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Quick and dirty summary

Scarcity, irrespective of the affected's intelligence, affects our behavior and cognitive abilities. We can counter this by putting slack in our lives and easing the burden of scarcity in others.

Notebook for Scarcity: Why Having Too Little Means So Much Mullainathan, Sendhil Citation (APA): Mullainathan, S. (2013). Scarcity: Why Having Too Little Means So Much [Kindle Android version]. Retrieved from Amazon.com Introduction Highlight (yellow) - Page 3 We normally think of time management and money management as distinct problems. Highlight (yellow) - Page 6 Obsessions developed around cookbooks and menus from local restaurants. Some men could spend hours comparing the prices of fruits and vegetables from one newspaper to the next. Some planned now to go into agriculture. They dreamed of new careers as restaurant owners.… They lost their will for academic problems and became far more interested in cookbooks.… When they went to the movies, only the scenes with food held their interest. Highlight (yellow) - Page 7 I don’t know many other things in my life that I looked forward to being over with any more than this experiment. And it wasn’t so much… because of the physical discomfort, but because it made food the most important thing in one’s life… food became the one central and only thing really in one’s life. And life is pretty dull if that’s the only thing. I mean, if you went to a movie, you weren’t particularly interested in the love scenes, but you noticed every time they ate and what they ate. Highlight (yellow) - Page 7 Scarcity captures the mind. Just as the starving subjects had food on their mind, when we experience scarcity of any kind, we become absorbed by it. The mind orients automatically, powerfully, toward unfulfilled needs. For the hungry, that need is food. For the busy it might be a project that needs to be finished. For the cash- strapped it might be this month’s rent payment; for the lonely, a lack of companionship. Scarcity is more than just the displeasure of having very little. It changes how we think. It imposes itself on our minds. Highlight (yellow) - Page 9 The capture of attention can alter experience. During brief and highly focused events, such as car accidents and robberies, for example, the increased engagement of attention brings about what researchers call the “subjective expansion of time,” a feeling that such events last longer, precisely because of the greater amount of information that is processed. Highlight (yellow) - Page 12 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. Highlight (yellow) - Page 13 When scarcity captures the mind, we become more attentive and efficient. Highlight (yellow) - Page 13 A tight deadline or a shortage of cash focuses us on the task at hand. Highlight (yellow) - Page 13 We can directly measure mental capacity or, as we call it, bandwidth. We can measure fluid intelligence, a key resource that affects how we process information and make decisions. 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. Highlight (yellow) - Page 13 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. Highlight (yellow) - Page 13 scarcity of all varieties also leads to a shortage of bandwidth. Highlight (yellow) - Page 14 There is one particularly important consequence: it further perpetuates scarcity. It was not a coincidence that Sendhil and Shawn fell into a trap and stayed there. Scarcity creates its own trap. Highlight (yellow) - Page 14 Scarcity captures our attention, and this provides a narrow benefit: we do a better job of managing pressing needs. But more broadly, it costs us: we neglect other concerns, and we become less effective in the rest of life. Part One: The Scarcity Mindset Highlight (yellow) - 1. Focusing and Tunneling > Page 20 Scarcity forces all the choices. Abstractions become concrete. Without the last push, you may be creative without producing a final product. Note - 1. Focusing and Tunneling > Page 20 Note that Devolved Digital game where you only have a minute before dying. Artificial scarcity can be used to productively push decisions and increase engagement. Highlight (yellow) - 1. Focusing and Tunneling > Page 23 Deadlines are effective precisely because they create scarcity and focus the mind. Highlight (yellow) - 1. Focusing and Tunneling > Page 24 When time is short, you get more out of it, be it work or pleasure. We call this the focus dividend— the positive outcome of scarcity capturing the mind. Note - 1. Focusing and Tunneling > Page 24 Are there ways to structure one's life to take advantage of the focus dividend? Shorter, more intense sprints or work hours? Less watercooler talk. More time for life. Highlight (yellow) - 1. Focusing and Tunneling > Page 24 We write more carefully, and to our surprise often better, when we have a tight word limit. Note - 1. Focusing and Tunneling > Page 24 Twitter on condensing ideas. Highlight (yellow) - 1. Focusing and Tunneling > Page 26 whatever else may happen in the world— scarcity by itself can create a focus dividend. Highlight (yellow) - 1. Focusing and Tunneling > Page 27 Just as we cannot effectively tickle ourselves, it is exceedingly difficult to fool ourselves into working harder by faking a deadline. An imaginary deadline will be just that: imagined. It will never capture our mind the way an actual deadline does. Note - 1. Focusing and Tunneling > Page 27 So deadlines must