NEGLECTING THE FUTURE

When working to finish things quickly, the engineers tunneled. Inside their tunnel, a quick fix was just the thing needed. Cutting corners was the perfect solution; the cost would only show up later. Much like an expensive loan, a hastily patched solution looks attractive within the tunnel. It saves us something today even as it creates greater expenses in the future. And we will then have more to do, more things to fix, more bills to pay. Patching is a lot like borrowing, a failure to invest and to commit the resources now so that the job is done correctly

NOTE

Ça peut largement expliquer une partie des bullshit jobs

NEGLECTING THE FUTURE

Because machine uptime was important, the company encouraged maintenance engineers to respond to breakdowns as quickly as possible [emphasis added]. Even so, overall performance didn’t improve. Only after the company started keeping and analyzing records machine by machine instead of person by person did it realize [why]. Engineers … would make a quick fix and move on to the next machine. Each … breakdown [was] patched three times before it was finally solved. In a way the engineers were doing exactly as asked

NEGLECTING THE FUTURE

People short on money also patch together short-term solutions. You need a washer but are short on cash? Buy the cheapest appliance. It is, of course, less durable, but that problem falls outside the tunnel. When your tire goes flat, you may literally opt for a cheap patch rather than get a new tire. You know that a patched tire is less advisable, less safe, and less durable than a new tire. But that, too, is outside the tunnel. For now, inside the tunnel, the patch makes life a lot easier. Like a quick fix that saves time now, these are all quick fixes that economize on money today. And as the patches accumulate—for the engineers, the report writers, and the poor—so too do the long-term costs.

NEGLECTING THE FUTURE

The messy home or office is the result of a sequence of small choices, mostly passive, effortless, and unnoticed. Rushing to a meeting, you drop a stack of mail on top of another stack of papers. Getting to the phone, you leave the book you’re reading open on the sofa. Lots of little things, at the end of which there’s a mess. While not urgent, it is important. It is less productive and less pleasant to work and live in a messy space.

NEGLECTING THE FUTURE

Having a messy office makes your work just that much less productive. You spend a whole lot of time trying to find those papers under the mail. Every day you incur a little cost. The cost is never big enough to make the thing urgent, as a deadline might. Instead, the neglected office bleeds you by a thousand little cuts.

NEGLECTING THE FUTURE

Scarcity, and tunneling in particular, leads you to put off important but not urgent things—cleaning your office, getting a colonoscopy, writing a will—that are easy to neglect. Their costs are immediate, loom large, and are easy to defer, and their benefits fall outside the tunnel

NOTE

Le mode tunnel ou autopilote vient avec la mentalité de manque. Le bouddhisme propose bel et bien une solution

NEGLECTING THE FUTURE

The pushcart is but one of many examples that poverty researchers can point to: even when returns are high, the poor, who need those returns more than anyone, fail to invest in ways that cannot be explained by weak financial institutions or a lack of skills.

NEGLECTING THE FUTURE

If all this sounds vaguely familiar, it may be because you have heard it discussed in politics. A similar focus on the urgent at the expense of the important has long been observed in the workings of governments that, over decades of tight budgeting, have slashed spending on infrastructure. The upkeep of bridges, for example, is a critical investment. Yet it is one that is all too easy to put off when budgets are tight and cuts are needed. Decaying bridges are important but not urgent, and so, according to a 2009 report issued by the American Society of Civil Engineers, approximately one in four rural bridges and one in three urban bridges in the United States are deficient.

FAILING TO PLAN

These various behaviors share one obvious feature: people are behaving myopically. This leads to the most basic implication of tunneling. When we focus so intensely on making ends meet now, we plan less effectively for the future. Of course, studies have shown that planning is a problem for all people. But scarcity makes this problem a whole lot worse.

FAILING TO PLAN

Stepping back, detaching from the moment, and thinking ahead requires a wider perspective and some cognitive resources. Thinking about the bills due next month, the other income sources you might anticipate, the new time commitments that might arise, all require some leftover cognitive capacity. With the mind focused on present scarcity, looking ahead risks becoming yet another casualty of the tunneling tax.

FAILING TO PLAN

Scarcity brings about behaviors that make us shortsighted. We ignore the (future) health cost of eating out when we are busy. We do not think about the implications of paying back payday loans (in the future) when we are tight on cash. We do not consider the (future) benefits of keeping our offices clean when working on a deadline. Of course, there will be exceptions, things that grab our minds no matter where we are. You may forget a meeting today while busy contemplating your wedding a year from now. That’s part of the beauty of the human mind. But by and large, the problems of scarcity press on us today. Tomorrow we may also be poor (in time or money), but that is another problem, left for another day. The scarcity that captures us is now, and it yields a tunneling tax and makes us act myopic.

FAILING TO PLAN

Many of the busiest people who borrow time are the same people who have invested years in demanding careers and planned carefully how to get ahead. In fact, as far as personality traits go these people are anything but myopic; rather, it is the context of scarcity that makes us all act that way. Tunnels limit everyone’s vision.

Notes

Economists and especially development economists have focused on what they call poverty traps—the notion that those who begin poor will stay poor. A commonly discussed mechanism is a lucrative investment opportunity that requires a fixed amount of capital. The rich have enough capital to make the investment while the poor will find it hard to save up enough money to do so. Other mechanisms discussed include aspirations and myopia.

6: The Scarcity Trap

a scarcity trap: a situation where a person’s behavior contributes to her scarcity. People in scarcity traps, like the vendor, may inherit components of scarcity that are beyond their control. Had the vendor been born in New York, she would be significantly richer. But we are particularly interested in that part of scarcity that follows from our behavior. And more than that we are interested in how scarcity generates that behavior, in how scarcity perpetuates and often amplifies itself through what we do when in a scarcity mindset.

6: The Scarcity Trap

the scarcity trap is more than a shortage of physical resources. It is based on a misuse of those assets so that there is an effective shortage. It is constantly being one step behind, constantly paying off last month’s expenses. It is a way of managing and using what you have so that it looks and feels like you have even less. An initial scarcity is compounded by behaviors that magnify it.

6: The Scarcity Trap

The person who is perpetually behind is spending less time on getting things done; a lot of his time is going to playing catch-up.

NOTE

This is the cost of scarcity: perpetually patching

CAUGHT JUGGLING

At work, after frantically finishing one project, you are stunned to realize you have only two days left to work on another. Only recently that deadline was weeks away. What you always “knew” is now a rude surprise. Play this out over time and it leads to what we call juggling: the constant move from one pressing task to the next. Juggling is a logical consequence of tunneling.

CAUGHT JUGGLING

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. As disinterested parties, we can see school fees looming. To the poor juggling their finances, they only become real when they are imminent.

CAUGHT JUGGLING

Decisions—whether about a new purchase or a new investment—must now navigate this increasingly complex patchwork. The legacy of previous choices makes each new one even more challenging. By juggling we—through our own behavior—make the problem more complex. The messy balance sheet of the scarcity trap increases the complexity and challenge of making ends meet.

CAUGHT JUGGLING

Juggling is not about being harried in time; it is about having a lot on one’s mind. Much of one’s bandwidth ends up being devoted to the balls in the air that are about to fall.

CAUGHT JUGGLING

These two features—being one step behind and juggling—define the scarcity trap. Life in the scarcity trap is about having even less than you could have. It is about playing catch-up, dealing with each ball just before it lands and the messy patchwork that emerges as a result. And much of this is a consequence of behavior under scarcity, which raises an obvious question. Why? If there are several ways to manage a fixed resource, why do we get stuck with one that is so terribly inefficient? Why do we not get out of the trap?

GETTING OUT

Getting out of a scarcity trap first requires formulating a plan, something the scarcity mindset does not easily accommodate. Making a plan is important but not urgent, exactly the sort of thing that tunneling leads us to neglect. Planning requires stepping back, yet juggling keeps us locked into the current situation.

NOTE

Clearly,some people are not able to change their perspective! Their identity is defined by their current situation and that’s all! They are mentally locked in this situation that defines them. Pense à Simon. Il y a un problème pour chaque solution

GETTING OUT

Long-term planning clearly falls outside the tunnel.

GETTING OUT

perhaps most important, future planning requires bandwidth, which scarcity taxes heavily.

GETTING OUT

All this is complicated by the lack of slack. Suppose the vendor judiciously avoids spending on almost everything, day in and day out. She is vigilant and controlled and is accumulating cash as described. Then one day, out of so many days, she slips and makes one impulse purchase. She gets distracted, she miscalculates, something looks so worthwhile; after all, the money is there. And now weeks of mental effort and physical restraint are all lost

NOTE

Il n’y a plus de marge de manœuvre,  l’erreur devient une sorte d’attracteur étrange vers le manque

GETTING OUT

Escaping the scarcity trap does not merely require an occasional act of vigilance. It requires constant, everlasting vigilance; almost all temptations must be resisted almost all the time.

GETTING OUT

Now, might not willpower build up with practice? Might not the poor, having to exercise it constantly, develop stronger willpower? There is little evidence to show that willpower capacity increases with use. (Think of how ironic this would be relative to common belief: the poor having greater willpower!)

GETTING OUT

even if poverty did increase willpower, there is reason to think that this still may not suffice to yield the near infallibility required. Be that as it may, there is instead fairly good evidence to the contrary. Recent research shows that self-control may actually get depleted as we use it. One study, for example, put dieters in a room with some highly tempting snacks (Doritos, Skittles, M&Ms, salted peanuts) and gave them a computer task to perform. For some, the snacks were placed, highly visible, on the table right next to them. For others, the snacks were far away, out of mind. Having completed the computer task, subjects were given access to large containers of ice cream. Those who had been sitting next to the snacks, continuously resisting the urge, finally caved. They ate significantly more ice cream than those who were less tempted by the distant snacks. Researchers in this field have likened willpower to a muscle, which fatigues with use. By this account, a persistent need to resist temptation would deplete, making it all the more difficult to escape the scarcity trap.

