Scarcity: Why Having Too Little Means So Much (18 page)

All this suggests that we should deepen our notion of scarcity. Scarcity is not merely the gap between resources and desires
on average
. Even if, as in the case of the vendor, there are many days with slack, it is the days of scarcity that matter. To be free from a scarcity trap, it is not enough to have more resources than desires on average. It is as important to have enough slack (or some other mechanism) for handling the big shocks that may come one’s way at any moment. Social scientists—and especially economists—have understood for quite some time the importance of uncertainty in affecting outcomes. We know that uncertain returns can reduce investments, that uncertain income streams can create anxiety and reluctance. The present discussion, however, places a different perspective on uncertainty and instability in the context of scarcity. It says that periods of scarcity can elicit behaviors that end up pulling us into a scarcity trap. And with scarcity traps, what would otherwise be periods of abundance punctuated by moments of scarcity can quickly become perpetual scarcity.

This, incidentally, does not mean that the only way to avoid scarcity traps is to have wealth large enough to weather all shocks. It does not mean that the only way to solve the vendor’s problem is to give her even
more
money. Rather, this discussion highlights the need for instruments for buffering against shocks. If the vendor had a low-cost loan or a liquid savings account—to be accessed solely for emergencies—that would give her the slack she needs in those critical moments of no slack. Similarly, insurance against some of these shocks would also solve the problem. Of course, many have realized
the benefits of such buffers. But the benefits appear to be far larger than we had anticipated. These become buffers not merely for managing risk. They are also bulwarks against slipping back into the scarcity trap.

We can blame the vendor’s relapse into a scarcity trap on the shocks that befell her, but we can also look to the lack of a buffer. Since she knows she faces a volatile environment, why not put money aside as a precaution during better times? Of course, vendors in India are not the only ones guilty of this mistake. The poor around the world have far too little
liquid
savings. As we mentioned earlier, studies report that half of all Americans say that they cannot get
$2,000 in thirty days
if they faced an emergency. And the data show that the poor, who are exposed to more shocks, tend to have even less liquid savings.

Looked at this way, the vendor’s problems began well before the shock. The seeds of the scarcity trap were sown during a period of at least relative abundance. And the same dynamic appears to happen with time as well. You work feverishly to finish a project; you are behind, and life is miserable, and you vow never to do this again. When the deadline passes, you finally come up for air. The next deadline is weeks away. Thank goodness, you can now relax. A few weeks later, you wonder where the time went. You are once again frantically working against the clock. Like the vendor’s scarcity, your scarcity originates with mistakes made during periods of relative abundance.

During periods of abundance, we waste time or money. We are too lax. In the harvest study from
chapter 2
, the farmers were poor before harvest, but they didn’t have to be. Had they managed their money better after the harvest, they would not have found themselves lacking toward the end of the harvest cycle. They were
poor right before this harvest only because they had mismanaged their finances when they were still flush. This is different from the problem of borrowing while poor. This is about waste when money is abundant. The result is an avoidable cycle punctuated by recurring periods of abundance followed by threatened periods of scarcity.

We have so far focused on problems caused by the scarcity mindset. We tunnel and we neglect. Our bandwidth is taxed, and we are less farsighted and more impulsive. All this might inadvertently suggest that during periods of abundance we are perfectly calculating and farsighted. Of course we are not. Decades of research have shown that even—no,
especially
—at the best of times we are prone to procrastination, an exaggerated focus on the present, and bouts of fuzzy optimism. We put off work that needs to be done. We squander money that should have been saved. We misallocate our abundance, saving and accomplishing too little sufficiently to insulate from scarcity that might come. Of course, both the rich and the poor do this. But the rich, because they have slack, come out fine, whereas the poor and the busy, carrying on with too little slack, are one shock away from falling into a scarcity trap.

Staying clear of the scarcity trap requires more than abundance. It requires enough abundance so that, even after overspending or procrastinating, we still leave enough slack to manage most shocks. Enough abundance so that even after extensive procrastination, we still have enough time left to manage an unexpected deadline. Staying out of the scarcity trap requires enough slack to deal with the shocks the world brings and the troubles we impose on ourselves.

Tying all this together, we see that scarcity traps emerge for several interconnected reasons, stretching back to the core scarcity mindset. Tunneling leads us to borrow so that we are using the same physical resources less effectively, placing us one step behind. Because we tunnel, we neglect, and then we find ourselves needing to juggle. The scarcity trap becomes a complicated affair, a patchwork of delayed commitments and costly short-term solutions that need to
be constantly revisited and revised. We do not have the bandwidth to plan a way out of this trap. And when we make a plan, we lack the bandwidth needed to resist temptations and persist. Moreover, the lack of slack means that we have no capacity to absorb shocks. And all this is compounded by our failure to use the precious moments of abundance to create future buffers.

Picture someone in a new city. In his old town he has many friends, but in this new town he knows no one. After a few days, the solitary existence begins to weigh on him. He talks on the phone with his friends back home, but it’s not the same. He dines in front of the TV, feeling sheepish about going out to eat alone. How does one go about meeting people? He decides to try a dating website, and after a few e-mail exchanges he sets up a date. But as the day approaches, he finds himself increasingly nervous, more nervous than he has ever been before about a date. The date starts badly. He tries to make jokes, but his delivery is strained, and the evening falls flat. He is so preoccupied with what he will say next that he finds it hard to pay attention to what his date says. He realizes he is just trying too hard. The date is a disaster.

