Scarcity

PACKING AND SLACK

You are about to leave on a business trip.

Imagine how you might pack a suitably large suitcase. You might start by putting in all the essentials—toiletries, business clothes, electronics. With room left over, you might add a few less essential items. You pack an umbrella in case it rains. You take a sweater in case it is cold. You pack your gym clothes and running shoes. (Perhaps this time you’ll actually get in a workout.) Satisfied, you close the suitcase with some room to spare. There are other things you could take, but you feel fine with what you have.

Now imagine instead packing a small suitcase for the same trip. As before, you might start by casually tossing in the bare essentials. But these already quickly fill the suitcase. You take everything out and pack again, this time more methodically. You carefully stack and arrange. You become creative in making room. You stuff socks and a phone charger inside your shoes and uncoil your belt and slide it along the suitcase edge. This leaves a bit of room to spare. Should you take the sweater? The (optimistic) gym clothes? The umbrella? Is it better to risk the rain and give yourself at least a chance to start getting in shape? Packing the small suitcase forces trade-offs. After some deliberation, you choose the sweater and squeeze the suitcase shut.

Both the large and small suitcase impose limits: no matter the size of the suitcase, you obviously cannot fit every possibly useful item. Both suitcases require a choice of what to pack and what to leave out. Yet psychologically only the small suitcase really feels like a problem. The large suitcase is packed casually. The small suitcase is packed carefully and intently.

This is a metaphor for many other problems in life. We have a time suitcase that must fit our work, leisure, and family time. We have a money suitcase into which we must fit our housing, clothing, and all our expenses. Some of us even have a self-imposed calorie suitcase into which we must fit all our meals.

As this metaphor illustrates, when scarcity focuses us, it also changes how we pack. It changes how we manage each dollar, each hour, or each calorie. It also leaves us with differently packed suitcases. The big suitcase is packed carelessly, with room to spare. The small suitcase is packed carefully and tightly.

Understanding these differences in how we pack is crucial for understanding how scarcity creates more scarcity.

TRADE-OFF THINKING

The cost of one modern heavy bomber is this: a modern brick school in more than thirty cities. It is two electric power plants each serving a town of 60,000 people. It is two fine, fully equipped hospitals. It is some fifty miles of concrete highway. We pay for a single fighter with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people.

—DWIGHT EISENHOWER, 1953

You are at a restaurant, having dinner with friends. The waiter describes the specials and then asks if you’d like to have a drink. You don’t typically order a cocktail but something on the menu catches your eye. How do you decide whether to order it? You may calculate how long before you’ll need to drive. You may wait to see if any of your friends order drinks. You may even wonder whether you’ll be splitting the bill. Or you may consider whether $10 is a reasonable price. What’s notable, though, is the dog that didn’t bark. There is one question you don’t ask yourself: “If I buy this drink, what will I not buy instead?” You do not ask this question because it almost seems silly. It feels as if you can buy this cocktail without giving up any other purchase. It feels as if there is no trade-off.

Think about how remarkable this is. As a matter of basic accounting, of course there is a trade-off. No matter how rich you may be, you have a finite amount of money. If you spend $10 on anything, it is $10 less left for something else (even if that something else is the inheritance you leave your children). Those $10 must come from somewhere. But it often does not feel that way. Many of us make $10 purchases as if there are no trade-offs. We do not have to sacrifice some other purchase just to make this one. Taken to the extreme, it feels as if there is an endless supply of $10 bills in our budget. If pushed, we know at some level that there isn’t, but we do not act that way.

Sometimes, though, we do recognize trade-offs. Picture yourself on a diet and contemplating the same cocktail. Even though the $10 price tag may not lead you to consider trade-offs, the “calorie price tag” might. Suddenly, those extra three hundred calories must be accounted for. Drink that cocktail and something else must be given up. Is it worth forgoing dessert? Or the bagel tomorrow morning? Diets make us calorie accountants. The books must balance. We recognize that having one thing means not having something else. We engage in what we call trade-off thinking.

