Scarcity: Why Having Too Little Means So Much (11 page)

There is an almost economic logic to all this: the poor have less slack because they can afford less of it. Packing material—space in the suitcase—is cheap for the rich, like mud, but it is expensive for the poor, like wax. So the rich pack like wasps, casually, inefficiently, and with slack. And the poor pack like bees, carefully, and with no slack.

There is also a deep psychological dynamic at work. When the
poor and the rich take a pause from packing, they each have items left outside their suitcase. Because those items that don’t fit have a great deal of value for the poor, the items capture their anxious attention. The poor tunnel on those items and cannot help but wonder,
Can I not rearrange and fit these in, too?
Packing captures their attention because the items in danger of being left behind matter.
When the rich take a pause
, the items left out by now are of low value. They could be added, but they could just as well be left out. The rich leave slack because they are less engaged in packing.

A house is just a pile of stuff
with a cover on it.

—
GEORGE CARLIN

Where does all the slack go? If you are like many people, you can see for yourself. Just go to your kitchen and look in your pantry. It is probably full of items bought in the distant past. In this you are not alone. Kitchen cabinets across the United States are full of soups, jams, and canned food that have not been used for ages. So common is this phenomenon that food researchers have a name for it: they call these items
cabinet castaways
. Some estimates suggest that one in ten items bought in the grocery store is destined to become a cabinet castaway.

In fact, many of our houses are castaway museums. Think of the last time you moved or cleaned out a closet and thought to yourself, “I don’t remember owning this!” These closet castaways are so common that space, not money, becomes the scarce commodity. People need to rent out self-storage facilities to house all their stuff. Some estimate that
over $12 billion is spent annually on self-storage
, three times as much as is spent on music purchases. In fact, the United States has more than two billion square feet allocated to self-storage space. The Self Storage Association notes that “
every American could stand
—all
at the same time—under the total canopy of self-storage roofing.”

Not surprisingly, the fortunes of the self-storage industry are closely dependent on the slack that comes from abundance. As one writer described in the
New York Times Magazine
:

“
Human laziness has always been a big friend
of self-storage operators,” Derek Naylor, president of the consultant group Storage Marketing Solutions, told me. “Because once they’re in, nobody likes to spend all day moving their stuff out of storage. As long as they can afford it, and feel psychologically that they can afford it, they’ll leave that stuff in there forever.” Now [during the Great Recession that started in 2008], though, “there are people who are watching their credit-card bills closer than before,” he said. “They’re really paying attention to the stuff they’re storing and realizing that it’s probably not worth $100 a month to keep. So they just get rid of it.”

Slack frees us to indulge in castaways. It allows us to buy an exotic canned soup or a remote-controlled model airplane on a whim. With slack, we do not feel compelled to question how really useful an item will be. We do not ask, “Will I end up using that juicer enough to make it worthwhile?” or “Will I really ever wear that bold pair of shoes to warrant buying them instead of a pair of pants?” Because there is no trade-off, we simply think, “Why not?” Since slack frees us from trade-offs, it licenses us to buy items that on their own, devoid of any other considerations, have some appeal.

The result, of course, is inefficiency and waste. When we have plenty of time, we loll around, and time evaporates. Minutes here and there add up to hours frittered away. We end up getting six hours of good use out of a sixteen-hour day. We take a week to finish a job we know could have been done in two days. And again, we are not referring here to hours you thoughtfully allocated to “having nothing important to do.” We mean those that were never allocated at all. When we have free time, we fritter and waste the hours in an
offhand way. And when we have easy money, we buy things we’ll cast away and forget. We end up with hours we are not sure what we did with, cabinets full of soups we don’t eat, and storage units full of items we forgot we own.

But slack is more than just inefficiency. Consider the following
hypothetical decision we presented to a group of university students
:

You plan to spend the evening in the library working on a short paper due the following day. As you walk across campus, you discover that an author you have always admired is about to give a public lecture. Do you proceed to the library anyway or go to the lecture instead?

Another group was presented with the same problem with an option added (shown in bold), which provided further enticement to skip out on the library.

You plan to spend the evening in the library working on a short paper due the following day. As you walk across campus, you discover that an author you have always admired is about to give a public lecture
and that—in another hall—they are about to screen a foreign movie that you have been wanting to see
.
Do you proceed to the library anyway or go to the lecture or to the movie instead?

Given only one appealing alternative, the lecture, 60 percent stuck with the library. But given two appealing alternatives, even
more
people (80 percent) chose the library. This looks like a peculiar outcome: people are given more attractive options, yet, they are less likely to choose any of them. It happens because choice is hard. When the choice is between the lecture and the library, you can decide which is more important that day—studying or leisure. But when there are two leisure activities, you have one more choice: which is the leisure activity that’s right for you? Faced with this additional choice, people simply say, “Forget it. I’ll just stick with
the library.” They avoid the burden of choosing by sticking with the original plan, in effect choosing not to choose.

Slack provides an easy way to avoid the burden of choosing. The only reason you must choose between the lecture and the movie is that your time budget is tight. If you had slack, you could do both. When you’re shopping for clothes and see two things you like, a tight budget forces you to choose. If you see two flavors of ice cream you like, a diet forces you to pick the one you prefer. Slack—in money, time, or calories—allows you the luxury of not choosing. It allows you to say, “I’ll take both.” Contrary to Milton Friedman’s ideal of “free to choose,” slack leaves us
free
not
to choose
.

