Why scarcity affects both rich and poor

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why scarcity affects both rich and poor

Scarcity: Why Having Too Little Means So Much by Sendhil Mullainathan

Audiobook: 8 hrs and 47 mins

A surprising and intriguing examination of how scarcity—and our flawed responses to it—shapes our lives, our society, and our culture

Why do successful people get things done at the last minute? Why does poverty persist? Why do organizations get stuck firefighting? Why do the lonely find it hard to make friends? These questions seem unconnected, yet Sendhil Mullainathan and Eldar Shafir show that they are all are examples of a mind-set produced by scarcity.

Drawing on cutting-edge research from behavioral science and economics, 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, why students and busy executives mismanage their time, and why sugarcane farmers are smarter after harvest than before. Once we start thinking in terms of scarcity and the strategies it imposes, the problems of modern life come into sharper focus.

Mullainathan and Shafir discuss how scarcity affects our daily lives, recounting anecdotes of their own foibles and making surprising connections that bring this research alive. Their book 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.

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Published 16.12.2018


Scarcity affects both the he poorest and the richest people Why most poor people in the Philippines has more children than the rich prople?.
Sendhil Mullainathan

The Science of Scarcity

Sugarcane farmers, like this one near Ahmedabad, suffer seasonal scarcity—and the distortions from deprivation. The payday-loan industry Advance America has 2, branches might be different if borrowers were nudged before their needs arose. Toward the end of World War II, while thousands of Europeans were dying of hunger, 36 men at the University of Minnesota volunteered for a study that would send them to the brink of starvation. Allied troops advancing into German-occupied territories with supplies and food were encountering droves of skeletal people they had no idea how to safely renourish, and researchers at the university had designed a study they hoped might reveal the best methods of doing so. But first, their volunteers had to agree to starve. The physical toll on these men was alarming: their metabolism slowed by 40 percent; sitting on atrophied muscles became painful; though their limbs were skeletal, their fluid-filled bellies looked curiously stout.

In economics, scarcity refers to limitations—limited goods or services, limited time, or limited abilities to achieve the desired ends. Life would be so much easier if everything were free! Why does everything cost so much and take so much effort? Figuring out how individuals, families, communities, and countries might best handle this to their benefit is fundamental to what economics is about. You are probably used to thinking of natural resources such as titanium, oil, coal, gold, and diamonds as scarce. Everyone agrees natural resources are scarce because they take a lot of effort, money, time, or other resources to get, or because there seems to be a finite amount available. But what constitutes a lot of effort, money, time, or other resources?

They argue that the poor – and the rich – react similarly to scarcity, money in your pocket, concentrates the mind both for better and for worse.
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EFL Lesson 1 Slides., The poor face a scarcity of resources more often than the rich because they have more limited resources most importantly, money.

They argue that the poor — and the rich — react similarly to scarcity, whether when confronting starvation or dieting, despite how different those problems are in the real world. The fight to endure with insufficient resources, whether time in the day, food on the table, or money in your pocket, concentrates the mind both for better and for worse. For the poor that shows up everywhere from the recurrence of payday loans in America to the interest rates and borrowing practices of small farmers and rag collectors in India. Making it that day or month is the test, the devil take the hindmost. Scarcity in essence reduces the mental bandwidth that might be accessible for what people not involved in such stressful or survival contests might see as higher priorities or rational choices like planning ahead, using self-control, or solving other life problems, which all lead to trade-offs, crises, and other problems.



  1. Calquin R. says:

    Scarcity refers to the basic economic problem, the gap between limited — that is, scarce — resources and theoretically limitless wants.

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