Of course, for those on a tight money budget, the $10 is just like the dieter’s three hundred calories: the money spent must be accounted for. In the packing metaphor, a small suitcase forces us to recognize that putting in one item means some other item must come out. The packer of a big suitcase who contemplates adding a pair of sneakers simply thinks about whether he wants them. The packer of a small suitcase thinks about what he must take out to make room.

Scarcity forces trade-off thinking. All those unmet needs capture our attention and become top of mind. When we are tight on cash, we are highly attentive to all the bills that must be paid. So when we consider buying something else, all the bills are there, making the trade-off apparent. When we are working on a tight deadline, all the things we must get done are foremost on our mind. So when we think about spending an hour on anything else, the trade-offs again are salient. When time or money is not so tight, we are not as focused and the trade-off is less apparent. By this account, trade-off thinking is an inherent consequence of scarcity.

To test this more rigorously, we did a survey of commuters in a train station in Boston. We asked them to list everything they think about when contemplating buying a TV. All the obvious candidates—the size of the TV, the screen resolution, and the fairness of the price—showed up. When we then divided our sample into lower- and higher-income groups, a pattern emerged. Only some people also reported trade-off thinking, volunteering such thoughts as, “What do I have to give up to buy it?” The people who asked themselves these questions were disproportionately poor. The poor reported trade-off thinking almost twice as often as the better off (75 percent vs. 40 percent). This was a striking difference, especially since the income cutoff we used was at best a crude proxy for scarcity. Some of those whom we classified as well off might well have been experiencing scarcity—for example, some were surely burdened by mortgage payments, credit card debt, college loans, or large families.

The same study produced a noteworthy wrinkle when we conducted it in India. We saw how scarcity is determined by an interaction of one’s budget and the size of items. As before, when asked to think about buying a blender, richer subjects mentioned tradeoffs less than 30 percent of the time while the poorer ones mentioned them over 65 percent of the time. But when we asked about a more expensive item—a television—both the rich and the poor reported trade-offs. Whether or not we think about trade-offs depends on the size of the item relative to our budget. The blender was a significant fraction of the budget for the poor but not for the rich. The TV, in contrast, was a significant expense even for the richer households in India. Put differently, the blender evoked scarcity for some, but the TV—because it would have been big relative to everyone’s budget—evoked scarcity for all, much as contemplating a car would most likely have generated trade-off thinking in most American households.

SLACK

The packing metaphor illustrates why scarcity creates trade-off thinking. We pack big suitcases loosely. Not every nook and cranny is filled. There is space left unused here and there. We call this space slack—the part of our budget that is left untapped because of the way we pack. It is typical of large suitcases. Slack is a consequence of not having the scarcity mindset when we pack with room to spare, of a particular approach to managing resources when we experience abundance. The concept of slack can explain our tendency to consider (or fail to consider) trade-offs and to attend to (or fail to notice) prices.

Imagine that after having packed a large suitcase, you want to add an item. You can just throw it in. No item needs to come out. You do not need to rearrange the contents because the suitcase had extra room to begin with—it had slack. But with a smaller suitcase, adding something necessitates taking something out. Slack is what allows us to feel there is no trade-off. Where does the money for the $10 cocktail come from? If you are well off, the cocktail will feel like it comes at the expense of nothing because in a way it does. Slack picks up the tab. Slack frees us from making trade-offs.

We all have experienced slack in time. On a not-too-busy week, we leave holes in our schedule. You leave a fifteen-minute window between meetings, where in busier times you would have squeezed in a quick phone call. This time is just there, like loose change lying around the house. You feel no compulsion to use it. You do not work hard to keep things tight. When a colleague says she’ll call you sometime between ten and eleven, you don’t bother to pin her down; you just allocate the whole hour for a thirty-minute call.