be set by a third party. Highlight (yellow) - 1. Focusing and Tunneling > Page 27 The pull of scarcity, which begins at milliseconds, cumulates into behaviors that stretch over much longer time scales. Highlight (yellow) - 1. Focusing and Tunneling > Page 29 Focusing on one thing means neglecting other things. Highlight (yellow) - 1. Focusing and Tunneling > Page 29 tunnel: to focus single- mindedly on managing the scarcity at hand. Highlight (yellow) - 1. Focusing and Tunneling > Page 29 Susan Sontag famously remarked, “To photograph is to frame, and to frame is to exclude.” By tunneling, we mean the cognitive equivalent of this experience. Highlight (yellow) - 1. Focusing and Tunneling > Page 29 Focus is a positive: scarcity focuses us on what seems, at that moment, to matter most. Tunneling is not: scarcity leads us to tunnel and neglect other, possibly more important, things. Highlight (yellow) - 1. Focusing and Tunneling > Page 31 This is a basic feature of the mind: focusing on one thing inhibits competing concepts. Inhibition is what happens when you are angry with someone, and it is harder to remember their good traits: the focus on the annoying traits inhibits positive memories. Highlight (yellow) - 1. Focusing and Tunneling > Page 31 Focusing on something that matters to you makes you less able to think about other things you care about. Psychologists call this goal inhibition. Highlight (yellow) - 1. Focusing and Tunneling > Page 32 Inhibition is the reason for both the benefits of scarcity (the focus dividend) and the costs of scarcity. Highlight (yellow) - 1. Focusing and Tunneling > Page 32 If scarcity- induced neglect is insensitive to the weighing of costs and benefits, we ought to see scarcity creating neglect even when it is detrimental to the person’s outcomes. Note - 1. Focusing and Tunneling > Page 32 Tunneling on one thing may lead an agent to get less total utility than if he assigned equal priority to certain things. I still think there should be tiebreakers given 2 competing choices however the difference in importance perhaps should be just very marginal. Highlight (yellow) - 1. Focusing and Tunneling > Page 34 We will call these negative consequences the tunneling tax. Highlight (yellow) - 1. Focusing and Tunneling > Page 36 When asked why they are uninsured, the poor often explain they cannot afford insurance. This is ironic since you might think the exact opposite: that they cannot afford not to be insured. Here, insurance is a casualty of tunneling. To a farmer who is struggling to find enough money for food and vital expenses this week, the threat of low rainfall or medical expenses next season seems abstract. Highlight (yellow) - 1. Focusing and Tunneling > Page 36 Another manifestation of tunneling is the decision to multitask. We may check e- mail while “listening in” on a conference call, or squeeze in a bit more e- mail on the cell phone over dinner. This has the benefit of saving time, but it comes at a cost: missing something on the call or at dinner or writing a sloppy e- mail. These costs are notorious when we drive. Highlight (yellow) - 1. Focusing and Tunneling > Page 38 we should be cautious about inferring preferences from behavior. We might see the busy person neglect his children and conclude that he does not care as much about his kids as he does about his work. But that may be wrong, much as it would be wrong to conclude that the uninsured farmer does not particularly care about the loss of his crop to the rains. The busy person may be tunneling. Highlight (yellow) - 1. Focusing and Tunneling > Page 38 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. Highlight (yellow) - 2. The Bandwidth Tax > Page 41 Bandwidth measures our computational capacity, our ability to pay attention, to make good decisions, to stick with our plans, and to resist temptations. Bandwidth correlates with everything from intelligence and SAT performance to impulse control and success on diets. This chapter makes a bold claim. By constantly drawing us back into the tunnel, scarcity taxes our bandwidth and, as a result, inhibits our most fundamental capacities. Highlight (yellow) - 2. The Bandwidth Tax > Page 44 Scarcity itself also captures attention via a bottom- up process. This is what we mean when we say it is involuntary, happening below conscious control. As a result, scarcity, too— like trains or sudden noises— can pull us away even when we are trying to focus elsewhere. Highlight (yellow) - 2. The Bandwidth Tax > Page 47 scarcity directly reduces bandwidth— not a person’s inherent capacity but how much of that capacity is currently available for use. Highlight (yellow) - 2. The Bandwidth Tax > Page 51 Our study revealed that simply raising monetary concerns for the poor erodes cognitive performance even more than being seriously sleep deprived. Highlight (yellow) - 2. The Bandwidth Tax > Page 53 “Once you realize that willpower is just a matter of learning how to control your attention and thoughts, you can really begin to increase it.” Highlight (yellow) - 2. The Bandwidth Tax > Page 54 a tax on bandwidth makes it harder for us to control our impulses. Highlight (yellow) - 2. The Bandwidth Tax > Page 60 the bottom line is clear. Poverty itself taxes the mind. Highlight (yellow) - 2. The Bandwidth Tax > Page 61 Across a variety of cognitive tests, they find that people simply perform worse when they are dieting. Highlight (yellow) - 2. The Bandwidth Tax > Page 64 