Saturday, July 11, 2015

Science of scarcity

These two have been sitting in my browser tabs for a while.

Andrea Fuller wrote a perspectives article for the Bill Moyers and Company website. She wrote about life in poverty:
Poverty is exhausting. Poverty is despair and desperation-inducing. Poverty is soul, dream and hope crushing. Poverty is like being enclosed in a prison cell with no doors or windows. It feels claustrophobic, as if there is no way out. Only the most resilient do not give up. Still, there is no guarantee that life will get better — and those in poverty know this all too well. They either become hardened or submit to fate. You don’t live life, you don’t thrive — you survive. You wonder if you are predestined, like a caste in another country, to live out a life destitute of fulfillment — whether financial, professional or just having a better life.
Yes, some people escape poverty:
Enduring poverty is not the end of hope or life. The key things needed to break down the walls that imprison those within poverty are: outside influences, support networks such as friends or family, awareness of other opportunities and access to resources.

With this combination, a new life is possible.
I see part of the solution is to bring those in poverty into a community, one that can provide resources and opportunities.

The Harvard Magazine has an article written by Cara Feinberg that discusses the research of behavioral economist Sendhil Mullainathan. He has been studying the effects of scarcity on the brain.

If a mind focuses on one thing, other abilities, such as self-control and long-term planning, often suffer. When a person experiences scarcity of something he or she focuses on whatever is scarce, to the detriment of other things. The important point of this research is that this can happen to anyone who experiences scarcity.
Their argument: qualities often considered part of someone’s basic character—impulsive behavior, poor performance in school, poor financial decisions—may in fact be the products of a pervasive feeling of scarcity. And when that feeling is constant, as it is for people mired in poverty, it captures and compromises the mind.

This is one of scarcity’s most insidious effects, they argue: creating mindsets that rarely consider long-term best interests. “To put it bluntly,” says Mullainathan, “if I made you poor tomorrow, you’d probably start behaving in many of the same ways we associate with poor people.” And just like many poor people, he adds, you’d likely get stuck in the scarcity trap.
There is a type of scarcity – scarcity of time – that will help everyone relate to the scarcity of money. When a person overcommits a looming deadline can increase motivation and focus. But while the most important task is getting done lots of other tasks are slighted and put off.

One of Mullainathan's studies was of sugar cane farmers in the south of India. They harvest their crop once, maybe twice, a year. Before harvest finances can be tight, after harvest the farmers had no financial worries. IQ tests taken before harvest resulted in scores noticeably lower than tests taken after harvest.

This research builds on work done by Daniel Kahneman and Amos Tversky, which led to a Nobel Prize.
The pair’s work inverts the long-held thinking that the poor are poor because they make bad decisions, Kahneman added. “Instead, people make bad decisions because they are poor.”
For example, to most people payday lending is high-risk borrowing and seems ridiculous. But for the poor the scarcity of today clouds thinking of long-term consequences. And actions taken under the influence of scarcity usually lead to more scarcity.

So how to get out of poverty? Policymakers needs a shift in perspective. Not what's wrong with the person, but what's wrong with the situation.

An example is a job-training program. A poor person must deal with being poor then arrange child care and transportation to attend class. Frequently, they are mentally depleted by the time the get to the classroom door. It is likely they will miss a session. Such students have a harder time recovering from a missed week. Dropping out becomes likely.

So tweak the class schedules a bit. Start a second class a week or two behind the first. If a student misses a class they can switch to the second session. Some say this is coddling, a substitute for personal responsibility. The researchers say no, it is adding a bit of fault tolerance into a system where poor people do take on responsibility. Slipups, common when stressed by poverty, don't undo hard work.

Policymakers are showing interest in how to use this research. Last year the White House formed a Social and Behavioral Sciences Team (the "Nudge Unit"). And the research continues. The social aspect of a solution is as important as the technological solutions.

The article discusses scarcity of money (and food) and scarcity of time. That led to an interesting question that came to me from reading some of the comments. What scarcity do the wealthy face? Scarcity of emotion? Spirit? Community? Do they hide it with obsessions about food and status?

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