Research / BFI Working PaperAug 22, 2022

Scarcity and Inattention

Providing information is a useful intervention that can increase the efficiency of any market. However, some individuals might systematically be less likely to attend to such information. Those with a “scarcity mindset” focus attention on immediate needs, which often results in having less attention, or “cognitive bandwidth,” for other concerns. We examine low-income parents’ inattention to information (about accessing internet, meals, etc.) sent by their children’s preschools during the COVID-19 pandemic. We use survey data collected shortly after the onset of the pandemic from 345 low-income parents and from the directors of the 11 preschools attended by the children. We measured two types of scarcity mindsets: financial scarcity, i.e., a subjective report of not having enough money to make ends meet, and social connections scarcity, i.e., a subjective report of loneliness. We find that both types of scarcity mindsets are significantly positively associated with inattention. Further, we find that financial scarcity and loneliness are largely independent in their correlations with inattention. Parents who report a financial scarcity mindset and high levels loneliness are 63% more likely than their counterparts who experience neither to be inattentive to information that was sent by the schools.

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