Free Scarcity: Why Having Too Little Means So Much by Sendhil Mullainathan, Eldar Sharif Page A

questions about financial hardship. Our interest, though, is in people’s everyday lives outside the confines of an experiment. Does scarcity tax people’s cognitive resources even when there are no experimenters lurking at the mall to get them to think about it?
    Showing this is essential to our argument. But it is hard. We cannot simply look at how poor people compare to rich people in cognitive capacity or self-control. Too many other things—health, friends, education—differ between the rich and the poor for us to be able to attribute any observed differences to scarcity. Such comparisons have been attempted endlessly with no obvious solution to the statistical problems that are inherent to such comparisons. How could we see the effect of scarcity free from all these intricacies?
    It was around this time that we were doing fieldwork on farming in India with the economist Anandi Mani, when we noticed something interesting. Farmers get their income in a big lump, all at once at harvest time. This means the farmer has a very different financiallife from most workers, who get paid regularly (daily, weekly, or monthly). Instead, a farmer might get paid twice a year or sometimes even once a year. Now picture a farmer who gets paid in June. The next few months are quite good: he’s got cash. But even if he’s prudent and tries hard to smooth his spending over this period, by the time next April or May rolls around, he will be tight on cash. So the
same farmer
is rich in the months after harvest and poor in the months before harvest.
    This was quite close to what we needed: we could examine the same farmer’s bandwidth in the months before harvest and in the months after harvest. Instead of comparing rich and poor people, we’d be seeing how the same person behaves differently when tight for cash and when flush with cash. But there was one wrinkle. Might not harvest months impose different obligations from ordinary months? For example, festivals and weddings are common during harvest months—exactly because people are cash rich. So instead of seeing the effects of scarcity, we might just see the effects of celebrations.
    To get around this, we used sugar cane farming, which has a peculiar feature. Sugar cane requires an enormous factory to crush the cane and extract the juice (which, once evaporated, forms sugar). The factories can only process so much and the crop can’t sit after harvesting for long. So sugar cane is harvested during a four-to-five-month window. In some areas it is harvested throughout the year. Neighboring plots are often on very different harvest cycles. One farmer may be harvesting while his neighbor to one side harvested several months ago and his other neighbor has months to go before harvesting. This rather obscure fact gave us the break we needed. We could now study the same farmers when they’re poor and rich
and
know that there’s nothing specific about the preharvest and postharvest calendar months. After all, the same month was preharvest for one farmer and postharvest for his neighbor.
    As we expected , the data showed that the farmers were more strapped for cash preharvest. Seventy-eight percent of them had pawned something in the month before harvest (and 99 percent tooksome sort of loan), but only 4 percent pawned something in the month after harvest (and only 13 percent took any kind of loan). Before harvest, they were also more likely to report having trouble coping with ordinary bills.
    As at the mall, we again measured executive control and fluid intelligence. We gave the farmers a Raven’s Matrices task, but we could not do the heart–flower task because it was difficult to administer it in the field. So for an executive control task, we chose a close cousin, something called the Stroop task. In this task, subjects see strings of items, such as
F F F F
, and have to quickly say how many items are in the string. (In this case, the answer is four.) When you see
2 2 2 2
, quickly