WHAT THE BANDWIDTH TAX MEANS Note - 2. The Bandwidth Tax > Page 64 For optimum performance one must have slack in one's life in order to be fully focused on the task at hand. Put slack in between activities so you have maximum bandwidth at your disposal and make sure there is a definite end (like a work diary). Don't cram too many things into one day. Highlight (yellow) - 2. The Bandwidth Tax > Page 66 We are saying that all people, if they were poor, would have less effective bandwidth. Part Two: Scarcity Creates Scarcity Highlight (yellow) - 3. Packing and Slack > Page 73 The packing metaphor illustrates why scarcity creates trade-off thinking. We pack big suitcases loosely. Not every nook and cranny is filled. There is space left unused here and there. We call this space slack—the part of our budget that is left untapped because of the way we pack. It is typical of large suitcases. Slack is a consequence of not having the scarcity mindset when we pack with room to spare, of a particular approach to managing resources when we experience abundance. The concept of slack can explain our tendency to consider (or fail to consider) trade-offs and to attend to (or fail to notice) prices. Highlight (yellow) - 3. Packing and Slack > Page 74 Slack the way we use it is not space deliberately left unused but, rather, the by-product of packing under abundance. Highlight (yellow) - 3. Packing and Slack > Page 81 Everyone from managers to movie producers suffers from the planning fallacy: we are all much too optimistic with our future plans. Even top-notch chess players can allocate too much time to earlier rounds and end up in “time trouble,” with too little time on the clock later in the game. Highlight (yellow) - 3. Packing and Slack > Page 82 You have borrowed, and there will be a price to pay; the following week will be yet a bigger nightmare. Note - 3. Packing and Slack > Page 82 Set aside perhaps a regular time in the week dedicated to doing chores. If nothing needs to be done it can be reallocated into leisure time. A form of slack that allows one to never let these build up into a scarcity trap. Highlight (yellow) - 3. Packing and Slack > Page 82 As the economist Abhijit Banerjee describes it, the temptation tax is regressive; it is levied more heavily on those who have less. Highlight (yellow) - 3. Packing and Slack > Page 83 Psychological biases often persist despite more extreme consequences. Highlight (yellow) - 4. Expertise > Page 89 our frugality has a perverse consequence. We pinch pennies on small items, yet we blow dollars on big ones. Highlight (yellow) - 4. Expertise > Page 93 Scarcity also makes us experts—expert packers. Without the luxury of slack, we come to understand the value of each inch of space in our suitcases. The poor ought to know the value of a dollar, the busy the value of an hour, and dieters the value of a calorie. Highlight (yellow) - 4. Expertise > Page 94 When you shop at a supermarket—say for a bag of chips or a can of tuna—you naturally assume that buying the bigger package must be cheaper per unit and thus will save you money. As it turns out, you often would be wrong. The bigger package can cost you more per unit; there might be a “quantity surcharge.” One survey found that 25 percent of brands that offered more than one size imposed some form of quantity surcharge. Note - 4. Expertise > Page 94 This is why Australia has price ad well as price per unit (ml, kg)! Highlight (yellow) - 4. Expertise > Page 96 One psychologist who studies decision making has suggested an iPhone app that would do something similar: “You would say, ‘I like vacations in the Bahamas, shoes, lattes, and books.’ And now, when you are tempted to buy something, that thing translates in terms of the things you are interested in. So, it [asks you], ‘Hey, this particular item is like half a day in the Bahamas, two [pairs of] shoes, and one latte.’” Highlight (yellow) - 4. Expertise > Page 96 Other experts have suggested using a “time price.” Assume you earn $20 an hour where you work (net: after deducting travel costs, taxes, and so on). When you buy an $80 ice-cream maker, you’ve just committed to four hours of work; Highlight (yellow) - 4. Expertise > Page 97 The problem with all these benchmarks is that they are not real. Thinking trade-offs under slack is like trying to have your cake and eat it, too. Since we do not actually make many trade-offs, they remain largely an invention. Highlight (yellow) - 4. Expertise > Page 101 people have been shown to think of money as compartmentalized into separate accounts. Highlight (yellow) - 4. Expertise > Page 101 a negative shock to the gas account (higher prices) leads to penny pinching (and lower quality) in that account. Highlight (yellow) - 4. Expertise > Page 103 Behavioral economics was born from the empirical observation that people violate several basic predictions of economics. They do not consider opportunity costs. Their willingness to pay for items is too easily moved. But economics is meant to follow the logic of scarcity. It is fitting then that its predictions are truer for those who actually have the scarcity mindset. Highlight (yellow) - 5. Borrowing and Myopia > Page 105 There is nothing in the prospect of a sharp, unceasing battle for the bare necessities of life, to encourage looking ahead, everything to discourage the effort. —JACOB RIIS, HOW THE OTHER HALF LIVES Highlight (yellow) - 5. Borrowing and Myopia > Page 108 Borrowing goes