NOTE

La volonté est une ressource qui s’épuise en l’utilisant trop

THE ROOT OF THE PROBLEM

Scarcity traps are particularly poignant because there is a feeling that with just one infusion, having just once gotten rid of all debt, a person can break free of the cycle. “If only I had a bit more time,” bemoans the person who is perpetually behind, “I could get things done and then stay ahead.” For the vendor, if only she could get the cash to buy the fruit (rather than having to save it up in tiny installments), she would be out of the debt trap, and her income would double. In all these cases, a one-time infusion of resources would appear to solve the problem.

NOTE

On peut sortir les gens d’un piège en leur donnant les ressources rien qu’une fois ? Réponse plus loin: non

THE ROOT OF THE PROBLEM

To see what happens, we decided to give the vendors at Koyambedu the cash they needed. Working with the economist Dean Karlan, we ran a study with hundreds of vendors. Half of them we simply followed for a year, recording their finances. We gave the other half a way out of the trap: we bought out all their debt. Overnight, we converted them from borrowers to potential savers. And their incomes effectively doubled. We wanted to understand the how and why of scarcity traps. Consider, for example, some of the explanations usually given for why the vendors find themselves in a debt trap. One possible explanation is they would rather borrow than save because they have nowhere safe to put their savings. They may be unbanked and may worry about the safety of cash sitting around, easily to be stolen or expropriated by family members. If that were the case, then when we gave them the cash, they ought to have quickly bought something durable and safe with it, and then gone on borrowing. Which might have returned them to the scarcity trap eventually. Another possible explanation is that the vendors are simply myopic: they are stuck in the debt trap because they do not think enough about the future. This view, it seems to us, cuts against the grain. The vendors wake up at 3 a.m. to ride in a crowded auto rickshaw for forty-five minutes to buy their wares; they spend all day in the hot sun. These hardly sound like the actions of a myopic person. Still, one might argue that at least in their finances the vendors focus too little on the future. If that were the case, then once we gave them the cash, the money would be squandered. You can imagine how quickly someone who is myopic would spend a large sum of money. The vendor would quickly find herself back in the debt trap. For a third explanation, suppose the vendors simply failed to understand the power of compounding. After all, the fact that it would take only thirty days to become debt free—how quickly the interest payments add up—was a surprise to us; perhaps it would also be a surprise to the vendor. To a vendor who would rather borrow and who does not appreciate the cumulative cost of her borrowing, the daily loan appears cheaper than it is. Since giving her the cash will not have altered her perception of compounding, she should continue to find the loan cheap and will soon fall back in the debt trap. We thought there was quite a bit to be learned by simply giving the vendors the one-time infusion needed to break free of the debt trap. We then tracked the behavior of the now debt-free vendors over the following year.

THE ROOT OF THE PROBLEM

During the first few months, the deft-free vendors did not fall back into the debt trap. They did not blow the cash on unwise expenses. They did not decide to store it in some other format for safety. They did not start borrowing again. It looked as if they now saw the hazards in the debt trap and persisted in staying out of it. This largely accords with the qualitative data: the vendors seemed to fully understand that being one step behind was costly. Like the busy person behind on his obligations, they seemed to be fully aware that they were paying a steep price for living in the scarcity trap. But that was not the full story. In the ensuing months they fell back, bit by bit. Or, rather, we should say one by one. By the end of the year, they all had accumulated as much debt as those whose debt we had left alone. So while the standard explanations are not supported by the data—the vendors do not fall back right away—neither is the view that those in a scarcity trap just need a one-time infusion to rid them of the debt.

THE ROOT OF THE PROBLEM

How are we to explain this behavior? Why do the vendors eventually fall back? What is it about the scarcity trap that operates so dramatically to alter their lives again, even after they have been given enough money to double their incomes?

SHOCKS

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. When packed so tightly, suppose she hits a bump in the road—a relative’s wedding comes up and she has to buy a gift.

SHOCKS

the vendor falls back into the scarcity trap because she did not have enough slack in her budget to weather the shocks she faces. Shocks bigger than her slack push her right back into the psychology of scarcity.

SHOCKS

Any slight instability is a threat hovering over a life lived at the edge of a scarcity trap, because with little slack to absorb it, instability is almost certain to be felt. In Portfolios of the Poor, the authors observe that the lives of the poor are full of instability and shocks; that those living on $2adayarenotabletocomeby$2 every day. They have some $3daysandsome$1 days. Life at the bottom is volatile. In the United States and other developed nations, that volatility may be lower, but it is still pronounced. The poor face variable income from many sources. They often have multiple jobs, all potentially intermittent. Many of their jobs are by the hour, and hours vary quite a bit. And, of course, job loss is always a serious possibility. Sudden expenses—a broken-down car or illness—also pose a problem

SHOCKS

Without enough slack, where do you get the money to fix your car when it breaks down? If you had liquid savings, you would use those. If you were well off, you would just cut back on other consumption, perhaps forgo that expensive dinner you’d been planning for the weekend. If you had a second car, you would perhaps delay making the repair until you carefully secured the money to fix this one. These are all easy or cheap options. But when you lack savings or a second car, and have no dinners to cancel, this becomes a serious challenge: where will you get the money? At that moment, you tunnel. You borrow. You start on a path back into a scarcity trap.

SHOCKS

All this suggests that we should deepen our notion of scarcity. Scarcity is not merely the gap between resources and desires on average. Even if, as in the case of the vendor, there are many days with slack, it is the days of scarcity that matter. To be free from a scarcity trap, it is not enough to have more resources than desires on average. It is as important to have enough slack (or some other mechanism) for handling the big shocks that may come one’s way at any moment

SHOCKS

periods of scarcity can elicit behaviors that end up pulling us into a scarcity trap. And with scarcity traps, what would otherwise be periods of abundance punctuated by moments of scarcity can quickly become perpetual scarcity.

SHOCKS

It does not mean that the only way to solve the vendor’s problem is to give her even more money. Rather, this discussion highlights the need for instruments for buffering against shocks. If the vendor had a low-cost loan or a liquid savings account—to be accessed solely for emergencies—that would give her the slack she needs in those critical moments of no slack

FEAST AND FAMINE

insurance against some of these shocks would also solve the problem. Of course, many have realized the benefits of such buffers. But the benefits appear to be far larger than we had anticipated. These become buffers not merely for managing risk. They are also bulwarks against slipping back into the scarcity trap.

NOTE

Une assurance sociale serait la solution : quel que soit le coup dur, nous pouvons le gérer en société ou association . À tester

FEAST AND FAMINE

. The seeds of the scarcity trap were sown during a period of at least relative abundance. And the same dynamic appears to happen with time as well. You work feverishly to finish a project; you are behind, and life is miserable, and you vow never to do this again. When the deadline passes, you finally come up for air. The next deadline is weeks away. Thank goodness, you can now relax. A few weeks later, you wonder where the time went. You are once again frantically working against the clock. Like the vendor’s scarcity, your scarcity originates with mistakes made during periods of relative abundance. During periods of abundance, we waste time or money. We are too lax. In the harvest study from chapter 2, the farmers were poor before harvest, but they didn’t have to be. Had they managed their money better after the harvest, they would not have found themselves lacking toward the end of the harvest cycle. They were poor right before this harvest only because they had mismanaged their finances when they were still flush. This is different from the problem of borrowing while poor. This is about waste when money is abundant. The result is an avoidable cycle punctuated by recurring periods of abundance followed by threatened periods of scarcity.

FEAST AND FAMINE

We have so far focused on problems caused by the scarcity mindset. We tunnel and we neglect. Our bandwidth is taxed, and we are less farsighted and more impulsive.

FEAST AND FAMINE

All this might inadvertently suggest that during periods of abundance we are perfectly calculating and farsighted. Of course we are not. Decades of research have shown that even—no, especially—at the best of times we are prone to procrastination, an exaggerated focus on the present, and bouts of fuzzy optimism. We put off work that needs to be done. We squander money that should have been saved. We misallocate our abundance, saving and accomplishing too little sufficiently to insulate from scarcity that might come. Of course, both the rich and the poor do this. But the rich, because they have slack, come out fine, whereas the poor and the busy, carrying on with too little slack, are one shock away from falling into a scarcity trap.

FEAST AND FAMINE

Staying clear of the scarcity trap requires more than abundance. It requires enough abundance so that, even after overspending or procrastinating, we still leave enough slack to manage most shocks.

NOTE

Il faut de la place pour faire des erreurs et toujours avoir des solutions après . Sinon c’est le manque

FEAST AND FAMINE

Staying out of the scarcity trap requires enough slack to deal with the shocks the world brings and the troubles we impose on ourselves.

FEAST AND FAMINE

Tying all this together, we see that scarcity traps emerge for several interconnected reasons, stretching back to the core scarcity mindset. Tunneling leads us to borrow so that we are using the same physical resources less effectively, placing us one step behind. Because we tunnel, we neglect, and then we find ourselves needing to juggle. The scarcity trap becomes a complicated affair, a patchwork of delayed commitments and costly short-term solutions that need to be constantly revisited and revised. We do not have the bandwidth to plan a way out of this trap. And when we make a plan, we lack the bandwidth needed to resist temptations and persist. Moreover, the lack of slack means that we have no capacity to absorb shocks. And all this is compounded by our failure to use the precious moments of abundance to create future buffers.

