Sendhil Mullainathan, Eldar Shafir
A lack of resources does more than limit your choices, because it fundamentally rewires your cognition. Scarcity automatically captures your attention, severely taxes your mental bandwidth, and traps you in perpetual reaction.
Scarcity continuously consumes mental bandwidth by forcing the mind to dwell on pressing shortages, which significantly degrades overall cognitive performance, problem-solving ability, and impulse control.
While severe constraints can yield a focus dividend that temporarily boosts productivity on immediate tasks, this intense concentration inevitably leads to tunneling, causing people to neglect important long-term risks and opportunities.
Operating under extreme budget constraints forces individuals to evaluate the exact opportunity cost of every decision, making them highly consistent and rational in valuing resources but leaving them mentally exhausted.