hand in hand with scarcity. Highlight (yellow) - 5. Borrowing and Myopia > Page 110 As it taxes our bandwidth, scarcity focuses us on the present, and leads us to borrow. Highlight (yellow) - 5. Borrowing and Myopia > Page 113 When we took away the ability to borrow—you now played each round as best you could and then moved to the next one—the poor earned 60 percent more points; the rich were unaffected. Note - 5. Borrowing and Myopia > Page 113 Create scarcity to optimize but don't allow borrowing. Highlight (yellow) - 5. Borrowing and Myopia > Page 114 scarcity, in whatever form, always leads to borrowing. Highlight (yellow) - 5. Borrowing and Myopia > Page 117 busy people tend to neglect the important but not urgent tasks. Note - 5. Borrowing and Myopia > Page 117 Most people neglect health when they are busy, and that is the worst kind of borrowing. Fixing health is extremely expensive later on. Highlight (yellow) - 5. Borrowing and Myopia > Page 117 the neglected office bleeds you by a thousand little cuts. Highlight (yellow) - 5. Borrowing and Myopia > Page 122 Tunnels limit everyone’s vision. Highlight (yellow) - 6. The Scarcity Trap > Page 125 scarcity trap: a situation where a person’s behavior contributes to her scarcity. Highlight (yellow) - 6. The Scarcity Trap > Page 126 The person who is perpetually behind is spending less time on getting things done; a lot of his time is going to playing catch-up. Highlight (yellow) - 6. The Scarcity Trap > Page 128 juggling: the constant move from one pressing task to the next. Juggling is a logical consequence of tunneling. When we tunnel, we “solve” problems locally and temporarily. We do what we can in the present, but this creates new problems in the future. Highlight (yellow) - 6. The Scarcity Trap > Page 129 Juggling is not about being harried in time; it is about having a lot on one’s mind. Much of one’s bandwidth ends up being devoted to the balls in the air that are about to fall. Highlight (yellow) - 6. The Scarcity Trap > Page 132 Recent research shows that self-control may actually get depleted as we use it. Highlight (yellow) - 6. The Scarcity Trap > Page 136 Any slight instability is a threat hovering over a life lived at the edge of a scarcity trap, because with little slack to absorb it, instability is almost certain to be felt. Highlight (yellow) - 6. The Scarcity Trap > Page 137 It is as important to have enough slack (or some other mechanism) for handling the big shocks that may come one’s way Highlight (yellow) - 6. The Scarcity Trap > Page 137 this discussion highlights the need for instruments for buffering against shocks. If the vendor had a low-cost loan or a liquid savings account—to be accessed solely for emergencies—that would give her the slack she needs in those critical moments of no slack. Highlight (yellow) - 6. The Scarcity Trap > Page 138 During periods of abundance, we waste time or money. We are too lax. Highlight (yellow) - 6. The Scarcity Trap > Page 139 Staying clear of the scarcity trap requires more than abundance. It requires enough abundance so that, even after overspending or procrastinating, we still leave enough slack to manage most shocks. Highlight (yellow) - 6. The Scarcity Trap > Page 143 the more you try not to think about it, the more you do. Psychologists call this an ironic process. When asked to not think of a white bear, people can think of little else. Highlight (yellow) - 6. The Scarcity Trap > Page 144 Studies have shown that food ends up top of mind of dieters and not just because they are hungry but because of the scarcity they face. Highlight (yellow) - 6. The Scarcity Trap > Page 144 Scarcity creates a mindset that perpetuates scarcity. Highlight (yellow) - 7. Poverty > Page 147 This, after all, is our thesis. If scarcity evokes a unique psychology irrespective of its source, then we are free to treat the varieties of scarcity all the same. Highlight (yellow) - 7. Poverty > Page 150 Money, because it is fungible, can be used to compensate for other forms of scarcity. Highlight (yellow) - 7. Poverty > Page 151 Nonadherence affects many people, but it is particularly concentrated in one group: the poor. While people at every income level may fail to take their medications, the poor do so most often. Highlight (yellow) - 7. Poverty > Page 151 The amount of crop that can be grown on a plot of land affects all of society. It determines food prices, world trade, environmental impacts, and even the feasible population of the planet. Highlight (yellow) - 7. Poverty > Page 152 In Asia, uncontrolled weed growth has been estimated to cost up to 50 percent of total rice output. Highlight (yellow) - 7. Poverty > Page 155 Our data suggest causality runs at least as strongly in the other direction: that poverty—the scarcity mindset—causes failure. Highlight (yellow) - 7. Poverty > Page 155 What the researchers found was that the number of planes in the air on a particular day predicted the quality of parenting that night. Note - 7. Poverty > Page 155 In this sense, central argument perhaps is cognitive load causes poor executive control... It was discussed already but is an interesting model that goes beyond scarcity. Rest, slack, meditation is as much recipe to success in life as well to replenish mental resources. Highlight (yellow) - 7. Poverty > Page 156 While research on child rearing is murky, there are a few things that emerge as clearly good, and they are pretty intuitive. Consistency is near