A DIFFERENT KIND OF SCARCITY TRAP

Picture someone in a new city. In his old town he has many friends, but in this new town he knows no one. After a few days, the solitary existence begins to weigh on him. He talks on the phone with his friends back home, but it’s not the same. He dines in front of the TV, feeling sheepish about going out to eat alone. How does one go about meeting people? He decides to try a dating website, and after a few e-mail exchanges he sets up a date. But as the day approaches, he finds himself increasingly nervous, more nervous than he has ever been before about a date. The date starts badly. He tries to make jokes, but his delivery is strained, and the evening falls flat. He is so preoccupied with what he will say next that he finds it hard to pay attention to what his date says. He realizes he is just trying too hard. The date is a disaster. This person, you might say, is trapped by social scarcity. His loneliness is making it hard for him to meet new friends and creating behaviors that perpetuate his loneliness

A DIFFERENT KIND OF SCARCITY TRAP

the problems—ruining a punch line or failing to listen—come from trying too hard to be liked, from focusing too much on scarcity.

A DIFFERENT KIND OF SCARCITY TRAP

study, researchers asked people who rated themselves as lonely to talk into a recorder. They had no specific task. They were simply to describe themselves and be interesting. All they knew was that someone else would listen to them later and rate them. Predictably, when raters listened to what the lonely had to say, they were not impressed. They rated the lonely as significantly less interesting than those who were not lonely. This is hardly surprising. You might say, “That is probably why they are lonely.”

A DIFFERENT KIND OF SCARCITY TRAP

Another version of the experiment shows that this interpretation misses something important. In this version, the lonely participants talked into a recorder with one important difference. This time they did not expect anyone to listen and to judge them. They were just talking, being themselves. In these recordings, independent judges now rated the lonely to be just as interesting as the nonlonely. The problem of the lonely was not that they were boring or otherwise unappealing. Their problem was that they performed badly when they thought it mattered

A DIFFERENT KIND OF SCARCITY TRAP

Of course, choking is not unique to the lonely. Nowhere is choking more transparent than in sports

A DIFFERENT KIND OF SCARCITY TRAP

Researchers now better understand the psychology of choking. Many actions in sports can be done either consciously or automatically. You can think about your arm’s movement while shooting a free throw. You can focus on the follow-through motion of a golf swing. Or you can just do it automatically, with your mind blank. For professional athletes, these activities are so routine that they are remarkably good at doing them automatically. In fact, they are better at doing them automatically. (Next time you run down the stairs, think about the movement of your feet. But please do not hold us accountable if you come close to tripping. Though you are a professional stair user, thinking about the task will make you much less effective at it.) 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.

A DIFFERENT KIND OF SCARCITY TRAP

Choking is the tip of a much broader phenomenon. Psychologists have found across a wide variety of tasks that performance and attention, or arousal, are linked by an inverted U-curve. Too little attention and performance is weak. Too much attention and the excessive arousal worsens performance again.

A DIFFERENT KIND OF SCARCITY TRAP

To make matters worse, the more you try not to think about it, the more you do. Psychologists call this an ironic process. When asked to not think of a white bear, people can think of little else.

NOTE

La ‘conscience de soi’ ou trop s’identifier à sa pensée va tuer la performance

A DIFFERENT KIND OF SCARCITY TRAP

There is an inverted U-shaped curve for conversation as well. Someone who is distracted and unfocused on a conversation is uninteresting. Someone who is far too focused can seem clingy or needy

NOTE

Encore une fois, c’est l’attachement à réaliser ton objectif qui te bloque. Laisse de la marge

A DIFFERENT KIND OF SCARCITY TRAP

They do badly because they are past the peak of the inverted U. Instead of listening to their partner and making small talk, they are attentively focused on “Do they like me?” or “Will this be the funniest story?” Just as expert free throw shooters do better when focusing less on the free throw, the lonely could do better by focusing less on their social need. Yet scarcity prevents that. It draws the mind of the lonely to just the place they need to avoid.

NOTE

Le manque est aussi un attachement

A DIFFERENT KIND OF SCARCITY TRAP

One of the biggest challenges of dieting is self-control. The easiest way to resist an impulse is if you never have the impulse in the first place. If a particular treat does not cross your mind, it is easier to avoid. If it does cross your mind, the sooner you can get it out of your mind the easier it is to resist.

NOTE

La capacité à se divertir est une stratégie essentielle de self-control

A DIFFERENT KIND OF SCARCITY TRAP

Thinking about that delicious dessert only makes things harder. Dieting creates a scarcity of calories, and that scarcity in turn places the dessert firmly top of mind

A DIFFERENT KIND OF SCARCITY TRAP

In one study, the preoccupation with food grew only more intense among dieters who had just eaten a chocolate bar. Physiologically, they had more calories; psychologically, they had now exacerbated the trade-offs they needed to make. Diets prove difficult precisely because they focus us on that which we are trying to avoid.

A DIFFERENT KIND OF SCARCITY TRAP

the key feature of scarcity—that it grabs attention—turns into a hindrance.

A DIFFERENT KIND OF SCARCITY TRAP

The poor stay poor, the lonely stay lonely, the busy stay busy, and diets fail. Scarcity creates a mindset that perpetuates scarcity.

7: Poverty

situation because he has taken on many projects. He would be less busy if he simply took on fewer. He could, in effect, choose to have less scarcity. The extent of his scarcity is, to some extent, discretionary. This discretion provides a critical safety valve that can limit scarcity’s stress and damage. The tourist frantically trying to see Italy in a week can only get so worked up about her scarcity of time. At some point, she may simply say, “Forget this, I’ll just see the Colosseum on another visit,” or, “I’ll stay another day in Rome and see less of the south.” This safety valve limits the damage and depth of the scarcity trap. For those who have some discretion, the scarcity trap threatens but only so much. The overcommitted can miss a few deadlines. Dieters can take a break from their diet. The busy can take vacations. One cannot take a vacation from poverty.

7: Poverty

It would be silly to suggest that the rural poor in India should cope with money scarcity by simply moderating their desires. Basic desires, for clothing, freedom from disease, even modest toys to bring joy to one’s children, are significantly harder to cast off. 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.

7: Poverty

Consider the parents of a newborn, who are suddenly time scarce. They also do not have the option to “want less”; the baby needs to be taken to the doctor, and fed, and changed, and cuddled, and bathed, and rocked (forever) to sleep. There are just so many nondiscretionary activities to juggle. But if you are a parent with money, your time scarcity can be alleviated in another way. You can hire a nanny or a maid, order in food rather than cook, use an accountant, employ a gardener, all of which will free up time.

7: Poverty

This discussion clarifies what we mean by poverty. We mean cases of economic scarcity where changing what you want, or think you need, is simply not viable. Some of these hard-to-change needs are biological, such as hunger for the subsistence farmer, and some are socially constructed

7: Poverty

trying to alleviate the scarcity of money—is much harder. Sure, you can try to work a few more hours, but in most cases you don’t have much to give, and it will bring limited extra wealth and leave you even busier and more exhausted. Less money means less time. Less money means it is harder to socialize. Less money means lower quality and less healthy food. Poverty means scarcity in the very commodity that underpins almost all other aspects of life.

THE ELEPHANT IN THE ROOM

Nonadherence affects many people, but it is particularly concentrated in one group: the poor. While people at every income level may fail to take their medications, the poor do so most often. Disease after disease—HIV, diabetes, tuberculosis—the same pattern repeats itself. No matter the location, the kind of medication, or the side effects, one thing stays the same: the poor take their medication least consistently.

THE ELEPHANT IN THE ROOM

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

NOTE

Les scientifiques semblent focus sur la monoculture cependant…

THE ELEPHANT IN THE ROOM

Moving to a very different context, consider the case of agricultural yields. The amount of crop that can be grown on a plot of land affects all of society. It determines food prices, world trade, environmental impacts, and even the feasible population of the planet. It matters perhaps most of all to the farmer: his entire income depends on his yield. As with medicine, technology has made terrific strides in improving yields and sustainability: better seeds, farming techniques, and organic farming methods. Yet like the doctors above, agricultural scientists who work on these issues are continuously vexed by one thing: farmer behavior.

THE ELEPHANT IN THE ROOM

One broad theme emerges from decades of this research: the poor are worse parents. They are harsher with their kids, they are less consistent, more disconnected, and thus appear less loving. They are more likely to take out their own anger on the child; one day they will admonish the child for one thing and the next day they will admonish her for the opposite; they fail to engage with their children in substantive ways; they assist less often with the homework; they will have the kid watch television rather than read to her. We now know more about what makes for a good home environment, and poor parents are less likely to provide it.

NOTE

Lire des histoires

CONFRONTING THE ELEPHANT

The poor fall short in many ways. The poor in the United States are more obese. In most of the developing world, the poor are less likely to send their children to school. The poor do not save enough. The poor are less likely to get their children vaccinated. The poorest in a village are the ones least likely to wash their hands or treat their water before drinking it. When they are pregnant, poor women are less likely to eat properly or engage in prenatal care. We could go on.

CONFRONTING THE ELEPHANT

CONFRONTING THE ELEPHANT When we do confront the disturbing facts, it is natural first to question their interpretation. Perhaps the poor are not “failing” to take their medication; perhaps these pills are simply too expensive. Why do they not weed? Because they are too busy. Why do they not parent better? Because they grew up in similar circumstances and have not been taught other parenting skills. Surely, all these issues of access and cost and skills play some role. But time after time, when you look at the data, these factors alone cannot explain the failures. For example, the poor in the United States who are on Medicaid pay nothing for their medications, yet they fail to take them regularly. The poor in rural areas report that their time is abundant between harvests, yet they do not weed. These failings cannot be dismissed as merely circumstantial: at the core there is a problem of behavior.

