The Psychology of scarcity

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Guest: Eldar Shafir

What happens when people are short on money, on time, on friends, or on food?  Their judgment gets impaired.  Princeton University behavioral economist ELDAR SHAFIR studies the psychological effects of scarcity and has found that when people lack something, their decision-making, even their IQ, gets compromised.  Could this explain why poverty is so difficult to escape?  Shafir has co-authored a new book on this topic with Sendhil Mullainathan called Scarcity: Why Having Too Little Means So Much.  He sits down with Marty to talk about why deficits can be so detrimental.

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