Abundance vs. Scarcity


        In Abundance: The Future is Better Than You Think, Peter H. Diamandis and Steven Kotler discuss what abundance means and how we have moved from a linear to an exponential society.  Linear growth is when growth increases by the same rate each time whereas exponential growth increases at an expanding rate.  The authors claim that over the past 150,000 years humans have evolved in a world that was “local and linear,” but today we are experiencing an environment that is “global and exponential.”  In the past, change was extremely slow, but now with the wealth of information available we have emerged into a fast growing society.  Because this new pace of change is new to us, our brains have difficulty comprehending it.  We also fall prey to the “hype cycle” which is that we have inflated expectations of a new technology and are disappointed when the product doesn’t live up to the excitement.  Therefore, we “literally have a blind spot for technological possibilities underlying our vision of abundance” (35).  The authors believe that technology can make the once scarce now abundant.  For example, Masdar City sits on the Persian gulf which is entirely salt water.  If we could create technology for desalination, we would have plenty of water to combat the problem of water scarcity.  Few sources are truly scarce, but mainly inaccessible.  Diamandis and Kotler think that we now actually have the ability for abundance due to three new forces.  The first is the newfound power of the do-it-yourself innovators.  The second is using wealth to solve problems with the rise of philanthropy.  The third is transforming the “poorest of the poor” into an emerging market force.  In terms of poverty, abundance is “not providing all with a life of luxury, but a life of possibility” (13), which can now be possible.  We now have the ability to do things we don’t even understand by utilizing the “collective brain.”  There are eight fields thought to be growing exponentially: biotechnology, computational systems, networks and sensors, artificial intelligence, robotics, digital manufacturing, medicine, and nanotechnology (57).  Ray Kurzweil stated that progress and technology are exponential.  He believes we are at a crucial point, the “knee of the curve,” where exponential growth becomes explosive and notes that the rate of exponential growth is growing exponentially.  The ability to sustain future generations and solve today’s global problems are right at our fingertips.

Cognitive Biases


A cognitive bias is a pattern of deviation in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion.  There are eight common types of cognitive biases.  The first, confirmation bias, is a tendency of people to favor information that confirms their beliefs or hypotheses.  For example, if one believes that the world is in a hole to deep to climb out of, any information that confirms this idea will be remembered.  A second bias is negativity bias which is the psychological phenomenon that humans recall unpleasant memories better than positive memories.  For example, remembering 9/11 instead of your friend’s birthday party.  A third type of cognitive bias is anchoring which describes the human tendency to rely too much on the first piece of information when making decisions.  Anchoring causes people to make future judgments based on their previous anchor of information.  For example, at the end of the nineteenth century, London was covered in horse manure and because of anchoring, people could not imagine any possible solutions.  A fourth bias is hindsight bias which is the ‘knew-it-all-along’ effect.  This is the idea that after an event occurs it is seen as being more predictable than before the event occurred.  For example, rooting for the underdog in a race and when that team actually wins claiming you were certain they were going to.  A fifth bias is self-serving bias which when individuals attribute success to internal factors, but attribute failures to external factors.  For example, applauding yourself for getting an A on your English paper while blaming your C in Math on a bad teacher.  A sixth bias is belief bias which is the tendency to accept all conclusions that fit in with one’s system of beliefs, without challenging what one is actually agreeing with.  For example, accepting that some good ice skaters are not professional hockey players while rejecting the claim that some professional hockey players are not good ice skaters.  A seventh cognitive bias is fundamental attribution error which is the tendency to overestimate the effect of personality and underestimate the effect of the situation in explaining social behavior.  For example, when someone trips you, blaming it on his or her rude personality rather than believing it was an accident.  An eighth final bias is framing which refers to a set of concepts and theoretical perspectives on how groups perceive and communicate about reality.  For example, answering a survey question differently based on the wording.  Cognitive biases relate to the future of abundance because without these biases we could accurately assess the probability of future outcomes, but we do not have “the temporal flexibility nor the neurological capacity to analyze the data” (Abundance page 29).  Our decisions that we make regarding issues such as poverty and water scarcity are hampered by these subconscious biases.

Malthusians vs. Cornucopians


Malthusianism is based on ideas by Thomas Robert Malthus which he documented in An Essay on the Principle of Population in 1789.  Malthus believed that unchecked population growth is exponential while the growth of the food supply is arithmetical.  This theory therefore calls for measures of population control.  One way he believed to reduce the population was through moral restraints such as abstinence and delayed marriage.  The second population method he documented was through premature death such as disease, starvation and war.  Neo-Malthusianism refers to people who agree with Malthus and the need for population control to ensure sustainability.  Opposite to Malthus’ views are those of cornucopians who believe that there is enough matter and energy on Earth to allow unlimited room for growth.  Cornucopians are considered futurists who believe that progress of material items will be met by advances in technology.  The term is often used in a derogatory way to describe someone who is overly optimistic about resource availability for the future.

