By Sendhil Mullainathan and Eldar Shafir
Times Books; 288 pages; $28
The authors of this book both study people for a living — often people who lack money. They may be vegetable sellers in Chennai, India, who borrow money at dawn and repay with exorbitant interest at dusk. Or they may be ill-paid office managers, like Shawn from Cleveland, Ohio, who lives from paycheck to paycheck, always finding that there is “more month than money.”
Surprisingly, the authors see a lot of themselves in their subjects. As successful academics, neither lacks money. But they do lack time. The way Sendhil Mullainathan feels about his professional obligations mirrors the way Shawn felt about his financial liabilities.
There is a distinctive psychology of scarcity, argues Mullainathan and Eldar Shafir, a psychologist at Princeton University. People’s minds work differently when they feel they lack something. Anyone who feels strapped for money, friends, time or calories is likely to succumb to a similar “scarcity mindset.”
This mind-set brings two benefits. It concentrates the mind on pressing needs. It also gives people a keener sense of the value of a dollar, minute, calorie or smile. The lonely are better at deciphering expressions of emotion. Likewise, the poor have a better grasp of costs.