CIFAR launches the Social Interactions, Identity & Well-Being program under
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We are used to thinking about the health of a society in economic terms, judging how well people are doing by how much they make and how much they buy. Fellows in the Social Interactions, Identity & Well-being program look beyond these narrow economic measures. They believe we can arrive at a better understanding of economic and social issues by exploring the complex ways in which health, happiness and well-being are shaped by social identities and interactions
This program is helping to shape a new social science based around the three interrelated concepts: identity, social interactions, and subjective well-being. Together they are helping to broaden the scope of economics, psychology and the other social sciences while also providing new insights into the connections between well-being and health, and helping to increase global interest in the science of well-being measures.
This program brings together academics from a wide range of disciplines—economics, psychology, sociology, anthropology, epidemiology and political science. Drawing from these varied disciplines, fellows have combined the insights of economics, with its emphasis on individual incentives, with lessons learned from psychology and sociology about the importance of our sense of self and our interactions with others. The results so far have led to new theoretical frameworks and practical approaches to policy and measurement aimed at promoting well-being around the world.
People have debated since at least the time of the ancient Greeks about what makes a good life. This program answers the question by considering the concepts of social identity and social interaction, and examining how they work together to affect well-being. Fellows take into account factors such as civic engagement, connections with family and friends, and good government – factors that have proven to be more important to people’s sense of well-being than income alone.
As a result, they’ve helped to switch focus from merely measuring wealth to looking at the many factors that affect well-being, as seen in the success and visibility of the World Happiness Report rankings of happiness by country. Other issues fellows have tackled include the nature of leadership, the barriers to education, the welfare and happiness of children, policy issues around the economics of poverty, crime and punishment, the identity and well-being of migrants, and many others.
Since the program was founded in 2005, fellows have tackled a wide range of important theoretical, empirical and policy challenges. Combining insights and methodologies from economics, psychology and sociology has helped to produce creative and integrative social science.
Notable work includes the research monograph The Social Cure: Identity, Health and Well-Being. Published in 2011, the book was edited by Senior Fellow Alex Haslam, with collaborators Associate Fellow Catherine Haslam and Jolanda Jetten (University of Queensland). Five CIFAR fellows contributed chapters that brought together the latest research showing how group memberships, and the associated social identities, determine people’s health and well-being. The book provides a variety of perspectives from clinical, social, organizational, and applied fields reflecting the strongly interdisciplinary nature of this research.
George Akerlof’s new book (with fellow Nobel Laureate Robert Shiller) Phishing for Phools provides another striking example of how SIIWB research into the psychological well-springs of human behaviour provides a more realistic explanation of how markets work, and what can make them go wrong, with dramatic consequences for individuals, nations, and the world. Akerlof also spoke about the work at the inaugural CIFAR David Dodge Lecture.
With millions of downloads, extensive media coverage, and numerous references by national leaders, the World Happiness Reports of 2012, 2013 and 2015, have generated extraordinary interest around the world. The reports were initiated and co-authored by Senior Fellow John Helliwell, with former CIFAR Advisor Richard Layard and Jeffrey Sachs (Earth Institute, Columbia University). Each edition looks at a range of indicators for well-being, including not only income but also measures for life expectancy, generosity, social support, freedom, and levels of corruption. The reports have influenced government policy and have helped encouraged many countries to begin collecting more well-being data on their populations.
Collaboration among program fellows has contributed to several recent influential books, reports and articles that challenge traditional ways of thinking. For example, Nyla Branscombe’s book Psychology of Change: Life Contexts, Experiences and Identities (2014) emphasizes how a person’s behaviour, intentional or otherwise, affects their physiology and health. The book examines topics including the physiological changes that follow exposure to political trauma, personality change in response to changes in employment and economic conditions, and changes due to engaging in collective action for social change.
Senior Fellow Roland Benabou’s co-authored article, Forbidden Fruits: The political Economy of Science, Religion and Growth (2015), reveals that internationally religiosity has a negative impact on innovation, as measured by patents per capita.
Other publications have focused on the social geography of happiness. A report by Helliwell and Associate Fellow Grant Schellenberg, using Statistics Canada data, found that people’s satisfaction with their lives is generally higher in smaller cities and communities than in richer cities. Speaking to the importance of shared identity for happiness, a key factor benefitting smaller centres is a greater sense of belonging.