This person, you might say, is trapped by social scarcity. His loneliness is making it hard for him to meet new friends and creating behaviors that perpetuate his loneliness. But this scarcity trap is different from what we have considered so far. There is no borrowing; there is no failure to save for shocks. Instead the problems—ruining a punch line or failing to listen—come from trying too hard to be liked, from focusing too much on scarcity.

Studies have shown that
the lonely overfocus
. In one study, researchers asked people who rated themselves as lonely to talk into a recorder. They had no specific task. They were simply to describe themselves and be interesting. All they knew was that someone else
would listen to them later and rate them. Predictably, when raters listened to what the lonely had to say, they were not impressed. They rated the lonely as significantly less interesting than those who were not lonely. This is hardly surprising. You might say, “That is probably why they are lonely.”

Another version of the experiment shows that this interpretation misses something important. In this version, the lonely participants talked into a recorder with one important difference. This time they did not expect anyone to listen and to judge them. They were just talking, being themselves. In these recordings, independent judges now rated the lonely to be just as interesting as the nonlonely. The problem of the lonely was not that they were boring or otherwise unappealing. Their problem was that they performed badly when they thought it mattered. It was not a lack of knowledge, either. Remember the study mentioned in the introduction: the lonely were better at deciphering others’ emotions—that was their focus dividend. But when the stakes are high, they do not use these skills well. You could say the lonely choke. Think back to the situations where you have felt tongue-tied or particularly inept. If you are like us, you probably still remember some of those social situations that you botched exactly because you wanted them to go particularly well.

Of course, choking is not unique to the lonely. Nowhere is choking more transparent than in sports. In basketball, the free throw is among the easiest shots to make. It is not far from the basket and you get to attempt it at your own pace, with no one guarding you. The name itself suggests how easy a free throw is. The world record was once held by a seventy-two-year-old man who made
2,750 free throws in a row
. Shooting over 90 percent in principle should not be hard for anyone with enough practice. Yet some players find it inordinately difficult. In the 2002–3 season, the professional basketball player Bruce Bowen typified the problem. That year, he made
only 40 percent of his free throws
. The problem for Bowen was not a lack of skill, as he was able to make much harder shots. That same season
he led the league in three-point shooting, making 44 percent of those shots. A three-point shot is from much farther away and often from a weird angle. It must be shot quickly and often you have another player in your face or running toward you. Yet that season Bowen shot these shots better than free throws.

Any sports fan knows endless stories of the choking player. The basketball player who fails to sink a simple free throw that would have won the game. The golfer whose simple putt somehow goes errant at the time when it is most important. No matter how stellar the play to date, there is always trepidation in those moments. The drama is high exactly because we fear, or perhaps even anticipate, choking.

Researchers now better understand the psychology of choking. Many actions in sports can be done either consciously or automatically. You can think about your arm’s movement while shooting a free throw. You can focus on the follow-through motion of a golf swing. Or you can just do it automatically, with your mind blank. For professional athletes, these activities are so routine that they are remarkably good at doing them automatically. In fact,
they are
better
at doing them automatically
. (Next time you run down the stairs, think about the movement of your feet. But please do not hold us accountable if you come close to tripping. Though you are a professional stair user, thinking about the task will make you much less effective at it.) For a beginner, remembering to pull the elbow in on a free throw (or to follow through on a tennis shot) improves performance. The conscious attention helps. For a professional, these are all actions to be done automatically. At this level of skill, extra focus prevents muscle coordination from happening in the quickest, most natural way. Athletes choke
because
they focus.

Choking is the tip of a much broader phenomenon. Psychologists have found across a wide variety of tasks that performance and attention, or arousal, are linked by
an inverted U-curve
. Too little attention and performance is weak. Too much attention and the excessive arousal worsens performance again.

For tasks where we are far to the left of the peak, more attention is good. For other tasks—free-throw shooting, if you’re a pro—we can find ourselves on the other side of the curve, giving too much attention. Free throws are hard for some good players because they focus too much. Bruce Bowen did not have time to think about his three-point shots. But free throws gave him far too much time to think. To make matters worse, the more you try not to think about it, the more you do. Psychologists call this
an ironic process
. When asked to not think of a white bear, people can think of little else.

Returning to the lonely, we now see why they do so badly. They choke exactly because scarcity focuses them. There is an inverted U-shaped curve for conversation as well. Someone who is distracted and unfocused on a conversation is uninteresting. Someone who is far too focused can seem clingy or needy. The lonely do badly exactly because they cannot think about anything besides managing their loneliness. They do badly because they are past the peak of the inverted U. Instead of listening to their partner and making small talk, they are attentively focused on “Do they like me?” or “Will this be the funniest story?” Just as expert free throw shooters do better when focusing less on the free throw, the lonely could do better by focusing less on their social need. Yet scarcity
prevents that. It draws the mind of the lonely to just the place they need to avoid.

Dieters face a similar problem. One of the biggest challenges of dieting is self-control. The easiest way to resist an impulse is if you never have the impulse in the first place. If a particular treat does not cross your mind, it is easier to avoid. If it does cross your mind, the sooner you can get it out of your mind the easier it is to resist. Thinking about that delicious dessert only makes things harder. Dieting creates a scarcity of calories, and that scarcity in turn places the dessert firmly top of mind. Studies have shown that food ends up top of mind of dieters and not just because they are hungry but because of the scarcity they face. In one study, the preoccupation with food grew only more intense among dieters who had just eaten a chocolate bar. Physiologically, they had more calories; psychologically, they had now exacerbated the trade-offs they needed to make. Diets prove difficult precisely because they focus us on that which we are trying to avoid.