We all have “too little”. Too little time, too little energy, too little money, or too little calories. But do you understand how these are all related, and how having too little of any one of these can negatively impact the rest of your life?

Introduction

Written by a behavioral economist and a psychologist, the authors of Scarcity: Why having too little means so much show you the underlying connection between dieting failure, failure to behave with money when you’re poor, failure to be good with your time when you’re already behind, and failure to budget your energy carefully when you are already drained.

I read this book because I was curious to learn more about the authors’ hypothesis that any type of scarcity (whether financial, time, or caloric) leads to irrational thinking.  I have certainly seen irrational time management in the professional world, anyone in the field of financial anything knows that our culture seems perpetually bad with money, and we only need to look around on the street or in the store to see many are bad with managing their calories.  If there is one logical underlying relationship between all three of these, then maybe those who have some success with at least one of the three can help parlay that into success with the other types.

The book highlights

One of the biggest premises of this book is that of the bandwidth tax that happens in the presences of scarcity.  With scarcity, we lose cognitive capacity (the ability to engage in logical reasoning) and executive control (executive function skills like controlling impulses).

Packing And Slack was a chapter that made it clear why leaving room for failure or inefficiency is vital to success, whether that’s having some flex in a budget, or having time for new wrinkles to show up in work deadlines.  The authors illustrated this by telling a story about packing for a trip with a too small suitcase, vs being able to take a slightly larger one and therefore not having to guess perfectly (or suffer the consequences). They didn’t specify, but I as an outdoors woman immediately thought about packing for what weather, a metaphor that I thought was a good one for conveying the importance of building in slack for one’s financial budget – nobody wants to get caught out in the rain without an umbrella.  But even worse, scarcity means both more opportunities to fail and higher consequences of failure – as if your failure to pack a raincoat meant that it was now more likely to precipitate, and that the precipitation would not be rain but instead would be a hurricane!

The chapter Expertise pointed out that lower income consumers have to do better than higher income consumers at being savvy to the total price (including excise and sales taxes) when making purchases, not just considering the listed prices, to the point where fewer low income neighborhood stores try to upcharge on the presumably (but not always) cheaper bulk buys.  Those with low income need to be more expert at monitoring prices around them, and the result is a constant trickle away drain of mental energy.

The chapter Borrowing and Myopia presented the story of someone who went from a very temporary and small financial shortage, to being wrapped in hundreds of dollars of fees PER MONTH via using payday loans.  It was enlightening and scary how tempting and easy those first stages of the slippery slope of payday loans can be, not just for those with low income but also for those of middle class experiencing any temporary cash shortage.  This chapter also discussed the concept of tunneling, where it’s all too easy to focus on solving the short term problem – the body isn’t even capable in that state of recognizing there’s a bigger long term problem that you’ve just set yourself up for.  And those are problems that an outside perspective can help you identify and steer away from, because your brain refuses to acknowledge the trade-off from inside the problem.

Scarcity Trap reassured that staying poor is a problem of scarcity, not an individual’s characteristics, making it a lot easier to remedy.  With help and guidance, the conditions causing scarcity can be managed and the scarcity mindset can be un-done. In other words, in the author’s research there is hope for the poor, the overweight, and the constantly over-busy; they are not flawed individuals doomed to their undesired states for life.  The authors described these as “contextual outcomes”.

The authors provided another story that I want to share.  Airplane pilots* were making pilot errors, and no amount of training or administrators demanding alertness were further reducing the error rates above the threshold to which their dedication to excellence could take them.  After that, they were just human, and fallible.  To stack the needed additional improvements above their current level of excellence, their systems had to change.  The engineers re-designed key error-prone components of the cockpit to force in a feedback mechanism for the pilot, and errors reduced!  It’s like having a shield you have to lift over a firing button, you can’t accidentally fire your weapons by falling on the console in turbulence.  In managing your money, an analogous situation of surrounding yourself with additional support structures could be putting the tempting credit card in a block of ice in the freezer, using physical or virtual envelop systems, or setting up your paycheck direct deposit to pay yourself first and auto-invest in your 401k/403b.

The benefits of using high quality rules of thumb were outlined in a story of women small business owners in the Dominican Republic, where even just keeping business earnings in one bra cup and personal money in the other bra cup was enough to make these women far more successful than their compatriots that did zero accounting.  Employing the 80/20 rule can be highly effective, and doesn’t tie up mental bandwidth that complex rules and systems would.  The KISS principal works with money too.

Conclusion

I liked this book, it did a good job of outlining the similarities and challenges of three supposedly separate problems that most of the people in our culture struggle with at least one of. If you feel like you don’t mange your time, your money, or your weight as well as you wish, I’d give this book a try.

Scarcity is available at the Rochester Public Library.

How are you experiencing scarcity? How can you get just a little enough ahead that you can get back your mental bandwidth, to have your body work with you instead of against you?

* I’m not sure how I’ve ended up reading multiple books about airplane pilots this week, but I have. The other book with pilots that I finished this week was Atul Gawande’s The Checklist Manifesto, which I recommend to anyone managing high levels of complexity at home or at work.