Program fellow and psychologist Eldar Shafir co-wrote, with economist Sendhil Mullainathan, Scarcity: The New Science of Having Less and How it Defines Our Lives (2014). This influential book examines how a real or perceived sense that we have less than we need—e.g. time, money, companionship—can distort our judgment. It can have a beneficial impact, strengthening focus, but usually has the greater negative impact of “tunnelling”, blocking out other relevant information — an important insight for those developing social programs aimed to address those facing severe conditions of scarcity.
Ongoing and developing projects include Groups for Health (G4H), an intervention program spearheaded by Catherine Haslam and Alex Haslam that targets social isolation and its toxic consequences, which include loneliness and depression. In the US, Senior Fellow Mario Small has conducted a randomized control trial into strategies to increase attendance and parental involvement in Head Start programs, which are for children, beginning at age three, from low income families. Low attendance at these well-established programs has diminished the benefits of the enriched experience that they offer. Fellow Elizabeth Paluck’s work , also in education, had demonstrated that speading new anti-conflict norms among a small group of “seed” students in a school reduced levels of disciplinary reports of peer conflict in one year by 30 per cent. Senior Fellow Rachel Kranton is studying the economics and neuropsychology of group divisions. Her findings challenge the working hypothesis that group divisions always mean people are less fair to those outside their group. Kranton has found this is true only for well-defined subsets of people—that not everyone treats people in their group better than people outside.
Other research investigates the root of important social issues such as the growing gender differences in academic achievement, with girls out performing boys, or the alarming trend that women face a so-called “glass cliff”: different systemic challenges than men in the corporate environment.
Program fellows have played and continue to play key roles in policy arenas. Senior Fellow Irene Bloemraad is on the US National Academy of Sciences panel on the integration of immigrants into American Society, due to report in 2016. And in 2013, Senior Fellow Nicole Fortin informed the House of Commons Standing Committee on Finance that growth oriented economic policies, while contributing to economic success, disproportionately benefit highly skilled workers. To reduce inequality in Canada, governments must study policy options such as raising the minimum wage, supporting education, and strengthening the trade union movement.
Program fellows have proposed and a health care intervention that involves encouraging people to stay involved with or to join social groups. This approach has led to improved well-being among residents of long-term care homes and has reduced relapses among people with a history of depression.
Similarly, Senior Fellow Philip Oreopoulos ran a project in Ontario that offered assistance to grade 12 students from disadvantaged high schools applying for postsecondary programs and financial support. The result was a significant increase in enrolment rates.
These various initiatives all speak to the practical importance of the theoretical insights that the program is developing and testing. They also makr the program out as peculiarly well placed to address the challenges in building stronger societies in the 21st century.
Simon Fraser University
University of California, Berkeley
University of Kansas
University of British Columbia
University of Queensland
Program Co-Director John Helliwell (University of British Columbia) presents the
Research by CIFAR Senior Fellow Roland Benabou (Princeton University) shows
Using longitudinal data from Statistics Canada, CIFAR Senior Fellow Shelley
Program Co-Director George Akerlof (University of California at Berkeley), a
CIFAR Senior Fellow Rafael Di Tella (Harvard University) finds that
CIFAR Fellow Irene Bloemraad (University of California, Berkeley) advances her
CIFAR Senior Fellow Nicole Fortin (University of British Columbia) explores
CIFAR Senior Fellow Philip Oreopoulos (University of Toronto) finds that
Program Co-Director George Akerlof (University of California at Berkeley) and
Program Co-Director John Helliwell (University of British Columbia) and colleagues
CIFAR Senior Fellow Shelley Phipps (Dalhousie University) completes a study
CIFAR Senior Fellow Robert Oxoby (University of Calgary) makes progress
Several CIFAR fellows contribute to The Social Cure, a volume
CIFAR fellows Shelley Phipps (Dalhousie University), Nicole Fortin (University
CIFAR Senior Fellow Philip Oreopoulos (University of Toronto) goes
CIFAR launches the Social Interactions, Identity & Well-Being program under the leadership of Nobel Laureate George Akerlof (University of California, Berkeley) and John Helliwell (University of British Columbia). The program seeks to extend traditional economic models to incorporate the effects of people’s social identity on their actions and on their subjective well-being.
Program Co-Director John Helliwell (University of British Columbia) presents the program’s research on social capital and well-being to the Canadian Mental Health Association, the B.C. Premier’s Council on Aging, the Banff Forum, the national conference of the Community Enterprise Development Network, the vice-presidents of research of western Canadian universities, the CBC-Wosk Centre annual dialogue on Imagine BC and a number of community groups.
