Scarcity: Why Having Too Little Means So Much

The authors use an analogy to illustrate the experience of abundance versus scarcity: They describe the process of packing a large suitcase versus a small one. The large suitcase, with ample space, allows for casual packing without much thought for trade-offs, whereas the small suitcase necessitates careful selection and prioritization of what to include. Mullainathan and Shafir extend this analogy to various aspects of life, arguing that scarcity compels individuals to engage in trade-off thinking, in which each decision comes at the expense of another opportunity.

The authors then introduce the concept of “slack,” which they define as the buffer or leeway in one’s resources that allows one to operate without constantly making trade-offs. Slack in a budget, schedule, or even calorie intake enables a more relaxed approach to decision-making, where not every choice needs to be scrutinized for its opportunity cost. However, scarcity diminishes slack, forcing individuals to make more deliberate and often stressful decisions about how to allocate their limited resources.

Mullainathan and Shafir describe how slack—or the lack thereof—shapes one’s ability to deal with unexpected events and make mistakes. They illustrate this with the story of two men, Alex and Ben, who purchase the same leather jacket.