Slack provides one other important benefit, captured in the following vignette:

Alex and Ben walk by a clothing store. Each sees a leather jacket. Neither owns one but both have always wanted one. This one is perfect. It just costs too much, $200, and it’s not terribly practical. The right thing to do is to walk away, but long-standing desires are hard to resist. Each says, “Why not?” gives in, and makes an ill-advised purchase.

Alex is financially comfortable at the time. He goes home and thinks, “What a bad purchase!”

Ben is tight for cash. He goes home and thinks, “What a bad purchase!” Followed by, “Now I won’t have the money to repair my car. That might make me late for work, which might lead to …”

Ben faces a more challenging world than Alex. By their own admission, both Alex and Ben gave in to a $200 temptation and made a foolish purchase. Both are out the same price of the leather jacket. Alex can brush off the mistake. Ben cannot. Same mistake,
different consequences. Ben’s world is not more challenging because he faces pushier salesmen or higher interest rates. It is more challenging because he lacks slack.

How will the $200 temptation be financed? For well-off Alex, his slack pays for it. Even before the ill-advised purchase, he was not spending up to his full budget. The $200 will come from that left-over space. The financially tight Ben, on the other hand, has no slack. His $200 must come at the expense of something he had planned on, something he thought was essential. His mistake costs him something real. Slack not only absolves you of the need to make trade-offs. It means mistakes do not entail real sacrifice.

Consider a similar example with time. In one study, psychologists asked college seniors to
estimate the time required to finish their senior theses
. The average estimate was thirty-four days. When probed for the possibility of good and bad turns of events, they agreed it could range from twenty-seven days (if everything went really well) to forty-eight days (if things went badly). In reality, it took them fifty-five days on average. This is not just the folly of inexperienced undergraduates. Everyone from managers to movie producers suffers from the planning fallacy: we are all much too optimistic with our future plans. Even top-notch chess players can allocate too much time to earlier rounds and
end up in “time trouble,”
with too little time on the clock later in the game.

Though the planning fallacy is common to many people, not everybody experiences the same consequences from it. Suppose you have a project due at the end of the month. In reality the project requires forty hours of work, but you mistakenly think it will take only thirty, and you plan accordingly. As the deadline approaches, your error becomes clear. You are ten hours short. How do you make up the shortfall?

Suppose you are not terribly busy. The shortfall is nothing more than an annoyance. You look at your schedule and find ways to create time. There are a few commitments that can be easily moved around, a few to-dos that can be put off and, most important, you
have empty spaces here and there in your calendar already. With a little jiggling, you’re set; you’ve found the ten hours you need.

Suppose, instead, that you are already heavily committed this week. Now this is more than annoying. You look at your schedule and you are overwhelmed. It’s really bad. Like a wobbly Jenga tower, if you delay or move any one thing around, the whole structure will collapse. Having no alternative, you reluctantly make some hard choices. You put off another (only slightly less urgent) project, rightly fearing—but not thinking about—the consequences this will have. You have borrowed, and there will be a price to pay; the following week will be yet a bigger nightmare.

For the less busy person, slack absorbs the error, thus minimizing the consequences. The busy person, on the other hand, cannot shrug it off so easily. Each added hour must come at the expense of something else. The
same
mistake has bigger consequences. We just saw how slack can be inefficient. We buy items destined to become cabinet castaways, and we use time and money inefficiently. Here we see that slack provides a hidden efficiency. It gives us room to maneuver, to reshuffle when we err. Slack gives us room to fail.

Slack also insulates us in another way. Alex and Ben paid the same dollar amount for that jacket. Yet, in some sense, it cost Ben more. That $200 expense is a small fraction of Alex’s income, a small fraction of his slack, but a large fraction of Ben’s. The same dollar mistake is
proportionally
more expensive for Ben. As the economist Abhijit Banerjee describes it,
the
temptation tax
is regressive
; it is levied more heavily on those who have less.

An economics graduate student, Dan Bjorkegren, tested this notion using a large survey of people’s consumption patterns in Indonesia. He classified some of their expenditures as
temptation goods
. This classification is surely subjective and open to dispute; future research would ask people to classify their temptation goods on their own. But for a first pass, this was a worthwhile exercise, and the list was eminently sensible: cigarettes, alcohol, other addictive substances, and so on. By looking at the proportion of spending that
went to purchasing these goods, Bjorkegren quantified the temptation tax. What he found was that for the poorest group the temptation tax was as high as 10 percent of their total consumption. And as people got richer their tax got lower; it got to be as low as 1 percent of their consumption. Of course, the wealthy were spending a lot more money on these temptations but proportionally less.

If errors are more costly and there are more chances to fail, might scarcity not make us more careful? This is easier said than done. Effort often is not sufficient to reduce error. Many of these mistakes do not stem from carelessness but are deeply rooted in our mental processes. Effort and attentiveness alone cannot rid us of the planning fallacy, remind us of things that are out of mind, or provide us with an iron will to resist all temptation. Our biases, a direct outcome of the workings of the brain, are not always responsive to the consequences. We may give in to momentary temptation and have a snack when we are healthy; we may also give in when we are diabetic. We may get distracted when playing a silly video game; we may get distracted when driving a car on a highway.
Psychological biases often persist despite more extreme consequences
.

If anything, scarcity will lead us to greater errors. The bandwidth tax places us in a position where we are prone to make mistakes. The busy person is likely to commit an even bigger planning error; after all, he is likely still needing to attend to his
last
project and is more distracted and overwhelmed—a surefire way to misplan. With compromised bandwidth, we are more likely to give in to our impulses, more likely to cave in to temptations. With little slack, we have less room to fail. With compromised bandwidth, we are more likely to fail.