More on Scarcity, Slack, Bandwidth and Impact on Poor and Public Policy

Citizen Wealth Financial Justice

15952477_BG1New Orleans   If you thought you had learned enough about the book, Scarcity:  Why Having Too Little Means so Much, by Sendhil Mullainathan, a Harvard economist, and Eldar Shafir, a Princeton psychologist, and the impact their work should have on public policy for the poor and the rest of us, you’re wrong, because here comes some more.

            Under President Clinton’s TANF “welfare as we know it” so-called reforms and the draconian policies being imposed by many states around the country now, there are often rigid ceilings on the maximum amount of time that families can receive welfare benefits before being kicked off the program.  Rather than understanding how scarcity works and its impact on people and their very brainpower, many political ideologues who are religiously devoted to the widely dis-proven notion that welfare recipients don’t want to work, believe that something like a 5-year limit will force them to get off their rumps and get a job.   Mullainathan and Shafir marshal extensive evidence about how all people think to argue that for those on welfare fighting scarcity on an immediate basis, such a deadline really only has meaning towards the end of the period as the bell is about to ring ending the payments.  They intriguingly argue, almost as devil’s advocates, for the haters that limits, if desired, would work better for shorter time periods with opposite incentives, even if benefits might be temporarily reduced or expenditures for other incentives increased.

            I’m not sure about that, but I’m enthusiastic about their policy recommendations for additional payments to poor families and workers to “expand bandwidth” to make success likelier whether for job searches or education.  They are clear-eyed about their skepticism about the values of microfinance, degrees, and other quick fixes to alleviate poverty, but are profound in arguing that if you pay a mother for childcare, thereby relieving the constant daily stress of scarcity in finding care for your children while trying to work or go to school, that the advantages would be huge.  They are also spot on in their argument that one of the crippling obstacles for lower income workers, especially with children, is the erratic nature of their work hours forcing a huge scramble every time the schedule changes from week to week. 

            Before you think these are just challenges for the poor, the problem of procrastination or too much “slack” for some while nothing but scarcity for others, jumped out at me just yesterday in reading a piece in the Wall Street Journal bemoaning the fact that the vast amount of 401k contributions are made in April of the year following the year claimed with only 10% or so coming from regular January through December contributions.  In a perfect example of what the book argued, the writer and his sources bemoaned the loss of revenue the investor would have received by having sat on the money for 16 months rather than putting it aside more regularly and on and on, but as the authors could have told them over and over, economic self-interest is not that good an incentive when there’s too much time to act.  They found some of the same principles when looking at work deadlines for projects and how people performed more productively, whether workers or students, with a series of short deadlines than having long lead times.  Looking at enrollment for Obamacare, I would bet they would argue that even with a perfect website there will be huge surges in enrollment at the March 31st deadline, just as there was last December, because that’s just the way people are.

            They gave an example of pilots making the mistake of lowering their wheels rather than their flaps on takeoffs and finding that the problem was isolated to bomber pilots and the culprit was not the pilot or their training or any of the fixes considered, but the design of the control panel on that particular plane that led to too many wrong grabs.  It wasn’t the people but the panel. 

The same could be said about the failure of so many public programs and other organizational projects.  Making them work means not blaming the people, but changing the way the programs work and are designed.  There are powerful lessons here.