PARENTING

One way is to assume that the causality runs from failure to poverty; that the poor are poor precisely because they are less capable. If your earnings depend on making good choices, then it follows naturally that those who fail end up poor

PARENTING

Our data suggest causality runs at least as strongly in the other direction: that poverty—the scarcity mindset—causes failure.

PARENTING

One study on parenting focused on air traffic controllers. What made air traffic controllers interesting is that their jobs change daily and can be intense. Some days there are many planes in the air, weather conditions are bad, and there are congestion and delays. On those days the cognitive load—tunneling for long hours on landing all planes safely—is very high. Other days are more relaxed, with not many planes in the air or on the mind. What the researchers found was that the number of planes in the air on a particular day predicted the quality of parenting that night. More planes made for worse parents

PARENTING

The same air traffic controller acted “middle class” after an easy day at work and acted “poor” after a hard day’s work.

PARENTING

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.

PARENTING

Yet this is easier said than done. Being a good parent, even when you know what to do, is hard. Consistency requires constant attention, effort, and steadfastness.

PARENTING

Good parenting generally requires bandwidth. It requires complex decisions and sacrifice. Children need to be motivated to do things they dislike, appointments have to be kept, activities planned, teachers met and their feedback processed, tutoring or extra help provided or procured and then monitored. This is hard for anyone, whatever his resources. It is doubly hard when your bandwidth is reduced. At that moment, you do not have the freedom of mind needed to exercise patience, to do the things you know to be right

POOR IN MORE THAN ONE WAY

Being a good parent requires many things. But most of all it requires freedom of mind. That is one luxury the poor do not have.

POOR IN MORE THAN ONE WAY

The poor are not just short on cash. They are also short on bandwidth. This is exactly what we saw in the mall studies and in the harvest studies. The same person when experiencing poverty—or primed to think about his monetary troubles—did significantly worse on several tests. He showed less flexible intelligence. He showed less executive control. With scarcity on his mind, he simply had less mind for everything else.

POOR IN MORE THAN ONE WAY

For example, an overtaxed bandwidth means a greater propensity to forget. Not so much the things you know (what psychologists call declarative memory), like the make of your first car, but things that fall under what psychologists call prospective memory—memory for things that you had planned to remember, like calling the doctor or paying a bill by the due date. These tasks must be maintained alive in your head, and they get neglected when your bandwidth is reduced.

POOR IN MORE THAN ONE WAY

it any surprise then that the poor fail to take their medications? Some may find this hard to believe: how can you forget something so important? But memory doesn’t work that way. You don’t remember as a function of long-term value. Certainly no one forgets to take painkillers: the pain is a constant reminder. Diseases such as diabetes, though, are “silent”; their consequences are not immediately felt. There is nothing to remind a person with an overburdened bandwidth to take those medications.

POOR IN MORE THAN ONE WAY

Another consequence is reduced productivity at work. Nearly every task—from processing drive-thru orders to arranging grocery shelves—requires working memory, the capacity to hold several pieces of information active in our minds, until we use them. By taxing working memory, poverty leads us to perform less well. It makes us less productive because our mental processor is occupied with other concerns. This creates a tragic situation where the poor, who most need the wages of their labor, also have their productivity most heavily taxed.

POOR IN MORE THAN ONE WAY

An overtaxed bandwidth means a reduced ability to process new information. How much of a lecture will you absorb if your mind constantly gets pulled away? Now think of a low-income college student whose mind keeps going back to making rent. How much will she absorb? Our data above suggest that much of the correlation between income and classroom performance may be explained by the bandwidth tax

POOR IN MORE THAN ONE WAY

Many public health programs rely on the poor to absorb new information. Campaigns try to educate the public about the importance of eating healthier, smoking less, obtaining prenatal care, getting screened for HIV, and so on. In poor countries, extension workers reach out to farmers to educate them about the latest crops or the latest pests. It should not come as a surprise that these efforts are less successful with the poor, largely failing to get them to smoke less, eat healthier, or adopt the latest farm practices. Absorbing new information requires working memory.

POOR IN MORE THAN ONE WAY

The bandwidth tax also means that you have fewer mental resources to exert self-control. After a long day hard at work, are you likely to floss? Or will you say, “Never mind, I’ll do it tomorrow.” To make matters worse, we have seen how the constant struggle with poverty (and scarcity generally) further depletes self-control. When you can afford so little, so many more things need to be resisted, and your self-control ends up being run down.

POOR IN MORE THAN ONE WAY

see this in the data on smoking: smokers with financial stress are less likely to follow through on an attempt to quit. The poor will end up fatter too; eating well is a substantial self-control endeavor.

POOR IN MORE THAN ONE WAY

One study found that when low-income women were moved to higher-income neighborhoods, rates of extreme obesity and diabetes dropped tremendously; other factors may have played a role, but a reduction in stress is almost certainly part of the story. Being a good parent requires self-control. Showing up at work even when you are sick requires self-control. Not snapping at your boss or at a customer requires self-control. Regularly attending a job-training program requires self-control. When you live in a rural village, ensuring that your kid gets to school every day requires self-control. So many of the “failures” surrounding poverty can be understood through the bandwidth tax.

POOR IN MORE THAN ONE WAY

In one study, thirty-eight good sleepers were instructed to go to sleep as quickly as possible. Some of them were told that after the nap they would be giving a speech. Most people really do not like to give speeches. Indeed, this group had far more trouble falling asleep and slept less well when they did. Other data on insomniacs show that they are more likely to be worriers. Put simply, it is hard to sleep well when you have things on your mind.

POOR IN MORE THAN ONE WAY

Studies show that sleeping four to six hours a night for two weeks leads to a decay in performance comparable to going without sleep for two nights in a row. Insufficient sleep further compromises bandwidth.

POOR IN MORE THAN ONE WAY

One of the things the poor lack most is bandwidth

NOTE

Et aussi les femmes avec la charge mentale

POOR IN MORE THAN ONE WAY

Bandwidth underpins nearly every aspect of our behavior. We use it to calculate our odds of winning in poker, to judge other people’s facial expressions, to control our emotions, to resist our impulses, to read a book, or to think creatively. Nearly every advanced cognitive function relies on bandwidth

NOTE

La bande passante est un préliminaire à la méditation

POOR IN MORE THAN ONE WAY

Perhaps the best analogy is this: Think of talking to someone who is clearly doing something else, say surfing the web, while talking to you. If you did not know what they were doing, how would they seem to you? Daft? Confused? Uninterested? Not all there? A bandwidth tax can create the same perception.

IS BANDWIDTH TAX THE CULPRIT?

So if you want to understand the poor, imagine yourself with your mind elsewhere. You did not sleep much the night before. You find it hard to think clearly. Self-control feels like a challenge. You are distracted and easily perturbed. And this happens every day

IS BANDWIDTH TAX THE CULPRIT?

The failures of the poor are part and parcel of the misfortune of being poor in the first place. Under these conditions, we all would have (and have!) failed.

IS BANDWIDTH TAX THE CULPRIT?

poverty appears to correlate with failure. We have given one explanation for these findings: the bandwidth tax. But how do we know that this, in fact, is the explanation? You might wonder, for example, whether the bandwidth tax is large enough to explain everything from failed adherence to forgotten weeding

IS BANDWIDTH TAX THE CULPRIT?

Not only is the bandwidth tax large, but the fact that we find it in two very different contexts is powerful confirmation. The poor in rural India are quite different from low-income shoppers at a New Jersey mall, yet they exhibit broadly similar bandwidth taxes. It is therefore not unreasonable to expect that the bandwidth tax plays a similarly large role in the lives of the poor everywhere.

8: Improving the Lives of the Poor

During World War II, the United States military was troubled by the recurrence of “wheels-up” crashes: after landing, pilots would retract the wheels instead of the flaps. And, as you can imagine, retracting a plane’s wheels while on the ground is not a good idea. To solve the problem, they brought in an expert. Lieutenant Alphonse Chapanis was a psychologist by training, ideally suited to get inside these pilots’ heads. Why were they so careless? Were they fatigued? Were they relaxing too soon, thinking they could “let go” after a stressful mission? Was it a problem of training? One clue quickly surfaced: the problem was limited to bomber pilots, those flying B-17s and B-25s. Transport pilots did not make this mistake. This clue helped Chapanis break free of his own biases. He decided not to look inside the pilots’ heads but instead inside their cockpits. In these bombers, the wheel controls and the flap controls were side by side and looked nearly identical. Transport planes, by comparison, had very different controls. What separated the bomber pilots from the transport pilots were the cockpits. One type of cockpit made it too easy to make a mistake. This experience transformed how cockpits are designed. Chapanis and others came to realize that many pilot errors were really cockpit errors. Until then, the focus had been on training pilots and ensuring alertness, on producing “excellent pilots” who make few mistakes

NOTE

UX design for the win

8: Improving the Lives of the Poor

Of course pilots must be trained; of course you must select for the best. But no matter how well you train them or pick them, they will make mistakes, especially if put in confounding contexts.

8: Improving the Lives of the Poor

Planes are much safer today not just because we have built better wings or engines but also because we have gotten better at handling human error.