Program Co-Director John Helliwell (University of British Columbia) and CIFAR-supported postdoctoral researcher Haifang Huang (University of Alberta) complete research using life satisfaction data to better estimate the value of non-financial job aspects, such as workplace trust, compared to to wages. They find that a one third increase in trust in management is equivalent to a boost in income of more than one third. He presents the results to the Vancouver Board of Trade, the CPRN/StatCan workshop on human capital, the Notre Dame conference on social capital, the Strategic Research Networks Initiative on the International Mobility of the Highly Skilled, and a policy panel of the Canadian Employment Research Forum.
Research by CIFAR Senior Fellow Roland Benabou (Princeton University) shows that rewards for behaviour that benefits others may crowd out the inherent value of good deeds. In the presence of rewards for doing good, people may no longer feel that undertaking such acts is necessary for living up to their standards of what defines a good person. Therefore, rewards may be self-defeating. This work attracts substantial interest not only from economists but psychologists as well. An important aspect of the proposed methodology is that self-perception (or identity) and social perception (or reputation) are fundamentally related and can fruitfully be analyzed using the same, integrated framework. Benabou also analyzes how the presence of material and / or social rewards (and punishments) affect the provision of public goods and similar actions such as voting, volunteering, helping, donating to political or charitable organizations and respecting a social norm, that are costly to an individual and mostly benefit others.
Using longitudinal data from Statistics Canada, CIFAR Senior Fellow Shelley Phipps (Dalhousie University) finds that mothers of children with disabilities are much more likely to report that they themselves are in ill-health than mothers with healthy children. The same is not true of the fathers of children with disabilities. The researchers argue the issue seems to stem from mothers being the major caretakers of disabled children. These findings suggest the need for special programs, especially to alleviate the burden on caregivers.
CIFAR Senior Fellow Alexander Haslam (University of Queensland) relates his research on creating new identities through the BBC Prison Study he conducted with Steve Reicher. This study, which the BBC filmed and broadcast in 2002 as a documentary entitled The Experiment, drew on some elements of the famous Stanford Prison Experiment by Philip Zimbardo. However, Haslam and Reicher’s study instead focused on tyranny and resistance. Subjects lived in a prison-like situation, with some subjects playing the role of guard and others the role of prisoners. The results differed significantly from Zimbardo’s findings, particularly in that the guards did not behave as brutally. The researchers concluded that individuals do not “conform blindly or mindlessly” when given a role — they do not view themselves as guards simply because they are assigned that role. Identification with a group depends on social structure, accountability and a sense of whether those in an undervalued group can improve their status, together or apart.
Program Co-Director George Akerlof (University of California at Berkeley), a Nobel laureate, writes the paper tied to his 2007 Presidential Address of the American Economics Association based on long-term research with CIFAR Senior Fellow Rachel Kranton (Duke University) on identity’s influence on economic outcomes. Akerlof describes the 1960s and '70s shift in macroeconomics from the Keynesian view, which stressed the importance of policies to regulate the market, to a view that argued for less government intervention. He argues the latter approach, with a smaller role for regulation, fails to account for the economic impact of basic human motivation. In addition, he adds another set of motivations to the standard characterization of individuals’ purpose: norms. For more information, please see the story in the New York Times.
CIFAR Senior Fellow Rafael Di Tella (Harvard University) finds that giving property titles changes peoples’ beliefs about how the world works; for example, how easy it is to make money and the importance of money for happiness. Di Tella’s research team surveys squatters living in close proximity to each other in the suburbs of Buenos Aires, some of whom have managed to obtain property rights while others are entangled in lingering legal disputes over their land. The lucky squatters who landed land titles show beliefs that lean toward supporting a free market and believing that money is important for happiness. Squatters with titles have much different beliefs than those who don’t. In fact, those with property rights hold similar beliefs to the inhabitants of the City of Buenos Aires even though their lives are remarkably different. The Wall Street Journal and the Financial Times feature the work.
CIFAR Associate Thomas Lemieux (University of British Columbia) focuses on the causes and consequences of economic inequality. His research indicates that institutional factors played a major role in the growth of income disparities. He finds that continuing decline in the rate of unionization and the growth in pay for performance arrangements have resulted in a situation where market forces play a more direct role in wage setting, resulting in more disparities between different types of workers. Lemieux says that he has benefitted from interaction with CIFAR Senior Fellow Philip Oreopoulos (University of Toronto) in considering the importance that education plays in producing inequality in the labour market. He co-authors a paper on youth human capital with CIFAR Senior Fellow Nicole Fortin (University of British Columbia) and makes major presentations at the Bank of Canada, the Federal Reserve Bank of San Francisco and the Department of Finance. For information, please see the story about Lemieux’s research in the New York Times.
