An analysis of poverty

SENDHIL MULLAINATHAN

Scarcity is not just a physical constraint. It is also a mindset. When scarcity captures our attention, it changes how we think — whether it is at the level of milliseconds, hours, or days and weeks. By staying top of mind, it affects what we notice, how we weigh our choices, how we deliberate and, ultimately, what we decide and how we behave…

Because we are preoccupied by scarcity, because our minds constantly return to it, we have less mind to give to the rest of life. This is more than a metaphor. We can directly measure mental capacity or, as we call it, bandwidth… We can measure executive control, a key resource that affects how impulsively we behave. And we find that scarcity reduces all these components of bandwidth — it makes us less insightful, less forward-thinking, less controlled.

And the effects are large. Being poor, for example, reduces a person’s cognitive capacity more than going one full night without sleep. It is not that the poor have less bandwidth as individuals. Rather, it is that the experience of poverty reduces anyone’s bandwidth.

When we think of the poor, we naturally think of a shortage of money. When we think of the busy, or the lonely, we think of a shortage of time, or of friends. But our results suggest that scarcity of all varieties also leads to a shortage of bandwidth. And because bandwidth affects all aspects of behaviour, this shortage has consequences.

From “Scarcity: Why Having too Little Means so Much”