Many people enjoy slack in money as well. One study showed that high-income shoppers are twice as likely to report that they do not track their spending because they “don’t have to; [they] make enough money.” A Dutch study found that wealthier people don’t practice mental budgeting at all. And financial planners often assume slack. They meticulously account for the big items but then often leave the remainder to be spent as you want. Richard Jenkins on MSN, for example, suggests leaving 10 percent aside as “fun money”—the slack in the budget, literally play money.

Of course, it can be very sensible deliberately and carefully not to spend everything you can. Leaving room for unanticipated expenses can be a conscious, deliberate, and smart strategy, an insurance policy of sorts against life’s vagaries. Even if it takes only twenty-five minutes to get to the airport, you give yourself forty-five minutes, just in case. We, however, do not use slack to refer to the sort of room deliberately created to deal with the unexpected, the kind that’s actually carefully budgeted. You might leave room in the suitcase for later eventualities, say, for shopping while in Rome. But notice, that’s intended slack, the kind you allocate carefully, as you would for any other item.

Slack the way we use it is not space deliberately left unused but, rather, the by-product of packing under abundance. During good times, we don’t meticulously account for every dollar. We generally choose a house and a car that leave us a comfortable amount of room for everything else. We have a rough sense of what kind of restaurants we ought to patronize and how often, so we can stay broadly within our budget. We choose a vacation that is broadly of the kind we can afford instead of calculating what we have in the bank account and choosing one that exactly brings us to the edge of our budget. This mindset is a feature of abundance, and slack is the result.

Why do the poor end up with less slack and the rich with more? A metaphor from nature illustrates our answer.

POOR BEES AND RICH WASPS

No man-made structure is built with the care of a single honeycomb. Young worker bees gorge on honey and excrete tiny specks of wax. The exchange rate is steep: each pound of wax requires eight pounds of honey, which requires more than ninety thousand individual bee trips to collect nectar from flowers. The wax is collected in small clumps while the bees cluster together and use their body heat to warm it so they can mold it. Bit by bit the bees put these pieces into place to create the tile work that makes the honeycomb. The work is piecemeal and local, with no boss to oversee it all. Imagine building a sand castle grain by grain, never stopping to survey where you are and with no one to give you directions. Now imagine doing that with hundreds of your friends, in total darkness. Yet it works. The bees create walls that meet at a remarkably precise 120 degrees, forming hexagons that are perfect to the eye. Each wall is less than 0.1 mm thick, with deviations of only +/− 0.002 mm. That’s a 2 percent tolerance—not a bad building standard. By way of comparison, the National Institute of Standards and Technology allows a 10 percent tolerance in the width of manufactured plyboards used in construction.

Like the bees, mud dauber wasps are also nest builders, but they build their nests out of mud. They then sting spiders and cram as many as two dozen carcasses into the nest, lay their eggs, and seal it. The hatched larvae feed on the stung prey, surviving the winter inside the sealed nest. Unlike honeybees, the wasps are not elegant builders. The cells are roughly cylindrical, but they are plastered together erratically, with none of the precision of the hive.

Why do bees create such precise structures and the wasps such messy ones? Scarcity. The wasps build with material that is abundant: mud. The bees build with material that is scarce: wax. The bees’ wax—like space in a tight suitcase or dollars during hard times—must be conserved. Building badly means wasting wax, which is an incentive to be efficient, to pack well. The wasps, on the other hand, have abundant material, plenty of mud to waste. Wasps can afford slack—to build sloppily—because their building material is cheap. The bees cannot because theirs is expensive.

Something similar happens for the poor and the rich. Imagine that before packing a suitcase, you lay on the bed the items you want to take with you, with the most valuable items on the left and the least valuable ones on the right. For a three-day trip, the first pair of underwear would be on the far left; a fifth pair would be on the far right. You start putting the items in your suitcase starting with the most valuable, from left to right. You can pack quite a few items before your suitcase is full, by which point you’d be packing things you do not care much about, like the fifth pair of underwear. Unused room in the suitcases of the rich comes at the expense of items of little consequence. The suitcases of the poor get full while they are still packing items they very much need. Space is at a premium in the small suitcase, whereas its limits matter less when suitcases are big. Economists call this diminishing marginal utility: the more you have, the less each additional item is worth to you.

