Scarcity

We have all faced a situation in which we wanted something but could not have it. Economists call that scarcity. Scarcity happens when we have unlimited wants, but there are limited resources. While we discuss this topic in class, we never talk about how scarcity affects the decision-making process.

 

But researchers have looked at it, including one study conducted with sugarcane farmers. What make sugarcane farmers different is that most of their revenue comes at one time during the year. It would be like getting your entire salary in January-March and being poor from October-Dec. This circumstance allowed researchers to see how the decision-making process was different when the farmers were rich compared to when they were poor. 

The farmers performed better on cognitive tests when they were rich. So, the same people seemed like they were smarter when they were rich. This shows how scarcity can change the mental processes. 

Now, many of us do not face the issue of poverty. Many students and teachers, however, are faced with scarcity of time. If you are like me, you plug events, meetings, or chores into openings on your calendar. My thought process has always been, if I see an opening on my calendar, then I can attend a suggested meeting. 

This type of planning often leads to one high-energy event after another, where eventually you are at a meeting physically but not mentally. Sendhil Mullainathan and Eldar Shafir's book.  (more about scarcity) suggests that when planning your calendar, you build it around high-energy events. Therefore, you are not stacking one high-energy event on top of another. 

We all face scarcity, and now we realize it impacts our decision-making process. The challenge for all of us is how to manage our resources wisely.