Budget constraints impose scarcity and are based upon

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budget constraints impose scarcity and are based upon

Scarcity: Why Having Too Little Means So Much by Sendhil Mullainathan

Audiobook: 8 hrs and 47 mins

A surprising and intriguing examination of how scarcity—and our flawed responses to it—shapes our lives, our society, and our culture

Why do successful people get things done at the last minute? Why does poverty persist? Why do organizations get stuck firefighting? Why do the lonely find it hard to make friends? These questions seem unconnected, yet Sendhil Mullainathan and Eldar Shafir show that they are all are examples of a mind-set produced by scarcity.

Drawing on cutting-edge research from behavioral science and economics, Mullainathan and Shafir show that scarcity creates a similar psychology for everyone struggling to manage with less than they need. Busy people fail to manage their time efficiently for the same reasons the poor and those maxed out on credit cards fail to manage their money. The dynamics of scarcity reveal why dieters find it hard to resist temptation, why students and busy executives mismanage their time, and why sugarcane farmers are smarter after harvest than before. Once we start thinking in terms of scarcity and the strategies it imposes, the problems of modern life come into sharper focus.

Mullainathan and Shafir discuss how scarcity affects our daily lives, recounting anecdotes of their own foibles and making surprising connections that bring this research alive. Their book provides a new way of understanding why the poor stay poor and the busy stay busy, and it reveals not only how scarcity leads us astray but also how individuals and organizations can better manage scarcity for greater satisfaction and success.

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Published 03.01.2019

Introduction to Budget Lines (Budget Constraint)

How individuals do the best they can, and how they resolve the trade-off between earnings and free time. There are hours in a week, so after 40 hours of work, you are left with hours of free time for all your non-work activities, including leisure and sleep. Suppose, by some happy stroke of luck, you are offered a job at a much higher wage—six times higher.
Sendhil Mullainathan

Austerity and scarcity: About the limits and meanings of liberal economy

The starting point of this article is the observation that current debates on austerity and scarcity go beyond questions of economic policy. Issues of scarcity and austerity mobilise antagonistic assumptions about what it means to face economic reality. They entail specific notions about what the bounds of economy are or should be. As such, they can tell us something about the way debates about the meaning and limits of liberal economy are structured. This article sets itself the task to start unpacking the conceptual and genealogical making and unmaking of the links between scarcity and liberal economy. It argues that scarcity should be understood as a variable social device for inculcating modes of futurity. Scarcity as a device entails the articulation of modes of economic individuation and collectivisation, and is inextricably tied to a moral economy of worth.

Choice in a World of Scarcity

Just as utility and marginal utility can be used to discuss making consumer choices along a budget constraint, these ideas can also be used to think about how consumer choices change when the budget constraint shifts in response to changes in income or price. Indeed, because the budget constraint framework can be used to analyze how quantities demanded change because of price movements, the budget constraint model can illustrate the underlying logic behind demand curves. After thinking about her total utility and marginal utility and applying the decision rule that the ratio of the marginal utilities to the prices should be equal between the two products, Kimberly chooses point M, with eight concerts and three overnight getaways as her utility-maximizing choice. How does this rise in income alter her utility-maximizing choice? Kimberly will again consider the utility and marginal utility that she receives from concert tickets and overnight getaways and seek her utility-maximizing choice on the new budget line. But how will her new choice relate to her original choice? The possible choices along the new budget constraint can be divided into three groups, which are divided up by the dashed horizontal and vertical lines that pass through the original choice M in the figure.

3 COMMENTS

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  2. Russell d. L. says:

    Budget constraints impose scarcity and are based upon If a city government spends a good deal of money on crime prevention and also on infrastructure.

  3. Philip D. says:

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