September 5th, 2013

A Purple Straw Hat

_Scarcity_, Sendhil Mullainathan and Eldar Shafir (kindle)

So, two grasshoppers who live in a climate temperate enough to survive the winter, wrote a book about their experiences and research on grasshoppers. They, like all grasshoppers, are fun people, very caring and empathetic and will show you a good time. And if you are a decent ant, you'll help them out a little when it is cold, because life sucks without grasshoppers. Telling them to dance when it is cold is just mean. Don't Be a Mean Ant.

These grasshoppers are smart, and perceptive and have great advice about changing the climate to be more supportive of people in general, advice which in many cases we should follow, notably things like not giving benefits payments monthly, because making the money last that long is really hard. There's a sweet spot between dribbling money out daily and twice a month that is probably ideal for most people's planning horizon. Daily money will get frittered; monthly money doesn't make it the whole way. Weekly and every two weeks are both good; twice a month is moving into dodgy territory and it gets worse from there. The same can be said about payments (monthly payments are hard; payments twice a month or every two weeks are easier; we should redesign mortgages and probably rent, too).

But while these grasshoppers are kind and curious and good at figuring things out, I remain completely unconvinced that they actually realize that some people are ants. That some busy people actually _don't_ delay in starting important but not urgent projects. Etc. They understand that some financial education curricula suck and that you can do better, but I don't think they get how people do that. They _get_ that we should amplify the better curricula (I particularly liked the story of the woman who kept the business cash in one cup of her bra and the home cash in the other; here in the US, a lot of wad management techniques have been completely forgotten, which is sad, because there's still a huge, mostly legal economy that is operating all in cash. They are only mostly legal because while what they are doing is usually legal, their failure to pay all their taxes and licensing often is not); they never seem to figure out how that new curricula is identified.

In general, I don't think the authors have figured out the basics of resource management. Which is weird, and kind of sad and will be the subject of future posts. However, their research in what life is like when you either can't figure out the basics of resource management, or you live in an environment where resources are guaranteed to hit a zero lower bound on a frequent but irregular basis, is the best I have ever seen. And they are right that the experience of scarcity, whether the result of wasting abundance or never having enough, is remarkably consistent.

Take the time to read Mullainathan and Shafir's book. We need more researchers and writers like these two, altho I kind of hope someone can figure out a simplified version of GTD to help them out along the way, because I'd like their lives to work a little better for them and their families.