Scarcity: Why Having So Little Means So Much

Sandra Ray, CIRS Manager, 2-1-1 Texas/United Way HELPLINE United Way of Greater Houston Objectives Review various models of poverty Learn how scarcity impacts lowincome persons and their ability to move out of poverty Discuss scarcity model and its implications for helping I&R callers Which view of poverty we ultimate

embrace will have a direct bearing on the public policies we pursue. B.R. Schiller (1989 Economics of Poverty and Discrimination) Individual Theory of Poverty Poverty is individual People in poverty are lazy, uneducated, ignorant Individual or family irresponsibility requires stiff penalties: Paternalistic intervention needed to get their lives together

A county program asked schools to identify children not attending school more than 10 days/school year without medical excuses. Families receiving TANF benefits are withheld to enforce school attendance Individual model indicates that same people will stay in poverty year-in/year-out. Structural Theory of Poverty Poverty is structural Holes in economic system that provide inadequate income.

Allows for fluid movement of persons in & out of poverty Person impoverished today may be laid off Person can be better off a year from now by obtaining a job to increase income security Structural Theory of Poverty (cont.) Structural theory states same persons are not in poverty year-in/year-out. 3 year longitudinal Survey of Income & Program Participation

1/3 of Americans were in episodic poverty at some point in 3 year longitudinal study Only 3.5% were in episodic poverty all 3 years of study Other data indicate 4 in 10 adults experienced poverty an entire year sometime between ages 25-60. Scarcity There is already a science of scarcity. You may have heard about it. Its called economics. (Mullainathan and Shafir, 2013,

p. 10) Scarcity is based on individual perception of scarce resources (time, money, etc.) Not just a physical constraint it is 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. How Does Scarcity Affect the Mind? HOBBES: Do you have an idea for your story yet? CALVIN: You cant just turn on creativity like a faucet. You have to be in the right mood.

HOBBES: What mood would that be? CALVIN: Last-minute panic. Scarcity affects how we focus oWhen a report is due next week, we delay completing it. oWhen a report is due this afternoon, you shut out everything else to complete the task. oClosing out everything else forces us to choose between completing the report on time and other options: eating lunch, taking a break, reading email, etc. Deadlines do not increase productivity

Tunneling & Scarcity Tunneling think tunnel vision focusing only on what is immediate instead of long-term Focus is positive scarcity focuses on what seems, at that moment, to matter most. Tunneling is not positive scarcity leads us to tunnel and neglect other, possibly more important things. Tunneling operates by changing what comes to mind most readily. I took a speed reading course and read War and Peace in twenty minutes. It involved Russia.

Woody Allen Tunneling & Scarcity (cont.) Tunneling can lead to 2 things: Multi-tasking checking email while listening to a webinar Theres a price to pay for multi-tasking What did you miss on the webinar? Did you respond appropriately to the email? Neglecting other tasks completely Missing time with family to finish a deadline Neglecting budget to focus on bill that needs to be paid

The Bandwidth Tax Bandwidth = computational capacity or ability to pay attention, to make good decisions, stick with plans and resist temptations Study in New Jersey of 6th graders: 1 side of the school faced the train tracks with trains continually rumbling past sound was not overly deafening momentary disruptions 6th graders on side facing tracks were a full year behind 6th graders on the quiet side of the school Students appeared to get accustomed to the sounds of the trains, yet their brains never fully

adjusted and focus was continually divided between classroom task and the noise on the train tracks. The Bandwidth Tax (cont.) 2-1-1 caller example: oCaller has minimum wage job, family of 4 and husband laid off 2 months ago. oMoney is especially tight. oEmployee begins to perform poorly at work, despite being on time for work every day, performing basic tasks and meeting most expectations oWhy? oPreoccupied by thoughts of How do I pay rent

next month? or Should I skip paying the electric bill to buy food? The things that distract us occupy our minds and need not come from external factors (i.e. the train noise) Helpful Definitions Cognitive capacity - our ability to solve problems, retain information, engage in logical reasoning, and so on. Central feature of cognitive capacity is fluid intelligence (capacity to think logically, analyze and solve

novel problems, independent of background knowledge) Executive Control ability to manage our cognitive activities, including planning, attention, initiating actions and controlling impulses Scarcitys Effect on Cognitive Control Executive Control relies heavily on selfcontrol Self-Control ability to weigh the future Do I eat cake now? If I eat the cake, what will happen to my diet, blood sugar, etc.

We use executive control to direct attention, initiate an action, inhibit an intuitive response, or resist an impulse. We appear to weigh the future inconsistent why? Scarcity Taxes Bandwidth Attacks on bandwidth makes it harder for us to control our impulses. If you are stressed over a deadline, more likely to want the cake Experiment asked volunteers to remember a 2

digit or an 8 digit number & recite it 30 minutes later While waiting, volunteers given an 8 digit number were more likely to eat a cupcake vs. fruit And, because scarcity taxes bandwidth, this suggests that scarcity not only can lower fluid intelligence, but can also reduce self-control. SO WHAT? Prove to me that this happens IRL (In real life for those of you who dont

Twitter or have Teenagers) Scarcity in the Real World Study looked at sugar cane farmers in India Farmers received 1 annual payment when sugar cane crop is sold Expected to find some degree of scarcity among poorest farmers Interesting feature: surrounding neighbors all harvested at varying times of the year In months before harvest: 78% had pawned something in months before 99% had taken a loan

VS 4% pawned in months after harvest Only 13% had taken a loan in months after harvest Scarcity in the Real World (cont.) Measured farmers bandwidth in month prior to harvest & month post harvest Regardless of economic status year-round, farmers exhibited worse on fluid intelligence and executive control pre-harvest (poor) than post-harvest (rich) Pre-Harvest farmers scored 9-10 IQ points lower (fluid intelligence) and were 11% slower

in responding with 15% more errors (executive control) In other words, the farmers appeared less intelligent, less able to make good decisions and exhibited poorer response capabilities What does this mean for I&R? Friday afternoon callers for food, rent, electric assistance Why do callers procrastinate? Using scarcity model: These callers are preoccupied with multiple issues during the week

Only when food, rent and electric assistance are pressing concerns does person decide to seek help Increases frustration when resources arent available later in week By Monday, these callers may be even more taxed and less able to focus on next issue still focusing on the last weeks issue. What does this mean for I&R? Using this model, it makes it easier to understand why callers seem to have the same issues throughout the year. Are they less intelligent?

Almost always answer is no The answer is likely that scarce resources tax their minds ability to process and think longterm. After Studying Scarcity: Sandras Theories of Impact for I&R Callers Consider: if callers who are poor year-round receive a large income tax return, do they perform better on cognitive tests in the weeks after the return is received? Research suggests the answer would be yes. Tax time, for example is generally best time

to discuss savings and plan for future since callers may be more likely to make positive decisions about budgeting/money management that affect future financial issues. Add Scarcity to Your I&Rs Training Library Amazon hardcover, paperback, Kindle, Audible, audio CD Barnes & Noble hardcover, paperback, audiobook & Nook iTunes iBooks & Audiobook

MacMillan www.indiebound.org (may have some retail outlets near you) Disclaimer: I am not affiliated with authors, nor am I receiving compensation for reviewing book or developing training from it. Questions? Sandra Ray, CIRS Manager, Training & Quality Assurance 2-1-1 Texas/United Way Helpline Houston, TX [email protected]