By Sendhil Mullainathan and Eldar Shafir

Link to publisher’s webpage


Cognitive capacity. Linked with fluid intelligence, or IQ. You can’t find the right answer in moments of scarcity which you otherwise can in moments of abundance.

Executive control. Your monkey brain takes over when you have limited bandwidth. You say things that you wouldn’t have otherwise. Eg. Saying “it’s bloody revolting” when shown an exotic dish while trying to remember an 8-digit number.

Focus dividend. You are able to perform better under pressure. Eg. Poor people are able to squeeze more out of a dollar than the rich.

Tunneling. You are so deeply focussed on putting out the fire at hand that you are unable to think about the larger picture. Eg. The firefighter who didn’t buckle up or the farmer who didn’t save money properly.

Tunneling leads to myopia. But when presented with the long-term preview, only those with enough slack are able to benefit from it. The poor remain unaffected..

Slack. When you have abundance you’re able to take an informed decision. Almost all programmes meant to help people out of scarcity neglect this and instead offer short-term solutions. Since the larger slack is never built the beneficiary slips back into scarcity soon enough. Unexpected crises can hit anyone at anytime.

Sometimes scarcity is good. For example when shooting free throws, let your body do its motion and don’t think too much.

The scarcity trap is a bad place. You’re so concerned on putting out fires that you can never escape it.

Juggling. When you have so many crises at hand you’re just juggling them one at a time. Soon as one is dealt with, another one arrives, and soon enough the original one returns to be dealt with again. This is why the scarcity trap is almost impossible to escape on your own. You can’t zoom out of your juggling.

People with certain types of scarcity can still figure it out by slipping on a deadline or giving up a diet, but a poor person can’t simply quit being poor.

Borrowing. Given a small lifeline at a crucial time can actually decrease performance as is the case with poor people when offered payday loans. When you borrow you lose your focus dividend and yet you are unable to detach from the situation enough to be able to escape it.

Scarcity affects everyone. There is no genetic rich or poor. Situations make you rich or poor. Case in point, a rich student performs poorly at a mental ability test right before the deadline for an exam. And a poor farmer performs better than usual right when she receives money for her harvest.