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

This is a study of scarcity of resources, such as money, time, or even food. It describes the benefits of scarcity, as well as the drawbacks, both of which might be surprising. Using both empirical evidence and anecdotal examples, the authors clearly illustrate why scarcity may be at the root of many seemingly illogical behaviors.

Clearly, this study of scarcity has political implications. It can help explain the cycle of poverty, and if politicians were to read this and accept the evidence as it is presented, they might design social safety net programs that were actually effective at lifting people out of poverty. There is even a chapter that suggests ways to improve the lives of the poor. It would be nice if politicians actually used evidence to make policy decisions, but we don’t live in that world, unfortunately.

The chapter on managing scarcity in organizations seems much more immediately useful. Some simple application of the lessons learned from this book could have immediate payoffs, as the examples demonstrate. Any organization that suffers from overwork, lack of resources, and constant firefighting could benefit.

Scarcity, and behavioral economics in general, make for interesting reading. However, I am much more interested in the scarcity mindset — and its counterpart, abundance — which is a slightly different thing. Why do so many of us perceive that scarcity exists, and act accordingly, when that is not actually the case? Perhaps that is the topic for a follow-up book.