T. Lemieux and D. Green, “The Impact of Unionization on the Incidence of and Sources of Payment for Training in Canada: A Study Based on the Adult Education and Training Survey,” Empirical Economics, 32 (2007): 465-489 doi: 10.1007/s00181-006-0092-3.
CIFAR Fellow Irene Bloemraad (University of California, Berkeley) advances her research on how organizations, social institutions and family influence the civic and political integration of immigrants. She says that discussions with CIFAR Advisor Robert Putnam (Harvard University) and his hypothesis that local ethnic diversity leads residents to become less social, altruistic and trusting over the short-term were especially influential on her work. These American findings spurred her interest in investigating whether diversity also has negative effects on social capital in other developed, immigrant-receiving countries. Her work makes a significant contribution to the Immigrant Civic Engagement Project.
I. Bloemraad et al, “Citizenship and Immigration: Multiculturalism, Assimilation, and Challenges to the Nation-State,” Annual Review of Sociology, 34 (2008): 153-179 doi: 10.1146/annurev.soc.34.040507.134608.
S.K. Ramakrishnan and I. Bloemraad, “Introduction: Civic and Political Inequalities” and “Making Organizations Count: Case Studies in California” in Civic Hopes and Political Realities: Immigrants, Community Organizations, and Political Engagement, S.K. Ramakrishnan and I. Bloemraad, eds. (New York: Russell Sage Foundation Press, 2008).
CIFAR Senior Fellow Nicole Fortin (University of British Columbia) explores the causes, consequences and future prospects of the recent slowdown in the economic progress of women. In the mid-1990s, the number of women in the workforce began to level-off in Canada and many other OECD countries even though women continued to advance in other areas, such as educational achievement. Fortin argues that the new identity theory developed by CIFAR fellows suggests women might be facing a conflict between their identities as mothers and professionals. Fortin explores this hypothesis further by following men and women over time and asking them questions about the importance of money and the importance of people, or family. She finds that gender roles explain the recent plateau in women’s participation in the workforce. In addition, Fortin identifies a connection between gender attitudes and the peak of the AIDS crisis, suggesting fear of the disease might have shocked society into more traditional attitudes of family.
N. Fortin, “Gender Role Attitudes and Women’s Labor Market Participation: Opting-Out, AIDS, and The Persistent Appeal of Housewifery,” UBC papers (2008). Published in Annals of Economics and Statistics, 117 (2015): 379-401 doi: 10.15609/annaeconstat2009.117-118.379.
CIFAR Senior Fellow Nyla Branscombe’s (University of Kansas) research uncovers the ways that group history affect people's responses to intergroup conflicts in the present. This work connects to the program theme concerning the role that social identity plays in well-being. Namely, whether groups resolve social conflicts, grant forgiveness and heal, or whether history maintains intergroup conflicts or even exacerbates them. She finds that people are "more than just individuals." Social history — in particular the meaning or interpretation given to that history — can encourage support for continued fighting or support for peace.
CIFAR Senior Fellow Philip Oreopoulos (University of Toronto) finds that ethnic biases influence hiring decisions in a study that receives a great deal of media attention. He submits 6,000 mock resumes in application to job openings that describe candidates with exactly the same skills, but some of the applicants have foreign-sounding names and work experience listed from another country, while others have English-sounding names and Canadian experience. Candidates with English names and Canadian experience receive interview offers at a rate three times that of those portrayed as immigrants. This important finding is the subject of much debate. For more information, please see the CBC story about this work.
P. Oreopoulos, “Why Do Skilled Immigrants Struggle in the Labor Market? A Field Experiment with Six Thousand Résumés,” Metropolis British Columbia, Centre of Excellence for Research on Immigration and Diversity: Working Paper Series, 09 – 03 (2009). Published in American Economic Journal: Economic Policy, 3 (2011): 148-71 doi: 10.1257/pol.3.4.148.