the top of the list. It is tough and anxiety-producing for children to learn things—discipline, rules of conduct, a sense of comfort—if parents are inconsistent in their statement and application. Highlight (yellow) - 7. Poverty > Page 157 Being a good parent requires many things. But most of all it requires freedom of mind. That is one luxury the poor do not have. Highlight (yellow) - 7. Poverty > Page 162 Any form of skill acquisition, whether it be learning social skills or developing good spending habits, requires bandwidth. Part Three: Designing for Scarcity Highlight (yellow) - 8. Improving the Lives of the Poor > Page 168 Error is inevitable, but accidents are not. A good cockpit design should not facilitate mistakes and, more important, should prevent errors from becoming tragedies. Highlight (yellow) - 8. Improving the Lives of the Poor > Page 170 Curricula can be altered, for example, so that there are modules, staggered to start at different times and to proceed in parallel. You missed a class and fell behind? Move to a parallel session running a week or two “behind” this one. Miss a module and you can get back on track on the next round. Sure, it will take you a bit longer to finish, but at least you will get there. As it is, training programs are built with no mistakes in mind, as if the participants are not expected or allowed to stumble. But the poor—even, or perhaps especially, when they are unemployed—have a lot going on. And much of it does not sit so well with being a student. Highlight (yellow) - 8. Improving the Lives of the Poor > Page 171 It is important to emphasize that fault tolerance is not a substitute for personal responsibility. On the contrary: fault tolerance is a way to ensure that when the poor do take it on themselves, they can improve—as so many do. Fault tolerance allows the opportunities people receive to match the effort they put in and the circumstances they face. It does not take away the need for hard work; rather, it allows hard work to yield better returns for those who are up for the challenge, just as improved levers in the cockpit allow the dedicated pilot to excel. It is a way to ensure that small slipups—an inevitable consequence of the bandwidth tax—do not undo hard work. Highlight (yellow) - 8. Improving the Lives of the Poor > Page 172 Limits can be made more effective once we understand tunneling. For a limit to affect behavior it must enter the tunnel. One way would be to send a salient reminder of the months that are remaining. By calling attention to it we can try to force this distant problem into the tunnel. Another way is to change the structure of the limit. We have seen that frequent interim deadlines have a greater impact than a single distant deadline. So a better solution would be to create smaller but more frequent limits. (Perhaps, instead of so many years in a lifetime, only so many months in a given few-year period.) And to make the consequences of going over the limit smaller but immediate, easy to detect and to survive—perhaps a drop in payments rather than cutting off welfare altogether. Highlight (yellow) - 8. Improving the Lives of the Poor > Page 173 Conditional cash transfers are an increasingly popular way to transfer money to the poor: the amount of cash a person receives depends on the good behaviors she exhibits. Studies show that these programs work; clients respond to the cash incentives. But that’s only one side of the coin. The other side is that many potential clients fail to respond. Here again, the incentives often fall outside the tunnel; the payments come in the future and the desired behaviors are not what is tunneled on now. Highlight (yellow) - 8. Improving the Lives of the Poor > Page 173 We never ask, Is this how we want poor people to use their bandwidth? Highlight (yellow) - 8. Improving the Lives of the Poor > Page 173 When we design poverty programs, we recognize that the poor are short on cash, so we are careful to conserve on that. But we do not think of bandwidth as being scarce as well. Highlight (yellow) - 8. Improving the Lives of the Poor > Page 175 Schoar collected the best rules of thumb and designed a different “financial education” class based on them. Her class was shorter and much easier to grasp. It used a lot less bandwidth, and this showed up in the data. Note - 8. Improving the Lives of the Poor > Page 175 Financial literacy class was too taxing on bandwidth so she simplified it using rules of thumbs used by successful local entrepreneurs. Highlight (yellow) - 8. Improving the Lives of the Poor > Page 176 BANDWIDTH CAN BE BUILT Note - 8. Improving the Lives of the Poor > Page 176 Bandwidth as a resource that needs to be built and protected like time and money! Highlight (yellow) - 8. Improving the Lives of the Poor > Page 179 Offer high-fee loans to deal with current fires. These loans will be attractive in the tunnel, and we can use the high fees to build a savings account. Highlight (yellow) - 8. Improving the Lives of the Poor > Page 179 Build a financial product that takes a farmer’s harvest payment and smooths it out, effectively yielding a monthly income. Highlight (yellow) - 8. Improving the Lives of the Poor > Page 180 Child care provides more than just child care, and the right financial product does much more than just create savings for a rainy day. Each of these can liberate bandwidth, boost IQ, firm up self-control, enhance clarity of thinking, and even improve sleep. Highlight (yellow) - 9. Managing Scarcity in Organizations > Page 184 On the surface, what St. John’s was lacking were operating rooms. No amount of reshuffling could solve that problem. But if you looked deeper, the lack was of a slightly different sort. Surgeries come in two varieties: planned and unplanned. Right now the planned surgeries took up all the rooms. Unplanned surgeries, when they showed up (and they did!), required rearranging the schedule. Having to move a planned surgery to accommodate an emergency came at a cost. Some of it was financial—overtime—and some may have been medical—more errors. But part of it was a cost in efficiency. Having people work unexpectedly late is less efficient. They are less proficient at their tasks, and each surgery takes longer. Highlight (yellow) - 9. Managing Scarcity in Organizations > Page 184 The scarcity in rooms was not really a lack of surgery space; it was an inability to accommodate emergencies. Note - 9. Managing Scarcity in Organizations > Page 184 Just like time scarcity, have "one room open" for unplanned emergencies or opportunities. Highlight (yellow) - 9. Managing Scarcity in Organizations > Page 187 A standard impulse when there is a lot to do is to pack tightly—as tightly as possible, to fit everything in. And when you are not tightly packed, there’s a feeling that perhaps you are not doing enough. In fact, when efficiency experts find workers with “unused” time on their hands, they often embark on making those workers use their time “more efficiently.” But the result is that slack will have been lost. When you are tightly packed, getting stuck in the occasional traffic jam, which for others is only mildly annoying, throws your schedule into total disarray. You are late to meeting number one, and with no time in between, that pushes into meeting number two, which pushes into obligation number three. You finally have no choice but to defer one of today’s tightly packed obligations to the next day, except, of course, that tomorrow’s schedule is “efficiently” packed, too, and the cost of that deferral ends up being high. Sounds familiar? Of course it does. You have undervalued slack. The slightest glitch imposes an obligation you can no longer afford, and borrowing from tomorrow’s budget comes at high interest. Note - 9. Managing Scarcity in Organizations > Page 187 This. This this this! Such a valuable paragraph that opens my eyes to correct time management. Time management is all about accounting for things and adding correct amounts of slack!! Highlight (yellow) - 9. Managing Scarcity in Organizations > Page 187 Should you leave spaces open in your schedule, say, 3–4 p.m. Monday and Wednesday, just in case something unexpected comes up, despite the fact that there is so much you’d like to do for which you have so little time? In effect, yes. That’s what you do when you allocate forty minutes to drive somewhere a half hour away, or when you salt away some money from your monthly household budget to save for a rainy day. When you face scarcity, slack is a necessity. And yet we so often fail to plan for it. Largely, of course, because scarcity makes it hard to do. Highlight (yellow) - 9. Managing Scarcity in Organizations > Page 188 a raft of empirical studies showed that, whatever their other consequences, leveraged buyouts did improve corporate performance. One reason is that the “corporate fat” exacerbates the incentive problem of managers. They spend poorly because they are spending someone else’s money. Fat, which is effectively free money, is spent on luxuries that management enjoys but are useless from the shareholders’ perspective. By increasing leverage and reducing fat, managers spend more wisely. Highlight (yellow) - 9. Managing Scarcity in Organizations > Page 189 Cut too much fat, remove too much slack, and you are left with managers who will mortgage the future to make ends meet today. Highlight (yellow) - 9. Managing Scarcity in Organizations > Page 192 “There are few images more common in current discussions of R&D management than that of the overworked engineering team putting in long hours to complete a project in its last days before launch.” Highlight (yellow) - 9. Managing Scarcity in Organizations > Page 193 Firefighting does not just lead to errors; it leads to a very predictable kind of error: important but nonurgent tasks are neglected. Highlight (yellow) - 9. Managing Scarcity in Organizations > Page 193 When teams are frantically working on a project that should have already been done, they start late on the next project, which ensures they will firefight there as well and stay perpetually behind. Highlight (yellow) - 9. Managing Scarcity in Organizations > Page 194 Someone must ensure that those who are focused on meeting immediate project targets are not borrowing from future projects, thereby exhausting any slack and digging the organization deeper into a bandwidth hole in the future. Highlight (yellow) - 9. Managing Scarcity in Organizations > Page 194 The truly efficient laborer will be found not to crowd his day with work, but will saunter to his task surrounded by a wide halo of ease and leisure. —HENRY DAVID THOREAU Highlight (yellow) - 9. Managing Scarcity in Organizations > Page 195 the consequences of reduced bandwidth on performance. Highlight (yellow) - 9. Managing Scarcity in Organizations > Page 195 Henry Ford recognized the distinction between hours and bandwidth. His decision to institute a