★ Rockstar Book Review: “Scarcity”

Posted March 31, 2017 6:00 am by with 4 comments

Review of: Scarcity
book:
Sendhil Mullainathan and Eldar Shafir
Price:
$7.38

Reviewed by:
Rating:
5
On March 31, 2017
Last modified:March 29, 2017

Summary:

Sendhil Mullainathan and Eldar Shafir illuminate the root of what makes scarcity so damaging and what we can do to address it.

scarcity book review

This is part of our Rockstar Book Review series.
Be sure to check out all previous books we’ve covered!

“Scarcity: Why Having Too Little Means So Much” by Sendhil Mullainathan and Eldar Shafir

rockstar rating 4 and a half starsWho it’s for: I would recommend this book for anyone who wants to understand the “whys” behind the seemingly perpetual state of not having enough of whatever we feel we need more of (money, time, attention, food, status, love, negotiation power, etc.).

Readability: MEDIUM. At 234 pages, this book is not overly lengthy and the authors’ writing is reasonably entertaining, thanks in part to their peppering of stories and scenarios throughout. Indeed, I’ve found myself quoting or paraphrasing many of these in the last few years.

What I liked about it: The insights I gained while reading this book has informed no fewer than sixteen articles and a number of talks I’ve written and delivered since discovering it in 2014. It helped me explain a number of situations I’d faced or witnessed others face where, no matter what we did over the short to medium-term, our situation seemed to either stay the same or get worse, almost akin to being caught in a rip tide. It can also give us the information we need to be more empathetic—and possibly more helpful—when we see others experience various types of scarcity in their own lives.

What I didn’t like about it: I wonder if this book couldn’t have been split into two volumes (scarcity for the individual, and scarcity at societal and organizational levels). There’s a great deal of merit in studying and offering recommendations on how to address each of these separately, as the primary stakeholders are fundamentally different. By attempting to cover both topics in a single volume, the book left me wondering what might be missing, especially from a broader perspective. Or maybe I just wanted more (and that’s not always a bad thing). Still, I would not hesitate to recommend it as a worthwhile read.

Where to find it:

Amazon @ $7.38 || Free @ the library :)

“Scarcity” Clarifies What We Know But Can’t Quite Verbalize: Too Little of Anything in Life Can Affect Everything Else

We all need certain things to feel at ease: we need safety, food, shelter, money, love, time, etc. Of course, how much we need has a lot to do with what we believe we need, but no one would argue with the following: when we feel we don’t have enough of something, anything, it can be such a distraction that it makes it difficult to focus on other aspects of our lives. Certainly, anyone who has experienced a broken heart or serious money troubles can agree with that premise.

That’s why it was so refreshing to read “Scarcity” because the authors explain the “whys” behind what is usually perceived by others as bizarre or impulsive behaviors associated with not having enough of something. In this book, authors Sendhil Mullainathan and Eldar Shafir elucidate what makes scarcity so damaging to the individual and to society in general. And with that, how we can change the way we respond to scarcity to avoid getting “stuck” in that state (which unfortunately can become a holding pattern if it’s left unaddressed).

The book is organized in three parts:

  1. Defining scarcity and how it affects us
  2. Explaining the self-perpetuating nature of scarcity
  3. Offering recommendations to reduce the scarcity that social systems and organizations experience

#1. What is Scarcity?

The authors define scarcity as “having less than you feel you need.” That feeling or belief can apply to just about anything, and, if left unchecked, it can drive us crazy by robbing our ability to focus on other aspects of life that are just as—if not more—important for us over the long term.

Scarcity captures the mind…when we experience scarcity of any kind, we become absorbed by it. The mind orients automatically, powerfully, toward unfulfilled needs…Scarcity is more than just the displeasure of having very little. It changes how we think. (pg. 7)

#2. Scarcity Begets Scarcity

If we take money as an example, the concept of scarcity easily explains why there are more payday lenders in American than there are McDonalds restaurants.

Payday lenders offer a service that few other lending institutions offer: immediacy. When we’re living paycheck-to-paycheck, our decision horizon is bi-weekly at best. We’re focused on how much we’ll have left over, after rent and bills are paid, to put food on the table. This focus on the immediate leads us to look toward short-term solutions to stay afloat, thereby dismissing more long-term solutions we just don’t have the bandwidth for due to our revolving money crisis.

Logic hardly applies in such a situation. We can’t see the forest for the trees and that makes it likely that we will make mistakes that will only serve to perpetuate or to further deteriorate our difficult situation, keeping payday lenders fat and happy in the process.