Program Co-Director George Akerlof (University of California at Berkeley) and Robert Shiller publish their best-selling book Animal Spirits. The book, which wins multiple awards, builds a new theoretical foundation for macroeconomics. It shows how confidence, fairness, bad faith and corruption, money illusion and stories affect the macroeconomy. Akerlof presented the book at a 2008 CIFAR meeting before publication to receive feedback from his CIFAR colleagues.
CIFAR Senior Fellow Rafael di Tella (Harvard University) writes an influential paper for the Federal Reserve Bank of Boston explaining how we can use data on emotions to help central banks set policy. He and Robert MacCulloch show, based on a survey of 600,000 Europeans, that self-reported life satisfaction is correlated with inflation and unemployment rates. They argue that central banks can use well-being measurements to understand how policies to reduce unemployment or offset inflation might impact the public, and factor contentment into decision-making. He also presents the paper to the Bank of Canada and to other policy institutions.
Program Co-Director John Helliwell (University of British Columbia) and colleagues use the new Gallup World Poll and other data to show that the large international differences in life satisfaction are mainly explained by differences in life circumstances, and not by differences in the way these circumstances are evaluated. The work is published in chapter 10 of International Differences in Well-Being, edited by Helliwell and CIFAR Advisor Daniel Kahneman (Princeton University). The book also contains a chapter on the links between income and well-being by CIFAR Advisor Richard Layard (London School of Economics) and two colleagues.
CIFAR Senior Fellow Shelley Phipps (Dalhousie University) completes a study of changes in time and money available to Canadian families with children from 1971 to 2006 and their consequences for well-being. She and Peter Burton find that the incomes of the richest Canadian families have increased since the 1990s but the total number of hours these families have spent working have not increased significantly. By contrast, middle class families have greatly increased the number of hours they work, but their income has not increased in proportion to the time they spend. The researchers conclude that the gap in well-being between those in different income brackets has grown even bigger than the inequality of their incomes.
CIFAR Senior Fellow Alexander Haslam (University of Queensland), Stephen Reicher and Michael Platow publish The New Psychology of Leadership, a book that argues good leadership is not about the special qualities or superiority of an individual leader; it is grounded in leaders’ capacity to embody and advance a group identity that leader shares with others. This perspective encourages us to see leadership as a group process that centres on leaders working with group members to create, advance, represent and embed a shared sense of “us” that is capable of motivating and directing their followership.
CIFAR Senior Fellow Robert Oxoby (University of Calgary) makes progress in understanding how social and personal identities shape market and social outcomes. Part of the research focuses on institutional design and its effects on identity. For example, the authors note that those defending the Canadian health care system often argue that it is central to Canadian identity. Another part of this research looks at the effect of identity and institutions on poverty, with a specific lens on South American nations and the South American experience.
Several CIFAR fellows contribute to The Social Cure, a volume combining theory, experiments and survey data to show the effects of social networks and identities on mental and physical health. The book, co-edited by CIFAR Senior Fellow Alexander Haslam and Associate Catherine Haslam (both University of Queensland) compiles evidence that social groups and the identities they forge are critical to keeping us healthy. It provides a variety of perspectives from clinical, social, organizational and applied fields that show how social connection can prevent and treat both physical and mental illness. CIFAR fellows and scholars including John Helliwell (University of British Columbia), Christopher Barrington Leigh (McGill University) and Nyla Branscombe (University of Kansas) write chapters.
CIFAR Senior Fellow Roland Benabou (Princeton University) and Jean Tirole show that social norms play crucial roles in social interactions, identity and well-being, yet they have thus far proven challenging to model convincingly using the theoretical tools of economics. They analyze how values shape laws and norms. They assess the use of campaigns by social psychologists to alter what people view as “normal” behaviour, and find that these interventions are limited because the message sometimes contradicts the intended outcome. Next, they look at how new laws send messages about the values a society holds, and therefore the behaviour that is acceptable. They use their model to define how the official rules influence the unofficial rules of society. The analysis also helps to explain the reverse: why the public opposes laws that contradict what they view as normal and acceptable, such as “cruel and unusual punishments.”
CIFAR fellows Shelley Phipps (Dalhousie University), Nicole Fortin (University of British Columbia) and Philip Oreopoulos (University of Toronto) investigate why young men are falling behind women in post-secondary school achievement and find that motivation is an important factor. They base their research on the fact that young women comprise 60 per cent of the undergraduate population in most Canadian universities. In addition, more than a third of women in their mid to late 20s have undergraduate degrees compared with less than a quarter of men the same age. Much of the past research in this area has emphasized that boys achieve equally high or even higher scores than girls on measures such as math tests. Therefore, the researchers argue that if we want to understand why boys are underachieving compared to girls, it is important to move beyond test scores to subjective factors such as how much boys like school and what motivates them.