POOR BEHAVIOR

Chapanis started off stymied by the pilots’ behavior. Many analysts are similarly stymied by the behavior of the poor. Low-income training programs in the United States, for example, suffer from absenteeism, dropouts, and a failure by the intended recipients to sign up. Microfinance programs in the developing world bemoan the fact that their clients do not invest enough in high-return activities: instead, loans are used to pay off other debts, to fight “fires” (like school fees that have come due), or simply to buy consumer durables. And vaccination programs suffer when people fail to show up to get vaccinated, with the result that debilitating but preventable illnesses still rage through much of the developing world.

NOTE

La pauvreté est une erreur de design dans l’économie

POOR BEHAVIOR

they have assumed that the problem lies with the person. They assume the problem is a lack of understanding or of motivation. So they follow up with attempts to educate or to sharpen incentives. In developed countries, this leads to a discussion of a “culture of welfare.”

POOR BEHAVIOR

If we accept that pilots can fail and that cockpits need to be wisely structured so as to inhibit those failures, why can we not do the same with the poor? Why not design programs structured to be more fault tolerant? We could ask the same question of anti-poverty programs.

POOR BEHAVIOR

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.

POOR BEHAVIOR

The programs’ design presumes that if people are motivated enough, they will make no mistakes

POOR BEHAVIOR

But the psychology of scarcity predicts that errors like this will be all too common, perhaps even unavoidable, no matter how motivated the person

POOR BEHAVIOR

Instead of insisting on no mistakes or for behavior to change, we can redesign the cockpit.

POOR BEHAVIOR

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 face.

POOR BEHAVIOR

It is a way to ensure that small slipups—an inevitable consequence of the bandwidth tax—do not undo hard work.

INEFFECTIVE INCENTIVES

Remember the lifetime limits on welfare payments discussed earlier? They were based on a belief that cycling in and out of welfare was due to a lack of motivation on the part of the poor. People went on and off of welfare, it was said, because the system made it too easy not to work. To fix this, in the United States a lifetime cap was imposed for the primary welfare program (now renamed Temporary Assistance for Needy Families). A person could now only be in the program for a total of five years over her lifetime. A lifetime limit may not be foolish. Limits create scarcity, the logic goes, which might lead to better management of how the resource is “used.” This almost relies on the psychology of scarcity. But it is flawed. We have seen that deadlines work when they are pressing, when they are top of mind. A long-term limit, like a distant deadline, becomes pressing only as it approaches, toward the end. To those who are currently juggling and tunneling, the limit, years away, will reside outside the tunnel, until it is very near. Until the limit becomes a pressing threat, it will be neglected and will rarely cross the person’s mind. And by then it will be too late. This is almost certainly not what was intended by those who devised the plan—years of neglecting the deadline, followed by last-minute panic and eventual failure to receive further aid. In a way, it is the worst of all possible arrangements: it penalizes but fails to motivate.

INEFFECTIVE INCENTIVES

For a limit to affect behavior it must enter the tunnel.

INEFFECTIVE INCENTIVES

Incentives that fall outside the tunnel are unlikely to work.

BANDWIDTH COMES AT A PRICE

In one study in rural Rajasthan, India, a mere kilogram of lentils proved particularly effective in getting people to come in and get vaccinated. Rewards and penalties in some distant future are less effective for those who tunnel.

INEFFECTIVE INCENTIVES

A hefty subsidy in a savings program that pays out years from now is nice, but it renders those savings an “important but not urgent” matter, one that falls outside the tunnel and can be neglected indefinitely. For an incentive to work, people must see it. And most incentives, unless designed well, risk falling outside the tunnel, rendering them invisible and ineffective.

NOTE

We have a solution to ecological crisis here : put it in the tunnel

BANDWIDTH COMES AT A PRICE

this raises another question: Even if we could bring those incentives into the tunnel, should we? Each additional incentive taxes bandwidth. To capitalize on a bonus payment for a child’s medical checkup, a parent must set up the appointment, remember to keep it, find the time to get there and back, and coerce the child to go (no child likes the doctor!). Each of these steps requires some bandwidth. And this is just one behavior.

BANDWIDTH COMES AT A PRICE

Conditional cash transfer programs seek to encourage dozens, if not hundreds, of these good behaviors. Just understanding those incentives and making the necessary trade-offs—deciding which are worth it for you and which are not, and when—requires bandwidth. We never ask, Is this how we want poor people to use their bandwidth? We never factor in this cost in deciding which behaviors are most worth promoting. 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.

BANDWIDTH COMES AT A PRICE

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. Faced with financial mistakes—too much borrowing at too-high rates—we provide financial education classes. Faced with employees whose social skills are lacking, we offer “soft skills” classes. 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. When the person actually focuses on the training or the incentives, what is he not focusing on?

BANDWIDTH COMES AT A PRICE

The course was several weeks long and focused on traditional accounting techniques, teaching daily recordkeeping of cash and expenses, inventory management, accounts receivable and payable, and calculating profits and investment. In a world of unlimited bandwidth, all this would be worth knowing. But in the real world, Schoar believed that she could do better for her clients.

BANDWIDTH COMES AT A PRICE

She gathered together a group of the best local entrepreneurs to look at how they managed their finances. They, too, were not engaged in complex accounting, but they did what the less successful entrepreneurs did not do: they followed good rules of thumb

BANDWIDTH COMES AT A PRICE

Schoar collected the best rules of thumb and designed a different “financial education” class based on them. Her class was shorter and much easier to grasp. It used a lot less bandwidth, and this showed up in the data. Attendance was much higher, and at the end of the rules-of-thumb class, clients were ecstatic and asking for more; many even said they would pay for another class themselves. Normally, you have to cajole people to come back to a class on financial education. The reduced bandwidth also made the class easier to absorb and more effective. In follow-up surveys, students were more likely to implement the rules of thumb

BANDWIDTH COMES AT A PRICE

Revenues—actual business sales—went up for the rules-of-thumb graduates, especially in bad weeks when improved practices can matter most: they had 25 percent higher revenues in those bad weeks. Traditional financial literacy training, in contrast, had no impact. The lesson is clear: economizing on bandwidth can yield high returns.

BANDWIDTH CAN BE BUILT

We’d be taking a cognitive load off. As we’ve seen, this would help your executive control, your self-control more broadly, even your parenting. It would increase your general cognitive capacity, your ability to focus, the quality of your work, or whatever else you chose to turn your mind to. From this perspective, help with child care is much more than that. It is a way to build human capital of the deepest kind: it creates bandwidth.

NOTE

Bandwidth= cognitive load bandwidth

BANDWIDTH CAN BE BUILT

the poor most want what the moneylender can easily offer: a small amount of money, provided quickly and repaid quickly to help out with an urgent need. Instead, the kind of finance that is offered to the poor is often built on the opposite principle: modest to large amounts of money provided judiciously and slowly. Such loans can be helpful for investing. But if people are busy fighting fires, they will not have the bandwidth for investments. Is it any surprise then that despite the presence of respectable microfinance institutions, people still prefer to go to moneylenders? In India, we tested one very short-term small loan product with KGFS, a full-service financial institution that serves the rural poor. And we were amazed by the high demand for loans that averaged less than $10. The product does not help build wealth; it does not turn people into entrepreneurs. On the surface, it does not look like the kind of sum that can transform a life. Yet it might do just that. The scarcity trap begins with firefighting and with tunneling,

BANDWIDTH CAN BE BUILT

We tend to focus on big shocks, such as medical emergencies or rainfall insurance. Surely these are important. Yet when one is juggling, small shocks can have equally large effects. For a poor farmer, a sick cow can reduce daily income enough to cause a slide into a scarcity trap. We should therefore look to insure the poor against these apparently “small” shocks. In the United States, something as simple as inconsistent work hours (this week you work fifty hours, but next week you get only thirty) can cause juggling and perpetuate scarcity. A solution would be to create the equivalent of unemployment insurance against such fluctuations in work hours, which to the poor can be even more pernicious than job loss.

BANDWIDTH CAN BE BUILT

We have seen how most of the shocks that come from juggling and induce tunneling are generally quite predictable. On the one hand, suddenly needing money for fertilizer counts as a shock. On the other hand, it is entirely predictable. It happens every year, but when you are busy juggling, you do not see it coming. This points to the great potential value in finding ways to buffer against such shocks. One way is to create financial products that help the poor build savings slack. We could do that using some of the techniques for managing scarcity we discussed earlier. For example, we can use tunneling to our advantage. Offer high-fee loans to deal with current fires. These loans will be attractive in the tunnel, and we can use the high fees to build a savings account

BANDWIDTH CAN BE BUILT

Considerations of bandwidth suggest that something as simple as giving cash at the right time can have big benefits. If done correctly, giving someone $100 can serve to purchase peace of mind. And that peace of mind allows the person to do many more things well and to avoid costly mistakes.

A PERSISTENT PROBLEM

One experiment in the United States moved thousands of families from low-income to higher-income neighborhoods, and found modest impacts, primarily on stress and quality of life, but the underlying patterns of poverty did not change.

UNDERAPPRECIATED SLACK

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. Roadways operate best below 70 percent capacity; traffic jams are caused by lack of slack. In principle, if a road is 85 percent full and everybody goes at the same speed, all cars can easily fit with some room between them. But if one driver speeds up just a bit and then needs to brake, those behind her must brake as well. Now they’ve slowed down too much, and, as it turns out, it’s easier to reduce a car’s speed than to increase it again. This small shock—someone lightly deviating from the right speed and then touching her brakes—has caused the traffic to slow substantially. A few more shocks, and traffic grinds to a halt. At 85 percent there is enough road but not enough slack to absorb the small shocks.