forty-hour workweek for his factory workers was clearly motivated by profits as much as by humanitarian concerns. As one commentator observes: When Henry Ford famously adopted a 40-hour workweek in 1926, he was bitterly criticized by members of the National Association of Manufacturers. But his experiments, which he’d been conducting for at least 12 years, showed him clearly that cutting the workday from ten hours to eight hours—and the workweek from six days to five days—increased total worker output and reduced production cost. Ford spoke glowingly of the social benefits of a shorter workweek, couched firmly in terms of how increased time for consumption was good for everyone. But the core of his argument was that reduced shift length meant more output. Highlight (yellow) - 9. Managing Scarcity in Organizations > Page 198 Increasing work hours, working people harder, forgoing vacations, and so on are all tunneling responses, like borrowing at high interest. They ignore the long-term consequences. Highlight (yellow) - 9. Managing Scarcity in Organizations > Page 198 maximize effective bandwidth rather than hours worked. Highlight (yellow) - 9. Managing Scarcity in Organizations > Page 204 Businesses often succeed and fail as a function of how they manage scarcity. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 205 Staying on schedule can be hard. A slipup early on—perhaps a bit of procrastinating or something that has run unexpectedly long—gets magnified when there is no slack to absorb this shock. What first seemed like manageable tightness becomes a cascade of lateness. Every appointment becomes rushed. You tunnel on getting through this appointment. Predictably, you borrow from future ones. A time-debt trap forms. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 206 change the environment to counteract the psychology. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 206 we can “scarcity-proof” our environment. We can introduce the equivalent of rumble strips and helpful assistants, using our insights into why things go badly to build better outcomes. Note - 10. Scarcity in Everyday Life > Page 206 Setting alarms for end times! The phone as a substitute for the assistant! Highlight (yellow) - 10. Scarcity in Everyday Life > Page 207 Having asked people what they were saving for and how much, we would send them, at the end of each month, a quick reminder—a text message or a letter. This benign reminder alone increased savings by 6 percent, a strikingly large effect given how infrequent and nonintrusive this was. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 207 insights about tunneling can also be used to exploit. You might set high late fees and then not remind people of the impending charges. Many of these effects, from reminders to the impact of late fees, will disproportionately affect the poor, since they are the ones who are tunneling—and suffering the consequences—the most. Note - 10. Scarcity in Everyday Life > Page 207 This is why I don't like some business models like hellofresh and frontendmasters.com. Though content is good it seems dishonest Highlight (yellow) - 10. Scarcity in Everyday Life > Page 208 “impulse savings.” Much like candy bars, impulse savings cards are left to hang at prominent locations, such as next to cash registers. They have pictures on them that portray people’s savings goals—such as college, a home, or a car—designed, like a candy bar, to create an urge. Except that when they “buy” these cards, people are actually saving: the dollars they pay get transferred into their savings accounts. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 209 Each of us enrolled a long time ago in a plan that automatically deducts 10 percent from our paycheck. Our savings balances show that we saved a lot, even though our daily behavior suggests total neglect: we spend our paychecks without ever thinking about saving. Automatic deduction allows us to save with full neglect. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 210 Changing the default—what happens when a decision is neglected—can have strikingly large effects. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 212 whenever possible, convert vigilant behaviors into one-time actions. Rather than having to be vigilant every time you grab a snack from the pantry, just be vigilant at the grocery store. Many banal tasks have this structure. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 212 Convert questionable one-time behaviors into the kind that demands vigilance. Some policy makers have proposed “cooling off periods” for car purchases, and similar arrangements may be wise for loans of every variety (money, time, calories, and so forth). Essentially, you are setting up a system that requires you to confirm the decision several times before you actually commit to it. (Imagine that any time you receive a tempting invitation, your e-mail is set up to send the following response: “Thank you. I may be able to do this. I will let you know in a week.”) Highlight (yellow) - 10. Scarcity in Everyday Life > Page 213 One insight of the psychology of scarcity is the need to prepare for tunneling and to insulate against neglect: navigate so that bad choices are harder to make in a single moment of tunneling, and arrange it so that good behaviors require little vigilance yet are occasionally reevaluated. Note - 10. Scarcity in Everyday Life > Page 214 Construct your environment, the more portable the better. Incentivize (or automate) good behavior and disincentivize bad behavior. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 214 There is no reason that the very same feature—a lack of appreciation of scarcity in the future—cannot be harnessed to help. A willingness to commit to a less scarce future underlies the well-known Save More Tomorrow program, through which people who felt they were not currently able to save agreed to increase their savings deductions whenever their salary increased. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 214 What’s particularly clever here is the linkage between something you expect to happen (the salary raise) and something you would like to happen (the increased savings). Note - 10. Scarcity in Everyday Life > Page 214 Reading while waiting Highlight (yellow) - 10. Scarcity in Everyday Life > Page 216 Clear and simple syntheses are a terrific way to economize on cognitive capacity. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 216 What Bertrand and Morse found was that far fewer customers took the payday loan when they were shown the cost in dollars. Those who come for payday loans are accustomed to seeing, thinking about, and needing dollars. Interest rates, by contrast, are exotic financial instruments that few of us use in daily life and which require substantial intellectual effort to turn into something more palpable. When your bandwidth is taxed, a concrete sum carries a lot more meaning than some abstract term. Note - 10. Scarcity in Everyday Life > Page 216 Cognitive kindness Highlight (yellow) - 10. Scarcity in Everyday Life > Page 218 “Perceived rule complexity was the strongest factor associated with increased risk of quitting the cognitively demanding weight management program.” Highlight (yellow) - 10. Scarcity in Everyday Life > Page 220 Are we allocating our tasks wisely, ensuring that high-bandwidth tasks get assigned high-bandwidth slots? Highlight (yellow) - 10. Scarcity in Everyday Life > Page 221 Families with no college experience tripled their submission rate if they received help in filling out the forms. Note - 10. Scarcity in Everyday Life > Page 221 Importance of good defaults in forms... Or even smart fill or non browser auto fill? Why connect with Facebook works? Highlight (yellow) - 10. Scarcity in Everyday Life > Page 221 When our bandwidth is taxed, the simplest snags can do a lot of damage. Note - 10. Scarcity in Everyday Life > Page 221 Every day, manage not just time but bandwidth Highlight (yellow) - 10. Scarcity in Everyday Life > Page 221 Those on public benefits, for example, often are required to “recertify”—to complete a series of forms—every year to show that they are still eligible. As you might imagine, it is during these periods of recertification that people drop out of the program. And this requirement appears often to screen out the most needy: those who are most taxed are also those most likely to delay in recertifying and, unfortunately, the ones in greatest need of the benefit. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 222 a program aimed at the cash stretched should not charge them much cash. Yet we frequently design programs aimed at people who are bandwidth-stretched that charge a lot in bandwidth. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 223 In a world of scarcity, long deadlines are a recipe for trouble. Early abundance encourages waste, and by the time the deadline approaches, tunneling and neglect settle in. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 223 A way to fight the abundance-then-scarcity cycle is to even it out—to create long periods of moderation rather than spurts of abundance followed by heightened periods of scarcity. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 224 it is striking how often we fail to build a buffer stock. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 224 we tend to underappreciate the likelihood of many low-probability events. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 224 Technically, we are facing a disjunction of low-probability events. What could interfere with your plans are not just floods or earthquakes, but you may get sick, or a family member could get sick, or there could be a break-in, or a car theft, or a war, or the loss of a job, or a surprise wedding, or an unexpected birth. All of these, of course, are possible but highly unlikely. But the problem is that any one of these is enough to count as a shock, for which you should have built some buffer stock. Highlight (yellow) - 10. Scarcity in Everyday Life > Page 224 If time is where you expect scarcity, this means leaving some extra room in your schedule, for “no good reason,” other than being able to move your many projects and obligations around at no cost. Note - 10. Scarcity in Everyday Life > Page 224 This is one of the biggest single takeaways I've had from a book. Highlight (yellow) - Conclusion > Page 228 Have you ever said, “I don’t want to make this important decision now; my bandwidth is taxed?” Highlight (yellow) - Conclusion > Page 230 How best to measure slack? How most effectively to determine whether people are engaging in trade-off thinking? But we can go further, perhaps measure fluctuating cognitive capacity more generally. Highlight (yellow) - Conclusion > Page 234 While scarcity plays a starring role in many important problems, abundance sets the stage for it.

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