CIFAR Senior Fellow Philip Oreopoulos (University of Toronto) goes into the field to implement Life After High School, a program designed to guide all grade 12 students at disadvantaged high schools through the application process to get accepted into a post-secondary education program. The program is implemented in 80 high schools across Ontario, with the support of the Ministry of Education and the Ministry of Training, Colleges and Universities. Its goal is to make it convenient and free for would-be students to discover post-secondary programs, apply for free, earn acceptance and learn about official grant and loan eligibility. With an offer letter and financial aid package in hand, the option to go becomes more real. Oreopoulos and his co-workers track students over time to measure effects on enrollment and persistence against a comparison set of students and schools.
The truth about happiness: what six ingredients make a life well lived and how well do Canadians fare? from CIFAR on Vimeo. Program Co-Director John Helliwell (University of British Columbia) co-edits the inaugural World Happiness Report with CIFAR Advisor Richard Layard (London School of Economics) and Jeffrey Sachs. The United Nations commissions the report after adopting the nation of Bhutan’s proposed resolution to deem Gross Domestic Product a poor indicator of citizens’ well-being. Readers have since downloaded The World Happiness Report more than a million times from all over the world, and its proponents begin to take steps to integrate happiness more centrally in the goals, measurements and policies supporting world development.
CIFAR Senior Fellow Nyla Branscombe (University of Kansas) presents her research on stigma at CIFAR's 2013 Building Better Lives & Communities symposium
CIFAR Senior Fellow Nyla Branscombe’s (University of Kansas) ongoing research tackles the many facets of stigma associated with gender, ethnicity, sexuality disability and other differences, and finds that it has severe psychological and social consequences. For example, she finds that stigmatized groups are held to higher moral standards. The majority expects people who belong to minority groups to be more tolerant of other minorities, and judges them more immoral when they don’t show extra tolerance. She also finds, contrary to popular belief, that stigmatized people are not usually inclined to use the “victim card,” or blame discrimination for their problems. Branscombe completes a cross-cultural study of people with dwarfism that shows how social support can buffer the pain of discrimination. In the U.S., where organizations such as Little People of America have existed for decades, the well-being of those with dwarfism is much higher than in places such as Spain where organizations are not yet established enough to empower stigmatized groups.
S. Fernández et al, “Influence of the social context on use of surgical-lengthening and group-empowering coping strategies among people with dwarfism,” Rehabilitation Psychology, 57 (2012): 224-235 doi: 10.1037/a0029280.
A. Fernandez et al, “Higher Moral Obligations of Tolerance Toward Other Minorities: An Extra Burden on Stigmatized Groups,” Personality and Social Psychology Bulletin, 40 (2013): 363-376 doi: 10.1177/0146167213512208.
CIFAR Senior Fellow Rafael di Tella (Harvard University) and a colleague find that electronically monitoring criminals in Argentina rather than punishing them with prison time reduces their rate of reoffense (recidivism) by 30 per cent. Di Tella goes beyond conventional economic thinking to explain these findings and finds that those who experience the terrible conditions in Argentine prisons increase their participation in crime. The prisoners change their identity and "become" criminals through their time in prison.
The psychology of scarcity: Why having too little means so much from CIFAR on Vimeo. Years of work by CIFAR Senior Fellow Eldar Shafir (Princeton University) on the psychology that emerges in the context of scarcity — scarcity of money in the case of the poor; scarcity of time for the busy — leads to the groundbreaking book Scarcity: Why Having Too Little Means So Much, co-authored by Shafir and Sendhil Mullainathan. The argument is that having scarce resources generates its own psychology, and that this psychology can have critical consequences for decision-making. Contexts of scarcity produce cognitive demands on attention and computation, making it difficult to make optimal decisions. Scarcity leads to attentional tunneling, distraction and depletion, and it makes foresight and planning more difficult. People facing scarcity make more errors and those errors are highly consequential. For more information, please see the story about this research in the Globe and Mail.
S. Mulainathan and E. Shafir, “Savings Policy & Decision-Making in Low-Income Households.” In M. Barr and R. Blank, eds., Insufficient Funds: Savings, Assets, Credit and Banking Among Low-Income Households, 121-145 (Russell Sage Foundation Press, 2009).
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