There is an almost economic logic to all this: the poor have less slack because they can afford less of it. Packing material—space in the suitcase—is cheap for the rich, like mud, but it is expensive for the poor, like wax. So the rich pack like wasps, casually, inefficiently, and with slack. And the poor pack like bees, carefully, and with no slack.

There is also a deep psychological dynamic at work. When the poor and the rich take a pause from packing, they each have items left outside their suitcase. Because those items that don’t fit have a great deal of value for the poor, the items capture their anxious attention. The poor tunnel on those items and cannot help but wonder, Can I not rearrange and fit these in, too? Packing captures their attention because the items in danger of being left behind matter. When the rich take a pause, the items left out by now are of low value. They could be added, but they could just as well be left out. The rich leave slack because they are less engaged in packing.

WHAT WE BUY WITH SLACK

A house is just a pile of stuff with a cover on it.

—GEORGE CARLIN

Where does all the slack go? If you are like many people, you can see for yourself. Just go to your kitchen and look in your pantry. It is probably full of items bought in the distant past. In this you are not alone. Kitchen cabinets across the United States are full of soups, jams, and canned food that have not been used for ages. So common is this phenomenon that food researchers have a name for it: they call these items cabinet castaways. Some estimates suggest that one in ten items bought in the grocery store is destined to become a cabinet castaway.

In fact, many of our houses are castaway museums. Think of the last time you moved or cleaned out a closet and thought to yourself, “I don’t remember owning this!” These closet castaways are so common that space, not money, becomes the scarce commodity. People need to rent out self-storage facilities to house all their stuff. Some estimate that over $12 billion is spent annually on self-storage, three times as much as is spent on music purchases. In fact, the United States has more than two billion square feet allocated to self-storage space. The Self Storage Association notes that “every American could stand—all at the same time—under the total canopy of self-storage roofing.”

Not surprisingly, the fortunes of the self-storage industry are closely dependent on the slack that comes from abundance. As one writer described in the New York Times Magazine:

“Human laziness has always been a big friend of self-storage operators,” Derek Naylor, president of the consultant group Storage Marketing Solutions, told me. “Because once they’re in, nobody likes to spend all day moving their stuff out of storage. As long as they can afford it, and feel psychologically that they can afford it, they’ll leave that stuff in there forever.” Now [during the Great Recession that started in 2008], though, “there are people who are watching their credit-card bills closer than before,” he said. “They’re really paying attention to the stuff they’re storing and realizing that it’s probably not worth $100 a month to keep. So they just get rid of it.”

Slack frees us to indulge in castaways. It allows us to buy an exotic canned soup or a remote-controlled model airplane on a whim. With slack, we do not feel compelled to question how really useful an item will be. We do not ask, “Will I end up using that juicer enough to make it worthwhile?” or “Will I really ever wear that bold pair of shoes to warrant buying them instead of a pair of pants?” Because there is no trade-off, we simply think, “Why not?” Since slack frees us from trade-offs, it licenses us to buy items that on their own, devoid of any other considerations, have some appeal.

The result, of course, is inefficiency and waste. When we have plenty of time, we loll around, and time evaporates. Minutes here and there add up to hours frittered away. We end up getting six hours of good use out of a sixteen-hour day. We take a week to finish a job we know could have been done in two days. And again, we are not referring here to hours you thoughtfully allocated to “having nothing important to do.” We mean those that were never allocated at all. When we have free time, we fritter and waste the hours in an offhand way. And when we have easy money, we buy things we’ll cast away and forget. We end up with hours we are not sure what we did with, cabinets full of soups we don’t eat, and storage units full of items we forgot we own.

But slack is more than just inefficiency. Consider the following hypothetical decision we presented to a group of university students:

Another group was presented with the same problem with an option added (shown in bold), which provided further enticement to skip out on the library.

