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29 February 2016

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 February 29, 2016
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scarcity book review eldar sharif

We got a donation from “Edward Jones!” my coworker exclaimed.

It’s 2003. I looked blankly at my computer in the darkened office in Vancouver. I just wanted to leave. I was working for $10 per hour. I had been making $18/hour as a consultant before taking this Development Assistant job. Now I was buying groceries with my credit card. I was rapidly going into debt and I was worried about how I was going to find a place to live. I was staying in a house owned by a really sleazy roommate, who always ogled me after I came out of the shower, and I was worried they would try to take advantage of me.

Edward Jones is a financial investment firm that a lot of people have had trouble with. I knew it was an investment firm. You see their storefronts around.


For the thank you letter, I wrote, “Dear Mr. Jones.”

Why did I do that? Was it because

A. I was sick of getting paid crappy wages?
B. I did not feel respected by my boss?
C. I did not have the mental bandwidth to deal with the issue because of poverty?

Recent research suggests C.

In the book Scarcity by Eldar Shafir and Sendhil Mullainathan, they write,

“The poor are not just short on cash. They are also short on bandwidth. The same person when experiencing poverty did worse on several tests. He showed less flexible intelligence. He showed less executive control. With scarcity on his mind, he simply had less mind for everything else.”

Scarcity book sendhil

“This is important because so many of our behaviors rely on bandwidth. For example, an overtaxed bandwidth means a greater propensity to forget.” Even to take medications, according to Shafir and Mullainathan.

Another consequence is reduced productivity at work.

Nearly every task requires working memory, the capacity to hold several pieces of information active in our minds until we use them.

By taxing working memory, poverty leads us to perform less well.

It makes us less productive because our mental processor is occupied with other concerns.

This creates a tragic situation where the poor, who most need the wages of their labor, also have their productivity most heavily taxed.”

“An overtaxed bandwidth means a reduced ability to process new information. How much of a lecture will you absorb if your mind constantly gets pulled away? Now think of a low income college student whose mind keeps going back to making rent. How much will she absorb? Our data above suggests that much of the correlation between income and classroom performance may be explained by the bandwidth tax.”

“To make matters worse, we have seen how the constant struggle with poverty further depletes self control. When you can afford so little, so many more things need to be resisted, and your self-control ends up being run down. Under these circumstances, we all can and would fail.” (From Scarcity, Why having too little means so much, 2013 by Mullainathan and Shafir.

You may have noticed this with your own programs, where desperate people make desperate choices, like taking out a payday loan, trying to make ends meet, but ending up with more debt because of emergencies.

But it’s not just about our programs. It’s about how we manage our staff.

So you’ve got your nonprofit staff working for $10-$15 per hour because “they believe in the mission” and “they want to be the change,” working 50, 60, 70 hour work weeks to get things done that should take them less time. They seem to work slower and slower.

Because you’re paying them less, they go into debt. Their bandwidth gets reduced. Now they’re working more, and they aren’t doing more.

 

“Nearly a century ago, Henry Ford recognized the distinction between hours and bandwidth. His decision to institute a forty-hour work week for his factory workers was motivated by profits. When he adopted it in 1926, he was bitterly criticized by members of the National Association of Manufacturers. But his experiments, which he’d been conducting for at least 12 years, showed him clearly that cutting the workday from 10 hours to 8 hours-and the work week from 6 days to 5 days – increased total worker output and reduced production cost. Ford spoke glowingly of the social benefits of a shorter work week, couched firmly in terms of how increased time for consumption was good for everyone. But the core of his argument was that reduced shift length meant more output.”

 

Sendhil Mullainathan writes, “In a way, none of this should be surprising. Just as we get physically exhausted and need to rest, we also get mentally depleted and need to recover. Instead, with prolonged scarcity, bandwidth taxes tend to accumulate.

So you stay late to finish your work, or come in on the weekends.

But according to Shafir, “studies have repeatedly shown that when workers sleep less they become less motivated, make more errors and zone out more often.

“Organizations can magnify the problem. When one member of the team begins to fall behind, this can contribute to the scarcity felt by others. When one person’s bandwidth is taxed, especially at the top, a sequence of bad decisions can lead to further scarcity and taxes on others’ bandwidth. Organizations can create a domino effect.”

That means if you’ve suddenly got a federal grant due, you can pull a couple 12 hour days. But at the end of it, you need to institute a mandatory vacation for everyone who worked on it.

How can you get more out of your nonprofit employees?

How can you stop people from catching the stupid that comes with overtaxed bandwidth?

1. Pay more per hour, even if that means people work part time instead of full time.

2. Make employees work less. Lock the doors and shoo everyone out at 5pm.

3. If people are having to work extra hard just before an event, you need to make sure they take a lot of vacation after the event.

        4. Give people more vacation in general. Encourage people to take time off. Tell them, “The cause will         always be here.”

5. Understand that people participating in your programs may be experiencing these same problems of decreased bandwidth and lack of self control caused by poverty.

Cathy TaylorAfter writing this book, Scarcity, Mullainathan and Shafir helped found a business called ideas42 which helps people make better decisions.  Check out the book and what their organization does. It might overlap with what your nonprofit does, and you could learn from their behavioral analysis and research to help make your programs more effective.

Would you like to make your nonprofit more effective AND your programs more effective?

Come and learn from Cathy Taylor, Executive Director of the Ontario Nonprofit Network at the Virtual Next Level Fundraising Conference April 4-5, 2016.

 

Next Level Fundraising Conference

This conference would not be possible without our generous sponsors:

Bay path university Impact Flow Charity Villagebloomerang-webinar

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