This post appeared in Dutch on the Oikocredit Netherlands website.
The book Scarcity by Sendhil Mullainathan and
Eldar Shafir had been on my to-do list for months. I kept postponing reading
it. Even though it seemed important, it wasn’t high on my list of priorities. I
had deadlines: finishing a paper, preparing a presentation or... finishing my
next blog post.
I wanted to read the book
because it talks about the psychology of poverty. I have been fortunate enough
never to have lived in poverty, and it is therefore hard for me to imagine how
it must be. That’s why I travel to developing countries, do research and read
books about development issues. After a busy period, I finally had time to read
Scarcity last week. And? It turns out
that my busy existence and a life in poverty are not as different as I thought.
Mullainathan and Shafir
show that people who are poor, busy or on a diet, all deal with the same
problem: scarcity. Scarcity of money, time or calories. Scarcity requires our
full attention and distracts us from other important aspects of our lives: a
poor mother is late for work, a busy manager forgets his daughter’s birthday, a
student on a diet cannot focus on her exam.
People living with scarcity
cannot think about much else. That has serious consequences: their cognitive
skills suffer. A study among farmers in India shows that their IQ score is ten
points higher after harvest – when there is plenty of money – than before
harvest – when they are penniless. People also start behaving differently as a
result of scarcity: they find it hard to resist temptations, snap at people
around them and forget appointments.
I can definitely recognise
these symptoms: in a busy period I sometimes forget everything around me. But I
differ from a poor person in one crucial way: for me there is a way out. In the
worst case I am late for a deadline or have to cancel a meeting. I can choose
not to be busy, but someone who is poor is trapped.
‘Poverty traps’ have been
an important topic in development economics for decades. Why can’t people
escape poverty? Many explanations have been offered: poor people are not
intelligent enough, live to close to the equator or live in countries with
messed up political systems. Mullainathan and Shafir offer an interesting
contribution to this discussion: scarcity creates a vicious circle and pulls
poor people further into poverty.
As opposed to many other
explanations, this explanation gives hope: poor people are not poor because of
who they are, but because of their circumstances. Scarcity creates behaviour
that makes poor people even poorer. A mother is fired because she cannot focus
on her job, she gets a fine for being late on her electricity bill or she forgets
to fill out a form that could get her child into a scholarship programme.
Simple changes can make her life easier: early reminders for paying bills,
insurance against financial shocks or assistance with filling out complicated
forms.
What about me? What can I
do to make my busy life easier? I’ll think about that later, I have a deadline
to make...