You plan to spend the evening in the library working on a short paper due the following day. As you walk across campus, you discover that an author you have always admired is about to give a public lecture and that—in another hall—they are about to screen a foreign movie that you have been wanting to see. Do you proceed to the library anyway or go to the lecture or to the movie instead?

Given only one appealing alternative, the lecture, 60 percent stuck with the library. But given two appealing alternatives, even more people (80 percent) chose the library. This looks like a peculiar outcome: people are given more attractive options, yet, they are less likely to choose any of them. It happens because choice is hard. When the choice is between the lecture and the library, you can decide which is more important that day—studying or leisure. But when there are two leisure activities, you have one more choice: which is the leisure activity that’s right for you? Faced with this additional choice, people simply say, “Forget it. I’ll just stick with the library.” They avoid the burden of choosing by sticking with the original plan, in effect choosing not to choose.

Slack provides an easy way to avoid the burden of choosing. The only reason you must choose between the lecture and the movie is that your time budget is tight. If you had slack, you could do both. When you’re shopping for clothes and see two things you like, a tight budget forces you to choose. If you see two flavors of ice cream you like, a diet forces you to pick the one you prefer. Slack—in money, time, or calories—allows you the luxury of not choosing. It allows you to say, “I’ll take both.” Contrary to Milton Friedman’s ideal of “free to choose,” slack leaves us free not to choose.

ROOM TO FAIL

Slack provides one other important benefit, captured in the following vignette:

Alex and Ben walk by a clothing store. Each sees a leather jacket. Neither owns one but both have always wanted one. This one is perfect. It just costs too much, $200, and it’s not terribly practical. The right thing to do is to walk away, but long-standing desires are hard to resist. Each says, “Why not?” gives in, and makes an ill-advised purchase.

Alex is financially comfortable at the time. He goes home and thinks, “What a bad purchase!”

Ben is tight for cash. He goes home and thinks, “What a bad purchase!” Followed by, “Now I won’t have the money to repair my car. That might make me late for work, which might lead to…”

Ben faces a more challenging world than Alex. By their own admission, both Alex and Ben gave in to a $200 temptation and made a foolish purchase. Both are out the same price of the leather jacket. Alex can brush off the mistake. Ben cannot. Same mistake, different consequences. Ben’s world is not more challenging because he faces pushier salesmen or higher interest rates. It is more challenging because he lacks slack.

How will the $200 temptation be financed? For well-off Alex, his slack pays for it. Even before the ill-advised purchase, he was not spending up to his full budget. The $200 will come from that leftover space. The financially tight Ben, on the other hand, has no slack. His $200 must come at the expense of something he had planned on, something he thought was essential. His mistake costs him something real. Slack not only absolves you of the need to make trade-offs. It means mistakes do not entail real sacrifice.

Consider a similar example with time. In one study, psychologists asked college seniors to estimate the time required to finish their senior theses. The average estimate was thirty-four days. When probed for the possibility of good and bad turns of events, they agreed it could range from twenty-seven days (if everything went really well) to forty-eight days (if things went badly). In reality, it took them fifty-five days on average. This is not just the folly of inexperienced undergraduates. Everyone from managers to movie producers suffers from the planning fallacy: we are all much too optimistic with our future plans. Even top-notch chess players can allocate too much time to earlier rounds and end up in “time trouble,” with too little time on the clock later in the game.

Though the planning fallacy is common to many people, not everybody experiences the same consequences from it. Suppose you have a project due at the end of the month. In reality the project requires forty hours of work, but you mistakenly think it will take only thirty, and you plan accordingly. As the deadline approaches, your error becomes clear. You are ten hours short. How do you make up the shortfall?

Suppose you are not terribly busy. The shortfall is nothing more than an annoyance. You look at your schedule and find ways to create time. There are a few commitments that can be easily moved around, a few to-dos that can be put off and, most important, you have empty spaces here and there in your calendar already. With a little jiggling, you’re set; you’ve found the ten hours you need.

