How is it that we can be so smart in many ways, and yet some of us can’t manage our time? How come others are smart in different ways, but still find themselves maxed out on their credit cards? A new book helps us understand why the poor stay poor, and the busy stay busy.
In their book, Scarcity, Harvard economist Sendhil Mullainathan and Princeton psychologist Eldar Shafir paint an alarming picture of how completely scarcity – whether money or time or some other asset – colonizes our minds and destabilizes our decision-making.
Mullainathan and Shafir show that scarcity creates a similar psychology for everyone struggling to manage with less than they need. Busy people fail to manage their time efficiently for the same reasons the poor and those maxed out on credit cards fail to manage their money. The dynamics of scarcity reveal why dieters find it hard to resist temptation, and why students and busy executives mismanage their time.
Once we start thinking in terms of scarcity and the strategies it imposes, the problems of modern life come into sharper focus. Chronically busy people, suffering from a scarcity of time, demonstrate impaired abilities and make self-defeating choices, such as unproductive multi-tasking or neglecting family for work. Lonely people, suffering from a scarcity of social contact, become hyper-focused on their loneliness, prompting behaviours that render it worse.
Mullainathan and Shafir have written a book that provides a new way of understanding why the poor stay poor and the busy stay busy. And it reveals not only how scarcity leads us astray but also how individuals and organizations can better manage scarcity for greater satisfaction and success.
Richard Thaler and UCLA Economist Shlomo Benartzi have worked together for years on finding the crucial steps to help people save for the future. You might enjoy Benartze’s TED talk “Saving for Tomorrow, Tomorrow.”