UNDERAPPRECIATED SLACK

You used to have an amazing assistant always ready to do the tasks you needed, on short notice, happily, and well. But then a management consultant discovered that your assistant had a lot of free time on his hands. The department was reorganized, and now you share the assistant with two other people. The office’s time-use data show that this is much more efficient; now the assistant’s schedule is packed as tight as yours. But now your last-minute short-notice requests can no longer be handled immediately. This means that, with your heavy schedule, even the smallest shock sets you behind. And as you fall behind, you start to juggle and fall behind further and further. The assistant was an important source of slack

UNDERAPPRECIATED SLACK

The very fact that the assistant was “underused,” like that room at St. John’s, is what made the assistant valuable.

SLACK VERSUS FAT

SLACK VERSUS FAT The mishandling of slack is not only about individuals; it applies to organizations as well. During the 1970s and the early 1980s, there was a perception that many corporations were “bloated.” Some industries were so awash with cash that the executives spent carelessly. They would overpay for real estate and business acquisitions, fail to bargain, and be unconcerned with the bottom line. Cash was spent so badly that some oil companies were worth less than the value of the oil they owned; the market anticipated they would simply waste their assets. The leveraged buyout wave in the 1980s was an attempt to solve this problem. The logic was simple: buy these companies and impose pressure by placing them in debt. Move them from abundance to scarcity. The discipline of debt—in our parlance, the focus that comes from scarcity—would improve performance. The executives would start paying attention, spend more prudently, and produce greater profits. In fact, a raft of empirical studies showed that, whatever their other consequences, leveraged buyouts did improve corporate performance. One reason is that the “corporate fat” exacerbates the incentive problem of managers. They spend poorly because they are spending someone else’s money. Fat, which is effectively free money, is spent on luxuries that management enjoys but are useless from the shareholders’ perspective. By increasing leverage and reducing fat, managers spend more wisely.

SLACK VERSUS FAT

Leverage also had an effect because of the psychology of scarcity. Companies became “lean and mean” in part for the same reason deadlines produce greater productivity, and low-income passengers know the price of cabs. Being a hypervigilant manager who keeps costs low can require a great deal of cognitive effort. You must negotiate diligently with suppliers and scrutinize every line item to decide if an expense is necessary. This kind of focus is easier to come by under scarcity and harder to come by under abundance. Even private companies, where managers are spending their own money, start acting “fat” when awash in cash.

SLACK VERSUS FAT

But as we have seen, slack is both wasteful and beneficial. When cutting, it can be hard to separate out true waste from useful slack, and indeed, many of the leveraged companies were left at the brink of bankruptcy. Faced with that reality, they tunneled. If the 1980s were a lesson in the power of cutting fat, the 2000s were a lesson in the danger of managerial myopia. Perhaps these two were related. Cut too much fat, remove too much slack, and you are left with managers who will mortgage the future to make ends meet today.

THE FIREFIGHTING TRAP

Both St. John’s and NASA had fallen into a firefighting trap. As the organizational researchers Roger Bohn and Ramchandran Jaikumar describe it, firefighting organizations have several features in common. First, they have “too many problems, not enough time.” Second, they solve the urgent problems but put off the nonurgent ones, no matter how important. Third, this leads to a cascade so that the amount of work to be done grows. Put simply, time is spent on fighting the immediate fire, with new fires constantly popping up because nothing is being done to prevent them. At St. John’s the surgeons were so busy dealing with patients right now that they could not step back and look at the overall patient mix. At NASA the engineers were so busy trying to make the deadline for each component that they did not look at how the components fit together. The firefighting trap is a special case of the scarcity trap.

THE FIREFIGHTING TRAP

Firefighting does not just lead to errors; it leads to a very predictable kind of error: important but nonurgent tasks are neglected. Just as the name implies, you are busy fighting the urgent problem (the fire); other problems, no matter how important, are drowned by the most urgent (seatbelts on the way to the fire). As a result, structural problems—important, but they can wait—never get fixed.

THE FIREFIGHTING TRAP

Firefighting traps involve a great deal of juggling. You are so focused on the looming deadline that when you finish you realize the next project is suddenly due. Most of us have found ourselves doing this at one point or another, and we know intuitively that firefighting is a trap for all the reasons scarcity is a trap. 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.

THE FIREFIGHTING TRAP

One solution, at least in organizations, is to explicitly manage and ensure the availability of slack.

THE FIREFIGHTING TRAP

as fat continues to be cut, and slack goes with it, organizations may want someone in-house who is not tunneled on stretching resources. Someone, removed from the daily tunneling, whose job is to ensure that the organization has enough slack and who focuses not on what needs to be done today but on what possible shocks may upset tight plans tomorrow. Someone must ensure that those who are focused on meeting immediate project targets are not borrowing from future projects, thereby exhausting any slack and digging the organization deeper into a bandwidth hole in the future. It is not a coincidence that the adviser that St. John’s hired was clearly removed from the struggle for the next operating room

MANAGE THE RIGHT SCARCE RESOURCE

The truly efficient laborer will be found not to crowd his day with work, but will saunter to his task surrounded by a wide halo of ease and leisure. —HENRY DAVID THOREAU

MANAGE THE RIGHT SCARCE RESOURCE

we often overlook bandwidth when arranging our time. What we naturally think of is the time it will take to complete our to-do list, not the bandwidth it will require or receive.

MANAGE THE RIGHT SCARCE RESOURCE

When Henry Ford famously adopted a 40-hour workweek in 1926, he was bitterly criticized by members of the National Association of Manufacturers. But his experiments, which he’d been conducting for at least 12 years, showed him clearly that cutting the workday from ten hours to eight hours—and the workweek from six days to five days—increased total worker output and reduced production cost. Ford spoke glowingly of the social benefits of a shorter workweek, couched firmly in terms of how increased time for consumption was good for everyone. But the core of his argument was that reduced shift length meant more output

MANAGE THE RIGHT SCARCE RESOURCE

At the end of each interview I asked the interviewees what they would do first to encourage innovation in their organization if they were suddenly omnipotent. By far the most common answer was time. But respondents often qualified this—they didn’t want more of the same kind of time, they wanted more unstructured time that did not have specific outputs or procedures attached to it. The managing director … put this very well when she yearned for “time to play … time to gaze out the window … time to let things settle … time to read and react

MANAGE THE RIGHT SCARCE RESOURCE

none of this should be surprising. Just as we get physically exhausted and need to rest, we also get mentally depleted and need to recover.

MANAGE THE RIGHT SCARCE RESOURCE

the effects of sleep on productivity are striking. Studies have repeatedly shown that when workers sleep less they become less motivated, make more errors, and zone out more often. One clever study demonstrated this by looking at the start and end of daylight savings time, nights on which, because of the time change, people lose sleep. It found that people spent 20 percent more time cyberloafing—searching the web for unrelated content—for every hour of lost sleep on those evenings. And that is just one night of sleep. Research shows that the cumulative effects are far worse. As work hours accumulate and sleep time diminishes, productivity eventually goes down.

MANAGE THE RIGHT SCARCE RESOURCE

most firms still manage hours, not bandwidth.

MANAGE THE RIGHT SCARCE RESOURCE

The deeper lesson is the need to focus on managing and cultivating bandwidth, despite pressures to the contrary brought on by scarcity. Increasing work hours, working people harder, forgoing vacations, and so on are all tunneling responses, like borrowing at high interest. They ignore the long-term consequences

MANAGE THE RIGHT SCARCE RESOURCE

There is nothing magical about working forty or fifty or sixty hours a week. But there is something important about letting your mind out for a jog—to maximize effective bandwidth rather than hours worked.

MANAGE THE RIGHT SCARCE RESOURCE

When one member of a team begins to fall behind or enters a firefighting mode, this can contribute to the scarcity felt by others. When one person’s bandwidth is taxed, especially at the top, a sequence of bad decisions can lead to further scarcity and to taxes on others’ bandwidth.

10: Scarcity in Everyday Life

Staying on schedule can be hard. A slipup early on—perhaps a bit of procrastinating or something that has run unexpectedly long—gets magnified when there is no slack to absorb this shock. What first seemed like manageable tightness becomes a cascade of lateness. Every appointment becomes rushed. You tunnel on getting through this appointment. Predictably, you borrow from future ones. A time-debt trap forms. A tight calendar leaves you on the edge of being late to every meeting. And on most days you go over that edge early.

WHAT IS IN THE TUNNEL?

Small changes to one’s circumstances can short-circuit the consequences of scarcity. The psychology of scarcity is primitive, and changing it “from within” can be hard. But you don’t need to change the psychology in order to get the right outcome. The foundation president is not tunneling any less. His trick is to change the environment to counteract the psychology. And not even drastically: the assistant does not create additional slack. Meetings are still scheduled back to back, and the president still tunnels during these meetings. All the assistant does is stand in the way, preventing the psychology of scarcity from doing harm. You can think of it as akin to a rumble strip on the side of a highway. It’s a small change, yet it protects drivers against their wandering minds and fatigue; it’s much easier than getting them to focus or to sleep more. In the same way, we can “scarcity-proof” our environment. We can introduce the equivalent of rumble strips and helpful assistants, using our insights into why things go badly to build better outcomes

WHAT IS IN THE TUNNEL?

A simple yet often underappreciated tool for managing scarcity is to influence what’s in the tunnel. This is one thing the assistant does well: she forcefully brings in the next meeting while the executive is still tunneling on this one

WHAT IS IN THE TUNNEL?

