No debate around the Indian economy is complete without a reference to the very real issue of continued poverty. In this context, a new book 'Scarcity: Why Having Too Little Means So Much' written by a Harvard economist and a Princeton psychologist has an interesting ring to it.
Here is an excerpt of its review from the New York Review of Books:
"Economists focus on the problem of scarcity—on how people allocate their resources (including both time and money) in the face of many competing demands. In their extraordinarily illuminating book, the behavioral economist Sendhil Mullainathan and the cognitive psychologist Eldar Shafir explore something quite different, which is the feeling of scarcity, and the psychological and behavioral consequences of that feeling. They know that the feeling of scarcity differs across various kinds of experiences and that people can feel “poor” with respect to money, time, or relationships with others.
But their striking claim, based on careful empirical research, is that across all of those categories, the feeling of scarcity has quite similar effects. It puts people in a kind of cognitive tunnel, limiting what they are able to see. It depletes their self-control. It makes them more impulsive and sometimes a bit dumb. What we often consider a part of people’s basic character—an inability to learn, a propensity to anger or impatience—may well be a product of their feeling of scarcity. If any of us were similarly situated, we might end up with a character a lot like theirs. An insidious problem is that scarcity produces more scarcity. It creates its own trap."
The economist, too, has reviewed the book, which sounds less impressed but still has interesting stuff to say about it:
Read the full review on NY Review of Books here.
Read the full review on the Economist here.