Book SummaryScarcity, by Sendhil Mullainathan and Eldar Shafir

1-Page Summary1-Page Book Summary of Scarcity

Scarcity is a universal human experience: the feeling that we don’t have enough of what we need. In Scarcity, Sendhil Mullainathan and Eldar Shafir explain how two common scarcities—time and money—temporarily change our brains: These scarcities make us more efficient with a limited resource in the short term, but they also decrease our mental bandwidth, distorting the way we process information and make decisions. The authors then suggest ways to counteract the adverse effects of scarcity.

When we face a scarcity of time or money, others are often quick to point to flaws in our personality, intelligence, or values as an explanation for our predicament. However, the authors’ research flips the script on this narrative—instead of bad choices leading to scarcity, scarcity itself impacts our ability to make good choices. This not only exacerbates scarcity and hinders our ability to cope with it, but it also takes a huge toll on other areas of our lives, like health, relationships, and work.

Sendhil...

Scarcity Summary Scarcity Makes Us More Efficient

To begin unraveling the impact of scarcity on our brains, we’ll first explain how scarcity helps us do more with less. Mullainathan and Shafir define scarcity as the feeling of having less than we need. (Shortform note: The authors’ definition of scarcity is key to understanding their ideas because it’s based on our perception of what we have rather than the physical reality of what we have. In other words, anyone can experience scarcity, regardless of how much wealth or time they have compared to others. This differs from other common definitions of scarcity that define it as the physical reality of something being “not plentiful or abundant.”)

The authors argue that once we perceive scarcity, that perception automatically focuses the mind, involuntarily channeling all of our mental energy into coping with that scarcity. In this section, we’ll look at how scarcity makes us more efficient when we’re short on time and money. The authors refer to this enhanced efficiency as the “focus dividend.”

(Shortform note: In Thinking, Fast and Slow, Daniel Kahneman...

Scarcity Summary Scarcity Decreases Our Mental Bandwidth

Although scarcities of time and money provide some benefits, Mullainathan and Shafir argue that we severely underestimate the downside of scarcity, the toll on our mental capacity that they call a “bandwidth tax.” Mental bandwidth is a term that encompasses our cognitive capacity and executive brain function. These concepts boil down to our ability to pay attention to important events, process information, make good decisions, and resist temptations.

(Shortform note: One education program uses physical energy as an analogy for understanding our limited mental bandwidth: When we’re physically fatigued, we’re more prone to injury and less physically efficient. Similarly, when our mental bandwidth is low, we’re less mentally engaged, less productive, and more prone to making errors.)

Mullainathan and Shafir assert that the same scarcity that gives us laser focus on pressing matters leaves us with little mental bandwidth to do other things in our life well. This hijacking of our mental bandwidth impacts us in three major...

Scarcity Summary Strategies to Cope With Scarcity

Given the limited upside of scarcity, and the heavy toll it takes on our mental bandwidth, Mullainathan and Shafir provide recommendations for intentionally manipulating our environment to counteract the psychology of scarcity. In this section, we’ll describe strategies for improving your day-to-day life as well as strategies for organizations to implement.

Strategies for Your Personal Life

The authors explain that by understanding how scarcity impacts your mental bandwidth, you can then deliberately change aspects of your life to account for these deficiencies. Here are some of their recommendations:

1. Create reminders that disrupt the hyperfocus caused by scarcity to avoid forgetting important tasks or to keep you on track with your schedule. This could include text messages or computer notifications—anything that actively grabs your attention. (Shortform note: The timing and the location of a reminder are key to making sure they’re effective, writes Don Norman in The Design of Everyday Things. He explains that...

Scarcity Summary Alleviating the Impact of Poverty: A Unique Scarcity

Now that we’ve covered strategies for mitigating the effects of scarcity, we’ll discuss why poverty is a unique scarcity in terms of its challenges and potential solutions. Mullainathan and Shafir emphasize that the stakes are higher with poverty compared to other forms of scarcity (like not being able to manage your schedule). If someone misses an appointment, they might complicate their tight schedule further—but it’s not an issue of survival, like not being able to pay rent or buy groceries.

(Shortform note: Poverty, and the unique scarcity and fight for survival that it brings, exists even in seemingly affluent and successful economic systems. For example, in the UK, landlords and utility companies force some people to use prepaid energy meters. People need electricity to cook food, heat their homes, and power medical equipment, but millions of people in the UK lose access to home energy when they can’t afford to pre-pay the meters installed in...

Shortform Exercise: Identify How Scarcity Affects You

Remember Mullainathan and Shafir’s definition of scarcity: the feeling of having less than we need. Regardless of how much money you have or what’s on your to-do list, everyone is prone to experiencing scarcity in some form or another, and everyone is impacted by the bandwidth shortage it causes.

What scarcity distracts you the most in your day-to-day activities? When do you notice your mind automatically circling back to scarcity-related thoughts?

Shortform Exercise: Counteract the Scarcity Mindset

Now that you’ve identified ways in which the scarcity mindset might be impacting your life, here’s an exercise to plan how to counteract the negative effects of your bandwidth shortage.

One of Mullainathan and Shafir’s recommendations is to create helpful reminders ahead of time to disrupt the narrow focus that scarcity creates. Write down when you need reminders the most. For example, do you need reminders to tell you when to shift tasks, to let you know when you’re overspending, or to remind you of appointments?