Someone has an incentive to ensure that you repay your loan or pay your rent. That person or institution, like the assistant, will bring it into your tunnel no matter how tunneled you are. Savings, on the other hand, has no dedicated assistants to care for it, and—absent a behaviorally informed intervention like ours—will end up outside the tunnel most of the time.

WHAT IS IN THE TUNNEL?

insights about tunneling can also be used to exploit. You might set high late fees and then not remind people of the impending charges. Many of these effects, from reminders to the impact of late fees, will disproportionately affect the poor, since they are the ones who are tunneling—and suffering the consequences—the most.

NOTE

Idée de créer une assurance pour pauvres, qui cherche tous les nouveaux contrats adoptés par les pauvres et les annule à leur place puis leur dit : “grâce à nous, vous avez économisé X € aujourd’hui”

WHAT IS IN THE TUNNEL?

Reminders, of course, are not limited to money. A busy person will too readily neglect the gym, which is important but never urgent. Signing up for a personal trainer reduces this problem. Now the trainer’s calls bring fitness back into the tunnel. Now going to the gym becomes something that cannot be neglected: a trainer, intruding into your tunnel, is asking when you would like to come work out this week. The trainer is a constant presence, ensuring that the gym is top of mind.

NOTE

Mieux qu’un rappel: un coach dédié… Ça marcherait aussi en faisant que les gens s’engagent dans leur communauté et qu’ils doivent valider leur intention d’implémentation

WHAT IS IN THE TUNNEL?

Impulses, rather than reminders, are also easy to bring to the tunnel. Supermarkets have long understood this. They saw an easy way to make money: place candy bars at checkout counters.

WHAT IS IN THE TUNNEL?

Many urges are like this; however important or desirable they may be, they may be out of mind when they are out of sight because they are not pressing. But when they’re in sight, they assert themselves, pushing other impulses

WHAT IS IN THE TUNNEL?

A photo of one’s family occasionally emerging on a busy person’s desktop (irregularly enough to capture attention rather than becoming part of the background) may also work: make something top of mind that might otherwise be neglected.

NOTE

Pattern break to capture attention; otherwise it becomes background

WHAT IS IN THE TUNNEL?

when they “buy” these cards, people are actually saving: the dollars they pay get transferred into their savings accounts. The cards not only combat tunneling by bringing a person’s latent goal to the forefront; they also provide an easy way to act on it—“buy this card”—before the goal fades

NOTE

Saving cards make saving physically present. We could imagine meditation cards also, they would be a good reminder

NEGLECT

Reminders are deceptively simple yet are often overlooked.

NEGLECT

When there’s neglect, it is often more effective to alter the outcome it leads to rather than fight it. Here is an example with retirement savings. When people in the United States start a new job, they need to fill out a form regarding their participation in a 401(k) plan. Typically, if they fail to fill out the form, they are not enrolled, which can be a recipe for disaster later in life. But when you have just been hired, with all the turmoil and anxiety that brings, you will often tunnel

NOTE

Change the outcome of neglect for  behavior change ux

NEGLECT

In one insightful study, researchers changed the consequences of neglecting the form. New employees received a revised form that said something along the lines of: “You are enrolled in a 401(k) at 3 percent. Turn this form in if you prefer not to enroll or to enroll at a different level.” Now, when people neglected the form, they were saving. And better yet, for all those who thought about it and wanted to save, everything was set—there was nothing at risk by forgetting. 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.

NOTE

Default option is hugely important because people will often not take action, because it takes cognitive load to do so

NEGLECT

Of course, there are a lot of tricky policy issues with someone else setting your defaults

NOTE

Ethics

NEGLECT

But in many cases you can set the defaults on your own. Automatic bill pay is a prime example. A busy person who enrolls for automatic bill pay no longer runs the risk—in the tunnel of work—of forgetting to pay her bills. Or, rather, she is free to ignore her bills, but when she does, those bills still get paid. As a result, some of the most persistent tunneling problems for the busy these days—at least for those who have access to modern technology—are those tasks that cannot be automated, like a car registration, a driver’s license renewal, or taxes. Worse yet are those that are not automated and do not have a natural deadline or reminder, like writing a will or getting a medical checkup

NOTE

Automatiser ces tâches peut être une activité lucrative

NEGLECT

Picture someone working at home and tunneled on a deadline. We know that they will neglect the quality of their eating; they will eat whatever they can find near at hand. In fact, distracted and depleted, they will tend to prefer the less healthy options, those most immediately tempting. With a pantry full of assorted options, this busy person will end up gaining a few pounds. In contrast, a pantry stocked with only healthy options can insulate the waistline from the deadline.

NOTE

The more tunneled, the less bandwidth available, the more we take default options

VIGILANCE

Slipping up just once and using your savings to buy a leather jacket can also undo many months of hard work.

VIGILANCE

One-off choices only need to be done once (or at least very infrequently) to get the desired outcome: enroll in automatic bill payment and you are done with worrying about paying bills, buy a washer/dryer and you save a trip to the laundromat for years

NOTE

Certains choix changent beaucoup de choses, comme apprendre à méditer

VIGILANCE

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. You splurge or take a loan just once, and you have dug yourself a hole for the extended future, a hole that will require vigilance to climb out of.

NOTE

Vigilance is needed. Making the bad choice very hard too

VIGILANCE

This suggests a recipe: whenever possible, convert vigilant behaviors into one-time actions. Rather than having to be vigilant every time you grab a snack from the pantry, just be vigilant at the grocery store. Many banal tasks have this structure. Keeping your house clean requires vigilance, or (assuming you can afford it) just set up a maid service once. Paying your bills every month requires vigilance. Setting up automatic bill payment only needs to be done once. Remembering to have sufficient cash for tolls while you drive requires vigilance; signing up for E-ZPass, an automatic form of toll payment, is done once. More broadly, because tunneling induces neglect, converting those things that tend to get neglected into one-time solutions can be very powerful.

NOTE

Automatiser permet de réduire la charge mentale… Résister à quelque chose en permanence demande plus de vigilance que d’y résister une heure… Il vaut mieux avoir certaines choses loin de soi

VIGILANCE

Spending time with your kids invariably suffers when it depends on your vigilance, but if you sign up for a weekly activity together, that one-time action ensures that you will have a minimum amount of quality time together each week.

NOTE

Idée : offrir aux parents une activité par semaine différente mais à la même heure et même endroit

VIGILANCE

The other direction also works. Convert questionable one-time behaviors into the kind that demands vigilance. Some policy makers have proposed “cooling off periods” for car purchases, and similar arrangements may be wise for loans of every variety (money, time, calories, and so forth). Essentially, you are setting up a system that requires you to confirm the decision several times before you actually commit to it. (Imagine that any time you receive a tempting invitation, your e-mail is set up to send the following response: “Thank you. I may be able to do this. I will let you know in a week.”) Occasionally, you may also want to turn automatic renewals into acts of vigilance. When was the last time you checked if there might now be more affordable car insurance than the one you so meticulously chose years ago?

VIGILANCE

Instead of automatically renewing, it might be wise occasionally to confirm the ongoing wisdom of that old one-off choice.

VIGILANCE

what about loans? Should we ban quick loans, one-time choices with potentially bad consequences?

LINKING AND THE TIMING OF DECISIONS

some loans provide needed slack. When your car breaks down and you need cash to fix it, a loan (even an expensive one) may prevent a worse cascade—arriving late to work, risking job loss, and so on. Paradoxically, scarcity increases the chance you’ll need a quick fix, as well as the chance that some such fixes will hurt you.

LINKING AND THE TIMING OF DECISIONS

One insight of the psychology of scarcity is the need to prepare for tunneling and to insulate against neglect: navigate so that bad choices are harder to make in a single moment of tunneling, and arrange it so that good behaviors require little vigilance yet are occasionally reevaluated.

LINKING AND THE TIMING OF DECISIONS

a world of tunneling and neglect

LINKING AND THE TIMING OF DECISIONS

At a moment of focus on the importance of exercise, buy a membership, hire a personal trainer, bet a friend, do what you can for this motivation to linger once you’re tunneled elsewhere

LINKING AND THE TIMING OF DECISIONS

Otherwise, you’ll plan to do it sometime soon, but you’ll be in another tunnel then.

NOTE

Act while you can , otherwise you won’t do it until you’re out of tunnel

ECONOMIZE ON BANDWIDTH

Bandwidth is about allocating our limited information-processing abilities

NOTE

Definition

ECONOMIZE ON BANDWIDTH

decisions that demand more information processing have immediate bandwidth implications.

ECONOMIZE ON BANDWIDTH

Clear and simple syntheses are a terrific way to economize on cognitive capacity.

NOTE

Rule-of-thumbs presentations are better for people because less bandwidth is needed

ECONOMIZE ON BANDWIDTH

This was illustrated in a study of payday loans conducted by economists Marianne Bertrand and Adair Morse. The researchers divided customers who were about to take a payday loan into two groups. One group was shown a table that listed the annual effective interest rate they would be paying (443 percent) compared to comparable loans (16 percent on a credit card). Another group was presented with similar data, but instead of interest rates, they were shown how many dollars they would pay on the loan if they were to repay in two weeks ($45),onemonth($90), and so on, as compared to how many dollars they would pay if the same amount were borrowed on a credit card ($2.50fortwoweeks,$5 for a month, and so forth). In other words, similar data were presented in slightly different ways: In one case, interest rate, an abstract measure of something, the precise implications of which may be hard to gauge. In the other, dollars paid, familiar units that you need to take out of your pocket. What Bertrand and Morse found was that far fewer customers took the payday loan when they were shown the cost in dollars. Those who come for payday loans are accustomed to seeing, thinking about, and needing dollars. Interest rates, by contrast, are exotic financial instruments

ECONOMIZE ON BANDWIDTH

Nutrition labels present a similar problem. They inundate people with a great deal of exotic information. Consumers now get not just calorie information but also information on calories from fat, good fats versus bad fats, essential nutrients (are you getting your omega-3 fatty acids?), percentage daily allowance of several vitamins and minerals, and so on. All this makes for serious information-processing demand, and without an easy way to process the information, it’s hard to know how to act. How bad is a bagel? It is hard to tell.

