Scarcity: Why Having Too Little Means So Much

In the concluding chapter of Scarcity, Mullainathan and Shafir reflect on the broader implications of their research on scarcity, emphasizing scarcity’s pervasive impact on cognitive capacity and decision-making. They open the chapter with a personal anecdote: The authors enjoy playing games on their phones, but they noticed that as they wrote Scarcity, their performances in the games suffered—the tension of working toward a deadline led to weak scores. Mullainathan and Shafir say this illustrates how the bandwidth tax can subtly affect various aspects of life.

The authors argue that individuals and societies at large fail to recognize and adapt to fluctuating cognitive capacities. Modern workers, who rely heavily on their mental faculties, seldom account for their mind’s daily rhythms. Similarly, social scientists and policy-makers often overlook the cognitive side of economic and social issues. Mullainathan and Shafir propose a novel concept: They suggest that countries measure Gross National Bandwidth alongside traditional economic indicators, suggesting that understanding and managing societal cognitive resources could greatly enhance public policies and social programs.

Mullainathan and Shafir shift to discussing practical applications. They ponder the potential benefits of employers offering their workers pay advances as an alternative to payday loans, thereby preventing the bandwidth tax associated with financial scarcity and improving employee productivity. The authors extend this idea to the broader consideration of how institutions and organizations might alleviate the cognitive burdens of scarcity for individuals.

The narrative then shifts to a discussion of abundance, the counterpart to scarcity, which presents its own set of challenges. The authors share their struggle with meeting deadlines for the book, noting that periods of perceived abundance can lead to procrastination and eventually result in scarcity. They observe that cycles of abundance and scarcity are interconnected, with the former often setting the stage for the latter, as exemplified by the financial crisis of 2008, in which a period of economic boom led to overconfidence and complacency, ultimately contributing to a devastating downturn.

Mullainathan and Shafir conclude with a reflective question, asking whether there is a unifying logic to abundance similar to that of scarcity. They suggest that the dynamics of abundance also deserve further exploration. The authors humorously note that now, with the book completed and ostensibly more time on their hands, they have the time abundance necessary to not address this question right away, echoing the patterns of behavior they have analyzed throughout their work.

Overall, the conclusion underscores the significance of understanding scarcity and abundance not just as economic or physical conditions, but as states with profound psychological impacts that influence behavior, policy effectiveness, and societal well-being.