Book Review: Scarcity: Why Having Too Little Means So Much

I recently read a book I greatly enjoyed on behavioral economics titled Scarcity: Why Having Too Little Means So Much. This book is written in 2013 by behavioral economist Sendhil Mullainathan and psychologist Eldar Shafir. It discusses how scarcity in life affects people’s decision-making behavior and accelerates the poverty cycle. I personally feel that the decision-making and behavior parts are very interesting, because it really pushes me to think about my own habits and mentality.

Dr Mullainathan and Dr Shafir believe that scarcity in behavioral economics mainly involves peoples' mentality. People think that many things in life are in shortage despite what the facts may show. It is more severe than the scarcity of material resources because it unconsciously captures people’s mind. This casues them to worry about themselves instead of doing what they should do as they perceive that waht have is much smaller than what they need. Thus, people’s cognition, execution, and self-discipline could be largely reduced and they tend to make more mistakes in life.

However, scarcity is not always terrible. When one has limited resources (e.g. time), one would suddenly have more specific plans and would fully utilize the resource one has at the stage. A classic example is that students usually cram assignments a few days before the deadline, where they are really concentrated and could possibly produce high quality work! This results in focus dividend–an advantage of the scarcity.

While scarcity benefits people by producing focus dividends, tunneling is a side-effect. In other words, one could also entirely focus on something while ignoring other things under scarcity. One example in the book impresses me: the authors ask us to write down “white objects” we can think of, and give us two examples: snow and milk. We try to think hard, but it turns out the two given examples restrict other possibilities we could think of. While this one is just a little game, unfortunately things we miss under tunneling in real life could be something even important. When you finish one major assignment, you might forget other things you should do at the same time: another big project, meetings with instructors… if it is a job interview, it would be a disaster…

In this sense, scarcity is also a lack of buffer. When we have limited time and energy, it is impossible to cover everything and we are more likely to make mistakes. Everyone has encountered different scarcities in life. So, how can we better handle scarcities in the real world?

1. Make sure you have just the right amount of buffer.

If there is too much, you will waste it! For example, we often spend hours on social media and streaming services after exams. However, if there is too little, we would be extremely anxious and end up rushing last-minute. Some people may accept this strategy, but think of potential unwanted changes that could happen at this time. How would it affect your initial plan? Therefore, it is highly recommended to make a daily plan before work and leave some spare time. Hence, we would not only clearly know what we are going to do in a day, but also we would have enough time to calmly deal with potential unpredictable things, rather than always feeling frustrated about disrupted plans.

2. When doing daily plans, prioritizing is the most important

Steven Covey, a famous American educator and entrepreneur, has proposed the Time Management Matrix (the picture below). It is a frame to prioritize things you need to do into four types: important and urgent (Quadrant I), important and not urgent (Quadrant II), not important and urgent (Quadrant III), not important and not urgent (Quadrant IV). In general, we should do Quadrat I (e.g. work, study) first because they are the most important and affect our rest time. In some cases, Quadrant II could be even more important than Quadrant I (e.g. making a daily plan for clearer daily orientations; tidying up your desk to prepare for work; workout is good for your health and work efficiency; reading books to gain more insights), but usually being neglected. Effective people attempt to take less time in Quadrant I, spend more time on Quadrant II and minimize time in Quadrant III and IV (not important).