1. The scarcity mindset:
Being “poor” on some thing, especially the one(s) that you deem to be important (while unnecessarily important), makes you either:
- Focusing on the the task of making/getting “more”, while temporarily shutting other tasks down. In this case, focus makes you more productive, creates focus dividend.
- Tunneling on the things you are “poor” on. You will not do the cost-benefit analysis in this case while unconsciously neglecting other (probably more important) things. If you ever rushed into a restaurant because of the hunger or buying more stuff in the supermarket because you are hungry, you have been in the “tunnel” a least once.
As Daniel Kahneman of Thinking Fast and Slow would say, scarcity captures the mind when thinking both fast and slow.
Each person has his/her own bandwidth of cognitive capacity. Just like noise or a night without sleep, scarcity will reduce components of your cognitive capacity:
- Fluid Intelligence: people are less likely to be as sharp about the things they are NOT poor on as normal people
- Executive control: people are also more likely to keep their impulse away if their minds are not occupied by other things because they have more effective capacity.
In general, people are not simply “dumber” or more “irrational” or “impulsive”, they are just currently being occupied more with scarcity
2. Scarcity creates scarcity
Scarcity and slack
Scarcity creates the thinking of “What do I have to give up?”. In this case, having one thing will restrain you from having another – scarcity creates scarcity. This will, thereby, creating the effectiveness compared to slack – the status of having abundance.
However, slack, enables us to have our “room to fail”, “right to NOT choose” (surprisingly). For example, if you need a coat because of cold weather, you will have the urge of purchasing one. However, if the weather is warm and you want to buy one just because it looks good and is on sales, you may NOT choose it.
“A man is rich in proportion to the number of things he can afford to let alone” – Henry David Thoreau.
In simple words, richness is about how much you can have more, not thinking about trade-off.
Expertise of the poor
The perception about the cost/the potential savings is relative to the total value, creates many types of irrationality. However, the “poor” is more likely to be expert and to act rationally because they have their own metrics, not base on other measures to decide.
Abundance/slack also makes us more irrational. Without trade-off, we struggle to “make sense” of money value. We also spend money differently in different context and in different source of income (lottery vs. tax refunds, for example). With trade-off in mind, this will be less likely.
However, the poor will be “local expert”, not “global expert”, with more consistency but they often fail in leaving some “slack” for future investment.
Why people neglect future? Poor/Busy people tend to borrow more now/neglect important but not urgent tasks when they enter the tunnel. Scarcity ties us to present, makes us blind about future.
The scarcity trap: when the behavior creates scarcity and vice versa. When there is an initial scarcity, people tend to have the behavior than magnify it. When you create a limit for some thing (such as calories for your daily intake), you also create yourself a “scarcity”, which, in turn, makes it harder to stick to your limit.
3. Designing for scarcity
Improve your behavior in case of scarcity:
- Power of neglecting, changing your default mode can make you stick to it. For example, buy yourself all the healthy food and you will eat them automatically.
- Vigilance: it is easier to do the right thing ONCE than to repeat it. So, turn your daily duties into one-time actions, automate them if you can. To generalize, design your life so that bad choice are harder to make out of “tunneling” and make the good choice as easy as possible.
- Economize your bandwidth: Jewish Sabbath with one day off duty, or the diet which enables you to eat as much as possible provided it does not contain carbohydrates, leave your bandwidth with some slack and make you control yourself more effectively.
- Timing your bandwidth: protecting high-bandwidth time for important but not urgent tasks.
- The problem of abundance: smooth out our activities into small “chunks” of abundance or, as in many other books, small tasks.
- Slack as buffer: we often under-appreciate the probability of MANY low-probability events. Thus, create a “scarcity proofing” environment .
Conclusion: rethink your OLD problems:
- Which ones in your life is creating large bandwidth tax?
- Consider your bandwidth instead of time. Will you able to concentrate even after allocating/having time?
- Knowing that the work you do out of deadline is NOT your best work
(This part includes policies for governments, organization also, but they do not belong to my interests to write them here)