ECONOMIZE ON BANDWIDTH

making trade-offs can be taxing

ECONOMIZE ON BANDWIDTH

You stay a bit longer, but really your mind is no longer at the party. The trade-off—what you are giving up for being at the party—makes it hard to be truly present.

NOTE

Not being fully present = because of cognitive load aka bandwidth tax

ECONOMIZE ON BANDWIDTH

The busy are desperate for time to devote to family and friends. Squeezing this time into a busy schedule is challenging—it ends up a predictable victim of neglect—and even when it is squeezed in, the pleasure is often gone, while the mind is elsewhere, contemplating what could be done instead

NOTE

This is called obsession about work : wobsession

ECONOMIZE ON BANDWIDTH

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, right when Friday exits, no matter how busy you might be, no questions asked, no need to plan. The Judaic scholar Abraham Joshua Heschel wrote a book about the Sabbath, which he considered God’s gift of time.

NOTE

American need to think less of work

ECONOMIZE ON BANDWIDTH

trade-off thinking is both distracting and particularly bad for dieting since focusing on food makes it harder to resist. One study randomly assigned participants to diets that differed in their rule complexity and concluded, “Perceived rule complexity was the strongest factor associated with increased risk of quitting the cognitively demanding weight management program.”

BANDWIDTH VARIES

low-income workers who are paid monthly, as well as food stamps recipients, will likely have the least bandwidth near the end of the month and more bandwidth right at the beginning. And it would be wise to exploit this timing in implementing policy and program design.

BANDWIDTH VARIES

Exploiting bandwidth might include not only timing tasks and events but also setting the best order. For the longest time, as we struggled to write this book, we would put aside a block of time every morning. And we protected it ferociously, sometimes even when it was painful to do so—for example, when you’re the only one holding up the scheduling of a six-person meeting. We were not simply protecting time; we were protecting high-bandwidth time

BANDWIDTH VARIES

We had begun a series of mental, and noisy, trains of thought. We had acted like dieters exposing themselves to donuts

NOTE

Rémanence de la charge cognitive

BANDWIDTH VARIES

But this did not work very well; our writing sessions were not particularly effective. And then we realized what we had done wrong. Before sitting down for our ferociously protected writing time, we quickly looked over e-mail

SNAGS

a group of researchers set out to find out why. They divided eligible high school graduates (and their families), who had come for help with their tax filing, into three groups and gave them all the forms needed to apply for financial aid to college. For the first group, they simply observed the tendency to apply. For the second, they tried to bridge the information gap. Perhaps eligible high school graduates didn’t know about the money they were eligible for, so the tax professionals told them. For the third group, the researchers did something inspired. Tax professionals not only told the eligible graduates what they were eligible for, but they also actually filled out the forms with them. Simply telling people the exact benefits they were eligible for had no noticeable effect. But the help filling out the forms did have a remarkable effect: not only were they more likely to apply for financial aid, they were also 29 percent more likely to enroll in college. Having to fill out forms is a potential snag for anyone, a chance to procrastinate and to forget. But with their bandwidth taxed, and with perhaps a bit of stigma attached, it is a bigger snag for low-income people. Families with no college experience tripled their submission rate if they received help in filling out the forms.

NOTE

Coaching > informing Coaching éligible people to get their financial aids against some money can be profitable

SNAGS

Misplanning, procrastination, and forgetting can turn seemingly minor steps into major stumbling blocks.

SNAGS

Those on public benefits, for example, often are required to “recertify”—to complete a series of forms—every year to show that they are still eligible. As you might imagine, it is during these periods of recertification that people drop out of the program. And this requirement appears often to screen out the most needy

NOTE

Un argument en faveur du revenu universel

SNAGS

those who are most taxed are also those most likely to delay in recertifying and, unfortunately, the ones in greatest need of the benefit.

NOTE

Revenu universel

SNAGS

To see the logic of taxing bandwidth, think about it this way. Imagine we imposed a hefty financial charge to filling out applications for financial aid. We would quickly realize that this is a silly fee to impose; a program aimed at the cash stretched should not charge them much cash. Yet we frequently design programs aimed at people who are bandwidth-stretched that charge a lot in bandwidth

SNAGS

many forms could be automatically filled using tax data.

SNAGS

This, incidentally, is not an argument for removing all snags. Sometimes there is a reason for their existence. Financial aid forms are complex because a lot of information is needed. Recertification happens because circumstances change, and programs need to target those who are eligible.

NOTE

Bureaucratie a ses raisons, mais pourquoi a-t-elle besoin d’autant d’informations?

THE PROBLEM OF ABUNDANCE

THE PROBLEM OF ABUNDANCE As we contemplate the better management of scarcity, we should remember that scarcity often begins with abundance. The crunch just before a deadline often originates with ample time used ineffectively in the weeks preceding it. The months just before harvest are particularly cash tight because money was not spent well in the easy months following last harvest.

THE NEED FOR SLACK

The reason why the abundance-then-scarcity cycle is so bad is that, as we have seen, scarcity can get us trapped. It is not merely that we fail to smooth our activities under abundance; it is that we fail to leave slack for the future

THE NEED FOR SLACK

This is the danger of not leaving enough slack, not enough buffer for potential shocks.

THE NEED FOR SLACK

buffer stock needs to be built during times of abundance. If time is where you expect scarcity, this means leaving some extra room in your schedule, for “no good reason,” other than being able to move your many projects and obligations around at no cost. With money, it means having and building a rainy day account, even if you do not feel terribly flush. All this does not come easy, does not feel natural, because even when you know that shocks and scarcity can happen, it doesn’t feel that way when there’s abundance.

THE NEED FOR SLACK

We can go some way toward “scarcity proofing” our environment. Like investing in a smoke alarm or setting up a college savings account for your new baby

Conclusion

As our island of knowledge grows, so does the shore of our ignorance. —JOHN A. WHEELER

Conclusion

Have you ever said, “I don’t want to make this important decision now; my bandwidth is taxed?”

Conclusion

People overlook bandwidth. When you’re busy and must decide what to do next, you might take into account the time you have and how long it will take you, but you rarely consider your bandwidth. You might say, “I only have half an hour. I will do this small task.” You rarely say, “I have little bandwidth. I will do this easier-to-accomplish task.” Of course, you sometimes do this implicitly, such as when you switch to another task when you fail to make progress

Conclusion

We schedule and manage our time but not our bandwidth. And it is striking how little we notice or attend to our own fluctuating cognitive capacities

Conclusion

Scientists tend to measure what their theories tell them to measure.

NOTE

Another scientific bias

Conclusion

Take productivity, a driver of economic growth. Productivity depends crucially on bandwidth. Workers must work effectively. Managers must make wise investment decisions. Students must learn in order to build human capital. All of this requires bandwidth, and it is possible that a drop in bandwidth today further reduces productivity in the future.

NOTE

Capitalism will prevail?

Conclusion

Bandwidth is a core resource. We use it in parenting, studying, getting ourselves to the gym, and navigating our interpersonal relationships. It affects the way we think and the choices we make.

Conclusion

Should he spend his time and energy motivating them? Should he resort to threats of firing? Greater incentives? More training? Additional conversations? The manager’s problem is not unique. Many employers of low-wage workers face problems of productivity and absenteeism. And they invariably try these assorted interventions.

Conclusion

Rather than motivating or training, threatening or enticing, perhaps he can focus on increasing bandwidth. Low-wage workers have volatile financial lives. We have seen their effects. We have also seen that incentives can be less effective in circumstances like this. When you’re tunneling, many rewards can fall outside the tunnel. Why not instead think about financial products, logistical interventions, or working conditions that help workers deal with financial volatility and help clear some bandwidth?

Conclusion

Many workers, as we saw in chapter 5, resort to payday loans. Yet it’s worth observing that a payday loan is often simply a loan against work that has already been done. The worker who takes a payday loan halfway through the pay cycle has already earned half her paycheck. The need for a loan is largely due to the fact that payment happens with a delay. Why should an employer have workers taking these loans, potentially falling into scarcity traps, taxing bandwidth, and resulting in lower productivity, especially when the employer can himself give pay advances at low cost?

NOTE

Toutes les boîtes pourraient faire ça pour des employés

ABUNDANCE

We have treated abundance as merely what happens when scarcity is absent, as if that’s the “standard” state, when all is fine. But introspection tells us that there have been periods when we felt real abundance and that those periods feel distinct, not only from scarcity but from other, less marked times. There are times when a psychology of abundance kicks in. And what makes the psychology of abundance so intriguing is that it seems to have in it the seeds of eventual scarcity. Many of us end up tight for time right before a deadline because we wasted the preceding period of abundance

ABUNDANCE

The experience of scarcity near the deadline often emerges because of how time was managed during abundance. This intimate link between scarcity and abundance repeats itself in many places. The farmer is strapped for cash before harvest because of how he spent his previous harvest’s proceeds. How he behaved during abundance contributes to his eventual scarcity. We fail to save when cash is plentiful. We loll around when the deadline is far away.

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