Rethinking Scarcity in Economics

Mullainathan, S., & Shafir, E. (2013). Scarcity: Why having too little means so much. Penguin UK, 2013; pp. 304, Rs. 504.

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Economics is often described as the science of scarcity; indeed, if there is any single foundation for economic science, it may well be in understanding the way society utilizes resources. While almost every theory in economics hinges on understanding decision-making under various conditions (uncertainty, initial endowments, among others), it is only in the past three decades that psychological factors have been incorporated into economic models of decision-making. Scarcity is the latest in a spate of behavioural economics research that looks to build a comprehensive and cohesive economic theory of decision-making with strong foundations in psychology (see also: Nudge [Thaler and Sunstein, 2003]; Thinking, Fast and Slow [Kahneman, 2011]; The Honest Truth About Dishonesty [Ariely, 2013]). In defining scarcity as a ‘mindset’, Sendhil Mullainathan and Eldar Shafir are able to argue for altered decision-making processes and outcomes when we perceive that we have too little, which is not as ubiquitous as physical scarcity of resources that economics studies.

First, the authors propose a taxonomy of various concepts (drawing from psychological science) that define scarcity. At the heart of this theory are two interrelated ideas of mental bandwidth and tunnelling. Intuitively, bandwidth refers to the mental capacity of an individual to focus on the task at hand under constrained processing capacity, while tunnelling refers to the refinement of our mental faculties toward a task that requires our immediate attention, that is, the one that is ‘causing’ the scarcity. Over the course of the book, the authors propose a cost-benefit approach to understanding how scarcity works: it often endows us with the short-term benefit of being able to focus better on the task at hand, but also tends to cost us our attention toward other concerns, leading to suboptimal decisions.

Scarcity is often seen in the form of three dimensions: (a) money or financial considerations; (b) time or temporal constraints; and (c) social constraints. While (a) and (b) are common areas of research in economics (particularly behavioural economics), the influence of social constraints on decision-making has only recently been explored. The authors argue that scarcity in the social dimension could refer to social isolation; for example, not having many friends or an active social life. Thus, socially isolated individuals may tend to perform worse under situations with high scrutiny, such as a date or a job interview, relative to situations where their every action is not observed.  However, simply being commonly drawn from the underlying theory of scarcity need not imply that poverty influences decision-making in the same way that being socially isolated or busy would.

The final part of the book deals with applying scarcity to everyday situations, organizational behaviour, and designing policy for individuals affected by scarcity (not unlike the libertarian paternalism in Nudge). Taking varied examples from commercial airline pilots to parenting, the authors provide cogent arguments about how people’s decisions are affected by their mental capacity as well as the environment that creates such constrained mental capacity. Despite the strong background work carried out by the authors, the book relies heavily on theoretical and hypothetical arguments, rather than employing empirical evidence (as most well-formed economic theories eventually do).  Additionally, there is little discussion of the types of psychometric tests that may be used in order to comprehensively measure scarcity, perhaps in an effort to keep the material accessible to non-scientific readers. This is perhaps a notable future course of research in scarcity and decision-making, bolstering empirical evidence for its influence.

The theory of scarcity as proposed is a novel conceptual leap for the fields of economics as well as psychology. This book is better taken as a starting point to an evolving area of research and thinking that holds considerable weight for understanding what goes on in the process of human decision-making. To some extent, Scarcity also deals with the issue of how much the environment in which the decision-maker is placed in influences decisions, and further how this environment may be endogenously determined by the decision-maker. Indeed, there is much to be learnt about behavioural economics by pursuing this line of inquiry.

Anirudh Tagat

Self-Care: Create your own calm

“Self-Care is not selfish. You cannot serve from an empty vessel.”

Over the course of their training, psychologists have often been told to maintain objectivity in their work. They are supposed to suspend their personal beliefs and feelings and look at clients with clear glasses. However, psychologists cannot discard empathy and compassion for they are the tools that help them connect with clients. Without these two, a psychologist is rendered as a mere robotic device that hears their clients, but does not listen.

However, the act of being compassionate and empathetic comes with a hidden cost, especially for clinical psychologists as they traditionally see clients with more complex issues. Compassion fatigue and emotional burnouts are prevalent in increasing rates amongst helping professionals. Compassion fatigue is a psychologist’s reduced capacity to feel empathy, positive regard, or authenticity for their clients and is usually “the natural consequent behaviours and emotions resulting from knowing about a traumatizing event experienced or suffered by a person” (Figley, 1995, p. 7, as cited in Adams, Boscarino, & Figley, 2006). Psychologists use compassion to increase the effectiveness of their therapy. Unfortunately, feeling compassion for clients also puts psychologists at the risk of compassion fatigue. It becomes a serious issue as it decreases psychologists’ competence in helping their clients. The APA Ethical Principles of Psychologists states that “psychologists strive to be aware of the possible effect of their own physical and mental health on their ability to help those with whom they work.” This means that a psychologist shouldn’t practice when they find themselves experiencing compassion fatigue as it affects their ability to foster the well-being of their clients.

Experiencing compassion fatigue for a longer duration can lead to an emotional burnout. It is characterized by emotional and physical exhaustion, depersonalization, and reduced personal accomplishment (Maslach, Schaufeli, & Leiter, 2001). When psychologists do not release their emotions regarding their work, the resulting emotional exhaustion provides the perfect breeding ground for emotional burnouts. All mental health practitioners experiencing burnout disengage from work, which consequently leads to decreased competence. Both compassionate fatigue and emotional burnouts can create feelings of depression, anxiety, and helplessness amongst therapists. Ironically then, the therapist herself/himself becomes the client.

