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[Reading Notes] For Those Who Always "Don't Have Time": The Behavioral Economics of Scarcity
Overview
This book unravels the effects of "scarcity". As the authors are a team of a psychologist and an economist, it naturally takes a behavioral economics approach. It examines the causes of familiar scarcities, such as lack of time or money, using abundant experimental data.
I learned about this book through Honeshavuri-sensei's introduction.
Effects of Scarcity
The book mainly discusses two effects: "Tunneling" and "Cognitive Load".
Tunneling
Tunneling is the effect where one's consciousness focuses only on what's right in front of them. A familiar example is when concentration skyrockets as a deadline approaches. I'm sure many of you have experienced this at least once. While this can be effective if used well, it comes at the cost of neglecting other things.
People who are short on time are always prioritizing the task right in front of them, experiencing tunneling. As a result, they don't focus on how to fundamentally create more time, leading to continued scarcity. Consider someone who is always busy at work. They might not be able to take on new initiatives, find it difficult to consult with others, and may even suffer health consequences... When you think about it, this could be detrimental in the long run. However, in the midst of busyness, the very idea of looking at other things doesn't even occur to them due to tunneling.
Let's consider the same for financial scarcity. The book mentions payday loans. These are short-term, small-amount loans taken out before payday and repaid when the salary comes in. They are used in situations like needing to pay rent before payday. Of course, the interest rates are high, and using these gradually reduces total income. However, faced with the urgent problem of potential eviction, tunneling occurs on the task of somehow resolving this, leading to the use of these loans despite the high interest rates.
As these examples show, whether it's time or money, scarcity causes the same tunneling effect. This leads to getting stuck in the swamp of scarcity, creating a loop. It's truly a vicious cycle.
Cognitive Load
There's a concept that human judgment is a finite resource. For example, there's the idea of doing tasks that require mental effort in the morning. In game terms, this is equivalent to MP. It's a status that decreases with processing and decision-making, and recovers with sleep. The book states that scarcity also affects this cognitive capacity. Let's look at examples with time and money again.
When time is scarce, you're constantly chased by tasks, leaving no room in your schedule. This leads to cramming tasks into short periods, inevitably increasing the load. Especially if you need to frequently adjust your schedule or meticulously calculate travel times, the tasks themselves increase, further raising the load.
When money is scarce, many worries tied to daily life arise. From immediate concerns like how to pay this month's rent or whether food expenses are too high, to various future anxieties. Being plagued by these concerns around the clock leads to a lack of concentration, putting a load on cognitive capacity. The book explains this based on experimental results such as medication adherence rates in impoverished areas and behavioral changes before and after harvest seasons.
To imagine a situation of cognitive scarcity, you might think of how your thinking ability becomes less than that of a kindergartener when speaking a foreign language, taking a test after pulling an all-nighter, or consider examples of accidents caused by drunk driving. Regardless of one's actual ability, temporary cognitive decline can occur in many situations.
Scarcity Begets Scarcity
The two effects described so far are frightening. Why? Because they are likely to cause further scarcity.
The most understandable example is financial scarcity due to loans. This is clear because the future burden is explicit due to fixed interest rates. While planned borrowing can be fine, borrowing in a situation without leeway can start a vicious cycle of borrowing again to repay.
Time is similar to money, but it's trickier because precise measurement is difficult, making it less visible. An easy-to-understand example might be the emotional impact of lashing out at others due to being busy and stressed. We often say someone is "in a bad mood," but they might actually be in a state of scarcity.
The experimental data mentioned in the book states that people in a state of scarcity experience an IQ drop of nearly 15 points. Regardless of one's actual ability, the tautological statement "You are in scarcity because you are in scarcity" holds true.
Reading this, I was reminded of the Japanese proverb "Binbou hima nashi" (The poor have no leisure), which apparently dates back to the Edo period. Unfortunately, this proverb doesn't capture the nuance of a loop, so there might be a better expression. However, it seems to represent the bidirectional influence of financial and time scarcity.
Causes and Countermeasures for Scarcity
To avoid falling into the swamp of scarcity, it's important to either "not fall in from the start" or "be able to get out quickly". So what conditions initially lead to scarcity?
The book states that scarcity often occurs when a small shock is given in a situation without leeway. For example, imagine if an urgent meeting comes up when your day is already fully booked with meetings. You'd have to move existing important (but not urgent) meetings, extend your working hours, or cut into your sleep time to accommodate it. This can affect the following days, disrupting your schedule and potentially leading to further scarcity.
Having Slack (Leeway)
To deal with such shocks, sufficient leeway is necessary. This is called slack, referring to time or financial leeway. By the way, the four-color flower chat app is probably an apronym (an acronym contrived from existing words) for this.
Of course, you might say "If I could have leeway, I wouldn't be struggling!", but experiments showed many cases where people fell into scarcity even when they had periods of abundance. In other words, the key to creating slack is whether you can prepare for scarcity during abundant periods when you have sufficient cognitive capacity. This might be tough for Edokko (native Tokyoites).
The book gives an example of a busy hospital always performing surgeries. By deliberately keeping one operating room open, overall efficiency improved. This emphasizes the importance of creating slack based on thorough analysis.
Providing Slack Externally
An important theme in economic support is how to provide assistance. The book also cited experiments showing that when providing slack externally, the timing is crucial.
Specifically, it was observed that when support was provided in a state of scarcity, it was used for putting out urgent fires and didn't help escape scarcity. On the other hand, when support was cleverly provided during relatively abundant times, it was more effective in escaping scarcity. This result supports the previously mentioned effects of scarcity.
Other Points
Reading this part, I was reminded of the Japanese saying "Okame hachimoku" (Bystanders see more of the game). This also seems effective in escaping scarcity. As mentioned earlier, people in a state of scarcity are experiencing tunneling, so it would be good if they could deal with it from a third-party perspective.
This book also includes behavioral economics content, such as an experiment showing that people in poverty recognize the value of a dollar more accurately. Without going into details, these results suggest that abundance, not poverty, might be what creates scarcity. This seems to be a theme the authors want to tackle, and further elucidation of scarcity is expected.
Conclusion
Based on the theme of time and financial scarcity, which everyone has experienced, this book explores its causes from a behavioral economics perspective. Knowing the causes of such a familiar and important problem can bring great value. This book is convincing as it considers causes based on numerous experiments and aligns with many experiences. As the title suggests, for those who "always don't have time", it seems to be a book worth reading even if you have to forcibly make time for it.