Suppose, instead, that you are already heavily committed this week. Now this is more than annoying. You look at your schedule and you are overwhelmed. It’s really bad. Like a wobbly Jenga tower, if you delay or move any one thing around, the whole structure will collapse. Having no alternative, you reluctantly make some hard choices. You put off another (only slightly less urgent) project, rightly fearing—but not thinking about—the consequences this will have. You have borrowed, and there will be a price to pay; the following week will be yet a bigger nightmare.

For the less busy person, slack absorbs the error, thus minimizing the consequences. The busy person, on the other hand, cannot shrug it off so easily. Each added hour must come at the expense of something else. The same mistake has bigger consequences. We just saw how slack can be inefficient. We buy items destined to become cabinet castaways, and we use time and money inefficiently. Here we see that slack provides a hidden efficiency. It gives us room to maneuver, to reshuffle when we err. Slack gives us room to fail.

Slack also insulates us in another way. Alex and Ben paid the same dollar amount for that jacket. Yet, in some sense, it cost Ben more. That $200 expense is a small fraction of Alex’s income, a small fraction of his slack, but a large fraction of Ben’s. The same dollar mistake is proportionally more expensive for Ben. As the economist Abhijit Banerjee describes it, the temptation tax is regressive; it is levied more heavily on those who have less.

An economics graduate student, Dan Bjorkegren, tested this notion using a large survey of people’s consumption patterns in Indonesia. He classified some of their expenditures as temptation goods. This classification is surely subjective and open to dispute; future research would ask people to classify their temptation goods on their own. But for a first pass, this was a worthwhile exercise, and the list was eminently sensible: cigarettes, alcohol, other addictive substances, and so on. By looking at the proportion of spending that went to purchasing these goods, Bjorkegren quantified the temptation tax. What he found was that for the poorest group the temptation tax was as high as 10 percent of their total consumption. And as people got richer their tax got lower; it got to be as low as 1 percent of their consumption. Of course, the wealthy were spending a lot more money on these temptations but proportionally less.

If errors are more costly and there are more chances to fail, might scarcity not make us more careful? This is easier said than done. Effort often is not sufficient to reduce error. Many of these mistakes do not stem from carelessness but are deeply rooted in our mental processes. Effort and attentiveness alone cannot rid us of the planning fallacy, remind us of things that are out of mind, or provide us with an iron will to resist all temptation. Our biases, a direct outcome of the workings of the brain, are not always responsive to the consequences. We may give in to momentary temptation and have a snack when we are healthy; we may also give in when we are diabetic. We may get distracted when playing a silly video game; we may get distracted when driving a car on a highway. Psychological biases often persist despite more extreme consequences.

If anything, scarcity will lead us to greater errors. The bandwidth tax places us in a position where we are prone to make mistakes. The busy person is likely to commit an even bigger planning error; after all, he is likely still needing to attend to his last project and is more distracted and overwhelmed—a surefire way to misplan. With compromised bandwidth, we are more likely to give in to our impulses, more likely to cave in to temptations. With little slack, we have less room to fail. With compromised bandwidth, we are more likely to fail.

This allows a look at the conditions of scarcity through a new lens. Late fees are a penalty for misplanning or forgetting, yet they create an even more hostile environment for those living with scarcity. Readily available junk food may cause obesity in the poor and the busy, who are, in turn, more exposed and less attentive; it is less of a threat for the rich and the relaxed. The hard-to-read disclosures on low-cost mortgage forms will be particularly misunderstood (and carry bigger consequences) for those living with financial scarcity. Environments that create room for errors, which are then penalized, are a challenge for us all. But they are particularly challenging for those in contexts of scarcity.

Scarcity does not just mean less room to fail. It also means a greater opportunity to fail. In our earlier story of Alex and Ben, the leather jacket was a temptation—buying it was a mistake for both men. But imagine we had written the story as follows:

Alex and Ben walk by a clothing store. Each sees a leather jacket. Neither owns one but both have always wanted one. This one is perfect. It just costs too much, $200, and it’s not terribly practical. Alex, who is flush with cash, decides, “Why not?” It’s not as if he has obviously better uses for his money. Ben, who is tight on cash, realizes it is an ill-advised purchase. He must resist.

