Although the interesting model of Scarcity makes it worth a read, like too many behavioral economics texts, it tries to cram too many global phenomena under its framework.
Scarcity: The New Science of Having Less and How It Defines Our LivesPublisher: Picador
Length: 288 pages
Author: Sendhil Mullainathan, Eldar Shafir
Publication date: 2014-11
Payday loans. Back-to-back meetings. Maxed out credit cards. Project deadlines.
Scarcity: The New Science of Having Less and How It Defines Our Lives ties these seemingly disjointed themes together in the latest pop behavioral economics book. Authors Sendhil Mullainathan, a MacArthur “Genius Grant” award winner and Harvard economics professor, and Eldar Shafir, a Princeton psychology professor, explore our often strained, sometimes irrational, and always complicated relationship to time, money, dieting, and the effect that getting by with less than we need in any of these areas has on the brain. Scarcity is compelling in theme, a bit weak in execution, but worth the reading nonetheless.
Scarcity is the newest entry in a succession of pop behavioral economic volumes. These books, when strung together their attention grabbing single verb titles (Click, Nudge, Switch, Sway, and Blink), sound like John Barthelme describing a janitor dancing Tchaikovsky with a mop in a broom closet. Usually they promise to help readers rethink some aspect of the everyday with a blend of science and story, while walking a fine line between self-help and research.
I first heard Scarcity in a carousel of a conversation stuck on the misinterpreted argument that Mullainathan and Shafir contended poverty makes people stupid. This argument holds that the author's viewpoint is a kind of repackaged Social Darwinism, but this is not the case. In fact, their central theme is probably one of the most well constructed scientific cases against conventional views of personal responsibility. That said, conflating an academic’s packed Outlook calendar and the daily struggle of those at the bottom of social ladder does lead to some slippery terrain. To their credit, Mullainathan and Shafir successfully navigate this terrain, including presenting an entire chapter, fittingly titled “Poverty”, that methodically anticipates and refutes these concerns point for point.
Mullainathan and Shafir break for new ground right out of the gate. Rather than retread finances and a packed calendar as merely anxiety-provoking stressors, they repurpose the tech term "bandwidth" as a measure of mental capacity. For those contending with “more month than money”, as one subject frames his financial constraints, or a calendar packed with conflicting appointments, a bandwidth tax impacts cognitive capabilities that can lead to some wrongheaded, counterproductive, and irrational decision making. As the authors put it:
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. (66)
This is effective weaponry in debates on personal accountability. At a time when an fMRI or some big data metrics seem to work as “effect on the brain” evidence to move a social argument, research demonstrating that poverty has a negative impact on health is critical.
Mullainathan and Shafir, however, are saying much more than that.
In fact, the concepts of bandwidth and bandwidth tax shut down most of the rationalizations to end welfare, challenge the much ballyhooed success of microfinance in the developing world, and ultimately reject bootstrapping. The same goes for the other terminology the authors introduce throughout the book, including tunneling, borrowing,and slack. As the authors frame it:
The bandwidth tax is an appealing explanation because it accounts for a diverse set of phenomena. Explanations of the poor’s failure are normally piecemeal. Perhaps farmers do not weed for cultural reasons; perhaps diabetics do not take their medications because of side effects; perhaps poor parents just lack the knowledge. These explanations are scattered because the circumstances of the poor are so very different... In contrast, a single, fundamental mechanism -- bandwidth -- can make sense of this diverse set of empirical facts across behaviors, time and place. (162)
The book, divided into three parts (“The Scarcity Mindset”, “Scarcity Creates Scarcity”, and “Designing for Scarcity”), lays fascinating groundwork for the authors' “new” scientific lens. While most of this hybrid genre are written in a kind of Gladwell-esque script for pronouncing their scientific revelations, Scarcity makes an analogy-driven case. There are notable exceptions to the former trend, however: Richard Thaler (Nudge), Nassim Nicholas Taleb (Fooled by Randomness, Black Swan), and Daniel Kahneman (Thinking, Fast and Slow) buck the formula well, but Mullainathan and Shafir do not. Scarcity illustrates more through diverse examples from other areas of disciplines (chemistry, biology, entomology) than through anecdote or story. As a result, the text is not stronger for it.
If the intent of the authors is to create a kind of quasi-apolitical, universalizing scientific theory of poverty, transcending cultural contexts, norms and various circumstance, more evidence is needed to make their case substantial. The argument in this volume could have been made stronger by providing stories in different contexts -- cultural and individual, alike -- to bring the point home. In short, this is one of the few instances where a book would have benefited from a little more of the Gladwell treatment, which also goes for many of Gladwell's own works.
This puts us back on that slippery slope where Mullainathan and Shafir started. If there is a single, overarching flaw with Scarcity, it is that it tries to tackle too much with too little. One of the errors faced by behavioral economics texts is a zealousness to fit the whole of our global cultures within its formulas. Scarcity suffers this kind of generalizing. Our contemporary culture seems hungry for a scientific cosmopolitanism unifying the global whole, and in the process what is bumped from the frame is not just cultural diversity, but also political nuance. As a result, a scientific cosmopolitanism creates an apolitization that addresses the symptoms of poverty without addressing systemic root causes.
The final section of Scarcity (“Designing for Scarcity”) proposes deep changes that can alter the fate of the global poor by factoring in bandwidth tax and create safeguards that prevent the poor from slipping farther down the ladder. But based on the overly broad framework of Mullainathan and Shafir's scarcity model, one has reason to be concerned that such safeguards will simply never be enough.