All helping professionals like nurses, emergency room personnel, police, and mental health providers are equally at risk for becoming victims of both compassion fatigue and emotional burnouts. However, clinical psychologists who tend to survivors of trauma are at a unique risk of experiencing vicarious trauma. Vicarious trauma occurs when psychologists develop trauma reactions after being exposed to their client’s traumatic experience (Trippany, Kress, & Wilcoxon, 2004). Psychologists start exhibiting symptoms of Post Traumatic Stress Disorder such as experiencing intrusive thoughts and images of their client’s stories along with physiological arousal and somatic complaints. Researchers working in the field of trauma are also not safe from vicarious trauma (Bell, Kulkarni, & Dalton, 2013). All psychologists are vulnerable to compassion fatigue, emotional burnouts, and perhaps, vicarious trauma. The only thing that can buffer the effect of this debilitating kryptonite is self-care. This includes all behaviours and actions taken to increase mental and physical resilience and well-being. Self-care acts as a safeguard against psychological distress caused over the course of a psychologist’s career; it recharges the therapist and helps them cultivate optimism.

Thus, self-care helps a therapist navigate around these pitfalls of compassion fatigue and emotional burnout. The next blog in this series will include various kinds of self-care techniques as well as some common things that get in way of it.

Prachi Bhuptani

Demystifying Research for the Indian Psychologist

Besides being engaged with clients or students, some psychologists might undertake research, not just as an alternative to lazy weekends, but to earn a decent living. In fact, most psychologists are meant to practice, teach, and research, in some combination or the other.  These three distinct (yet interconnected) roles require different sets of skills, and graduate and post-graduate training is usually targeted to develop such skill sets. Psychologists who practise can also conduct research with clinical samples, similar to researchers who conduct studies with their students. As an undergraduate student of psychology you may well be tired of being asked to read people’s minds, but you also should have taken part in a professor’s research project.

However, most Indian students of psychology have hardly had this opportunity, and that is a cause for great concern. As a result, most undergraduate (and in some cases, postgraduate) students hardly have any understanding of research in psychology and research methodology.

So how do undergraduate students grasp what research is? One way is through the arduous Lab sessions that are a mandatory part of the curriculum for psychology majors. And another way is… Um… Yes! When they’re required to complete a Research Methods course as part of post-graduate study. And then, training in research is complete (?). At least as complete as it could be to receive a passing grade, anyway.

Given such limited exposure to the rigors of scientific research in psychology even at the postgraduate level, chances are the student will often be dissuaded from doing/participating/assisting in research for the rest of their careers. Unless of course, the resilient few go on to complete an MPhil or a PhD (and I completely empathize with you!). Yet, an additional degree often does not guarantee adequate training in research, because the quality of training vastly differs from one University to the next. No, this isn’t the difference between one institute teaching Path Analysis and the other not; this is the difference between being exposed to a flourishing research environment, with innovative principal investigators, and enthusiastic participants, and an ethics committee that distinguishes right from wrong, and co-investigators who cooperate more than compete, and… basically, a culture for research.

This is a utopian view, where systems and processes are stable, and the profession of a social science researcher commands respect. But reality  tends to be a bitter pill. The notions of research and the profession of a researcher are often misconstrued, misperceived, and misunderstood, not just in a discipline like psychology, but in the sciences as whole (which, by the way, include social sciences). Scientific illiteracy can contribute to such a state of affairs, where individuals may not only be ill-informed about how to think analytically and interpret scientific conclusions presented in popular media, but may also be ill-informed about what the components of science and research really are. Although critics of this opinion may throw Indian literacy figures in the air, I oppose the criticism by stating that most individuals who have the fortune of receiving higher education are literate, but are often scientifically illiterate. And this lack of information, combined with poor monetary incentives to continue researching, significantly contributes to students being dissuaded from entering research.

So now, I’ll break down some myths of research in India that I’ve come across.

Yes, research is fun, if you make it so.

No, natural science research and social science research are not at par; the former often receives more funding (often for completely valid reasons, too).

Yes, research requires resilience, commitment, and internal motivation (in more than equal proportions).

No, the monetary payoffs aren’t great; but the feeling of contributing to knowledge more than makes up for it.

Yes, if you’re good at it, you’ll go places, get published, and the whole deal.

Yes, you’ll receive credit for your work, most of the time.

No, you won’t receive funding for all your ideas.

Yes, research is creative! Scientific creativity is prized above all else.

Yes, you can choose any topic under the sun that can be plausibly studied about, in a scientific manner.

No, you won’t be able to plagiarize; integrity is one of the corner stones of academic research.

Yes, seeing your name in print in an article that you’ve toiled over for months on end really makes it worthwhile.

No, it isn’t easy.

It’s a tough road ahead for social science researchers here, and I admit, it isn’t all roses and peaches. But I’d urge students of psychology, and other social science disciplines to give the profession a chance. After all, dismissing something without knowing what it is, is a marker of scientific illiteracy. In the spirit of the indomitable Mr. Spock (and Leonard Nimoy): “Live long and prosper!” and research!

 Hansika Kapoor