Here, buying the leather jacket is a mistake for Ben but not for Alex. This, after all, is what abundance affords us. It allows us to buy more things. Wealth transforms temptations into affordable luxuries. The same good can be a temptation when you have little but a mere frivolity when you have plenty. The dieter must avoid the same cookie that the nondieter eats thoughtlessly. The busy must avoid distractions—having a drink with friends or watching mindless TV—that the nonbusy enjoy without thinking.

Scarcity not only raises the costs of error; it also provides more opportunity to err, to make misguided choices. It is harder to do things right, because many items—time commitments for the busy, expenses for the poor—must be carefully made to fit into a constrained budget. To see this, think again about packing. Imagine that the two of us—Sendhil and Eldar—are invited to a picnic. Sendhil has to bring fruit for a fruit salad, and Eldar’s job is to bring the jellybeans. Sendhil must carefully consider how best to pack: one watermelon and much of the space in his bag is taken. And even the pineapple makes it hard to fit much else. Maybe he can align some bananas around the edges or fit a few grapes or strawberries in between the apples and the pears. There are nontrivial logistics to his packing problem: finding the best arrangement is a challenge. Contrast this with Eldar’s much simpler task. He simply pours in some watermelon-flavored jellybeans and some orange. He shakes his bag to let the pile settle, then pours in a few other flavors. Eldar may also have to make some trade-offs; he may not be able to fit all the flavors he wants. But once he has made his choices, his packing is inherently easier. No ingenuity is required to pack the jellybeans. What distinguishes the two tasks is granularity. The fruit are bulky items, whereas the jellybeans are small, almost like grains of sand. The complexity of packing gets easier as the items get more granular.

In life, do you pack grains or bulky items? It depends on your budget. On a small budget, that iPod feels bulky, taking up a large fraction of what you will spend this month. As your budget grows, the iPod takes up less and less room. It becomes a smaller and smaller fraction of your disposable income—it gets more and more granular. A bigger budget does not just make decisions less consequential; it reduces the complexity of packing. Small budgets make for bulky items and for complex packing; large budgets make for granular items and for easier packing.

Of course, even with a big budget, large enough items still create complexity. Serving as a juror on a major (and long!) criminal trial will produce complexity even for someone with lots of free time; the decision to buy an elegant summer house will require attention even from the person who is well off. But with abundance, your choices on average get more and more granular. They stop straining your budget or your planning.

All this suggests an additional layer. While our focus here is on the psychology that comes from scarcity, the effect of scarcity may be more than psychological; it can be a mathematical fact. Scarcity may create a logistically harder packing problem. The mind, challenged by the psychology that emerges from scarcity, may find itself needing to navigate a world that is computationally more complex.

SCARCITY AND SLACK

We opened this book with a definition of scarcity: a subjective sense of having more needs than resources. This is above and beyond actual physical limits—only so much money, time, and so forth—that all of us necessarily face. The concept of packing brings this distinction into sharp focus. Physical limits and trade-offs are always there: suitcases, no matter how large, are of a fixed size. But we do not experience them that way. A small suitcase makes us feel scarcity. We notice trade-offs; we feel we have too little space. A small suitcase can also make scarcity objectively more complicated to manage. A big suitcase does not just permit more room; it removes the feeling of scarcity. We not only feel we have enough space; we do not even notice trade-offs. While actual limits and trade-offs are universal, the experience is not.

In this sense, the concept of slack cuts to the core of the psychology of scarcity. Having slack allows us the feeling of abundance. Slack is not just inefficiency; it is a mental luxury. Abundance does not just allow us to buy more goods. It affords us the luxury of packing poorly, the luxury of not having to think, as well as the luxury of not minding mistakes. As Henry David Thoreau observed, “A man is rich in proportion to the number of things he can afford to let alone.”