By: Laura Walton AFC®
When something in our lives is scarce, we tend to focus on it. That focus can be both good and bad.
I frequently catch Shankar Vedantam’s excerpt from his website, Hidden Brain, on NRP. A recent piece on scarcity attracted my attention. In economic terms, scarcity concentrates demand on fewer resources which, in turn, drives up price. In psychology, scarcity concentrates our focus. If something is scarce in our lives, it concentrates our minds, our bandwidth, on what is scarce. It produces tunnel vision.
Shankar talks about scarcity of money. For those in poverty, acquiring the bare necessities becomes the focus which, in part, explains the existence of the pay day loan business model. If you don’t live paycheck to paycheck, it’s hard to understand why you would subject yourself to triple digit interest expense to get an advance on your paycheck. But, for someone with a family and a bare refrigerator, their focus is on food, not interest rates. We know that those punishing interest rates create a viscous cycle that makes it very difficult for the individual to build an emergency fund – the very thing that could break the cycle.
He relates an interesting study showing that we behave differently when resources aren’t scarce. Eldar Shafir, a psychology professor at Princeton, along with Sendhil Mullainathan, an economics professor at Harvard, studied sugarcane farmers in India who are paid just once a year for their harvest. After harvest, they are flush with money. By the time the next harvest comes along, money is scarce. When they are flush, they take the time and energy to engage in practices like weeding that increase their crops over the long-term. By the time the next harvest comes along, they focus only on their immediate needs, just getting by until they are paid.
And then there’s time – a scarce commodity for all. Shankar related the story of a young doctor so focused on her residency that the rest of her life unraveled. The interesting point here was that, after she addressed her issues by actually scheduling time to do nothing, she became more productive. She says, “Honestly, like, it’s kind of incredible. But at work, my brain has increased its capacity fourfold. I am able to hold so many more things in my consciousness at once and manage them. I’ve just seen a really huge improvement in my ability to enjoy being in the company of others, to enjoy, like, occasions and to enjoy my work and do well at my work.”
Quoting from the article, “Eldar Shafir and Sendhil Mullainathan say they are constantly trying to keep the lessons of scarcity front and center in their own lives. As a busy academic, Eldar has come up with a rule. When an invitation to an event two months down the road comes along, he asks himself whether he would attend the event if it were tomorrow. If the answer is no, he declines the invitation because his life is not going to be any less hectic two months from now.” And so the “Eldar Rule” is born – a good one for all of us to keep in focus.