Tag Archives: Sendhil Mullainathan

Book Review – Scarcity – True Cost Of Not Having Enough

I have been reading the Scarcity: Why Having Too Little Means So Much , which is a 2013 book by behavioural economist Sendhil Mullainathan and psychologist Eldar Shafir. It has been one of the most revealing books on certain behaviours which we exhibit in everyday life given our varied circumstances.

If you read through various chapters of the books , the authors have brought out real life examples that will make you know more about scarcity and its impact. By constantly loading the mind with other processes, it leaves less “mind” for the task at hand. Scarcity directly reduces bandwidth – not a person’s inherent capacity, but how much of that capacity is currently available for use.

Scarcity alters how we look at things; it makes us choose differently. This creates benefits; we are more effective in the moment. But it also comes at a cost; our single-mindedness leads us to neglect things we actually value!

part – one : The Scarcity Mindset

As leaders we talk about alot about being focussed , remain careful not to use this as a force function because it can hamper lateral thinking & our ability to develop systems approach within the organization.


Scarcity creates more scarcity and the examples quoted are a reflection of these real life dilemmas

  • How hard was it to pack your suitcase for a holiday! Well, that probably depended on two things: the amount of stuff you wanted to bring, and the size of your suitcase. This is a wonderful analogy for many decision areas in life.
  • For those of us trying to lose weight, the “stuff to pack” represents the amount and type of food we’d like to consume, and the suitcase represents the restricted calorie count of our diet plan.
  • For those of us struggling with poverty, we must determine how to best cover our bills, grocery shopping, and other purchases, given our finite budget.

Understanding the role of bandwidth helps us understanding specific circumstances.

part – two: Scarcity Creates Scarcity

As leaders we never have enough time . It also is true that as we grow ourselves in a given role we play , we tend to become more busy , we are providing less attention to every aspect being thrown at us . Our ability to absorb has to be of higher order to process a well informed decision. It is important therefore that we group things in a manner that we become more effective. Context switching is ineffective and as leaders we should minimise its impact.


The Firefighting Trap

part – three – Designing for Scarcity

Some unfortunate incidents At St. John’s and NASA have reflected upon the above mentioned trap which is a special care of scarcity trap. There will always be “too many problems and not enough time”. You will solve urgent ones and put nonurgent on burner. In engineering organization , we are always too busy meeting deadlines for each of our platform components that we forget to look at how the components will fit together. Recall what I have alluded about systems thinking at the start if blog. Without having a systemic view you cannot get components to to work for each other as opposed to against.

Organizations can create a domino effect , with each individual member pulling tam towards firefighting and reduced bandwidth . But organization can also be insightful , creating environments conducive to the successful management of scarcity challenges

part – three – Designing for Scarcity

As a leader of the organization you’ll need to work with so many constraints and limitations of resources but still need to complete the task well within time. One should dig deep within themselves through network effect of strong peer and management teams that help one to get comfortable with uncomfortable questions.

Our true leadership needs to address

  • Identification of true scarce resources [ first step ]
  • Prevent underappreciation of complexity of managing scarcity and the benefits that come from doing it just a little bit better