Scarcity doesn’t just lead us to overborrow or fail to invest. It leaves us handicapped in other aspects of our lives. It makes us dumber. It makes us more impulsive. (pg. 66)

#3. Reducing Scarcity

A big part of reducing scarcity is slack, a cushion of whatever resource we might have some concern about not having enough of. Slack gives us room to maneuver, room to recover, room to think, room to breathe. Slack enables us to consider options and make better decisions as a result.

When it comes to:

  • Money, slack usually comes in the form of savings
  • Time, slack is having unscheduled time in your calendar
  • Food, slack can mean allowing some room for treats now and then
  • Health, slack means your body is strong, making it easier to recover from illness or injury
  • Relationships, slack means you have a number of meaningful relationships—you feel loved and accepted by friends and/or loved ones

Bottom Line

Understanding how scarcity negatively affects various aspects of our lives can help us identify where we need more breathing room, room that will enable us to make better decisions, both today and over the long term.

Where you can find the book: Amazon @ $7.38
Where you can find the author: Sendhil Mullainathan & Eldar Sendhil

Other suggested books of this type: “The Power of Full Engagement” by Jim Loehr & Tony Schwartz, “Essentialism” by Greg McKeown, “Your Money or Your Life” by Vicki Robin and Joe Dominguez, and “Enough” by Patrick Rhone

Book suggestions on specific scarcity topics: Scarcity of attention -“Overwhelmed” by Brigid Schultz, “Deep Work” by Cal Newport and “The Shallows” by Nicholas Carr. Money scarcity – “Nickel & Dimed” by Barbara Ehrenreich and “The Overspent American” by Juliet B. Schor.

Other suggested behavioural psychology books: “Predictably Irrational” by Dan Ariely and “Why We Do What We Do” by Edward L. Deci

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Hélène is Rockstar Finance's Curator of Books, and Blogger at FreetoPursue.com. A perpetual student, speaker, writer and coach, you'll often find her reading, researching or writing. She also likes travelling and hanging out with her husband and their greyhound Belle.

4 responses to ★ Rockstar Book Review: “Scarcity”

  1. Mrs. Picky Pincher March 31st, 2017 at 9:15 am

    I would be really interested to see these principles applied to people at the poverty level. When I read the title “Scarcity,” that’s what I assumed it would be about. It sucks as a FIRE writer because too often our advice targets middle-class and upper-class earners.

    Reply

    • Hélène Massicotte March 31st, 2017 at 9:36 am

      This book definitely addresses money issues for people at the poverty level and why payday lenders are so successful. Here’s a quote that offers a reality check for those of us who don’t experience poverty-level money issues:

      “Money, because it is fungible, can be used to compensate for other forms of scarcity…Less money means less time. Less money means it is harder to socialize. Less money means lower quality and less healthy food. Poverty means scarcity in the very commodity that underpins almost all other aspects of life.” p. 150.

      Another book that addresses the daily scarcity the working poor experience is “Nickel and Dimed” by Barbara Ehrenreich. Truly eye opening and one that many lawmakers and influencers should read.

      On a related note, we’ll be reviewing at least one book in the not-too-distant future that addresses this very issue, which is increasingly important to acknowledge as the gap between the “haves” and the “have nots” keeps widening.

      Reply

  2. Judge April 1st, 2017 at 12:53 pm

    Helene,
    Scarcity mentality, is not a simple to address. Specifically
    relating to its affect on behavior.

    Your summary of the topic was well represented and thought provoking..

    One quote hit home…

    “That feeling or belief can apply to just about anything, and, if left unchecked, it can drive us crazy by robbing our ability to focus on other aspects of life that are just as—if not more—important for us over the long term.”

    As my wife always says “we lead a charmed life and are very lucky”…
    I agree and it is true but until recently (6 months ago) I discovered scarcity thinking in my head was unchecked and life sucking.

    I am now able to approach many aspects of my life from an abundance mentality an that has changed the minds viewing camera angle. Just like scarcity, abundance begets abundance. I am now much more calm and a happier person, even though I always thought of myself as happy. The proof is my kids noting I don’t get so up tight about trivial BS often.

    Thanks for the post. I recently came upon your site, much of it resonates with me.

    I commend you for getting the “liquid courage” to pursue what you want in life.

    We have only so many summers to live and can’t let them waste away paying attention to what really doesn’t matter.

    Judge

    Reply

    • Hélène Massicotte April 3rd, 2017 at 8:39 am

      Thanks for the thoughtful comment Judge. I appreciate you sharing your personal experience.

      I’m also pleased to hear you found some of the writing on Free to Pursue of use (liquid courage is one of my favourites).

      Kids have a highly-tuned sense of behavior don’t they? Talk about proof that they pay more attention to what we do than what we say.

      I wish you abundance over many, many summers. :)

      Reply

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