Portfolios of the Poor: Summary


Many people may think that the poor spend all their money as soon as they earn it, but Portfolios of the Poor by Daryl Collins, Jonathan Morduch, Stuart Rutherford, and Orlanda Ruthven document how the poor manage their money.  They found that the poor are frustrated by the difficulties they encounter trying to save their money in reliable ways.  Therefore, implementing financial tools for the poor would improve their lives greatly.  To analyze the money management of the poor, a case study was done on Hamid and Khadeja, a married couple living in Bangladesh.  Hamid was a reserve driver of a motorized rickshaw and Khadeja stayed home, their average monthly income equivalent to seventy dollars.  Although a fifth was spent on rent and a lot was spent on basic necessities, about two to thirty dollars a month were saved for minor shortfalls and for their parents.  By closely analyzing this family, it was found that much more saving is done by the poor than shows up on large surveys because much of the saving is not done officially in banks, but through family and at home safe keepings.  When the family needs to make a larger expenditure, the three common courses of action they can take are either, go without it, raise money by selling assets, or use past or future income to fund the expense.  It is argued that the poor, due to the uncertainty and irregularity of their income, need financial services more than anyone else.  It was found that among the author’s sample of 250 families, “no household used fewer than four types of [saving] instruments during the year.”  The concerns the poor face with saving money is first, the risk factor of disease or bad weather halting their income and second, the types of things the poor want to buy such as new furniture or health services, require a large amount of money at one time.  The financial diaries proved why the “shift from an exclusive focus on microcredit to the broader microfinance is an important and welcome advance.”  Poor households have shown that they would utilize more reliable financial partners, so we must work to get that for them.

Poor Economics: We Can Help


Poor Economics by Abhijit V. Banerjee and Esther Duflo calls for people to not be discouraged by the enormous issue of poverty.  A study they did where they showed students different fliers with information about the poor and then asked for donations confirmed the idea that while people’s first thought is to be generous, they often rethink and decide there is no point since the problem of poverty will never be solved.  The book emphasizes that the most important factor to solve poverty is where the aid given by individuals or nations to poor countries goes rather than where the money comes from because poverty is not solely about a lack of income, but rather a poor person not having the capabilities to reach his or her full potential.  The chapter concludes by determining that poverty is a trap when opportunity expands dramatically for those can invest just a bit more than others.  For example, a farmer who needs fertilizer.  Although the farmer may be able to buy half a bag of fertilizer himself, he will only reach a real agricultural boom when he receives a full bag, which is where aid could be of large help.  Poverty may seem like a permanent part of our nation, but it does not need to be.

8 Steps to Happiness

        The article If Money Doesn’t Make You Happy, Then You Probably Aren’t Spending it Right by Elizabeth Dunn, Daniel Gilbert, and Timothy Wilson explains how people often misuse money while attempting to buy what they think will make them happy.  A reason as to why people squander their money on things that will not make them happy is because they often wrongly forecast how future events will occur.  The first principle for spending money is to buy experiences instead of things.  One reason experiences are better than things is that we adapt to things quickly in contrast to a memory that can continue to provide delight years after the actual experience.  Experiences are also more likely to be shared with others which provides a higher level of happiness.  The second principle is to help others instead of yourself.  Social relationships are argued to be universally essential for happiness.  The third principle is to buy small pleasures instead of few big ones.  Since we adapt to things quickly it seems it would be more beneficial to buy a variety of small pleasures than few large purchases.  The fourth principle is to buy less insurance.  Research shows that humans are less fragile than they think and cope well with traumas.  This research proves that buying extended warranties on products may be “unnecessary emotional protection.”  The fifth principle is to pay now and consume later.  Buying quickly can often rack up debts and also eliminates anticipation which is another source of happiness.  People report high levels of happiness when anticipating experiences.  The sixth principle is to think about what you’re not thinking about.  This means that people often ignore unpleasant details when imagining products, therefore creating a bias of the degree of happiness that the purchase will give.  The seventh to beware of comparison shopping.  Comparison shopping may distract consumers from elements of a product that may be important to their happiness.  The eighth and final principle is follow the herd instead of your head.  Research shows that a good way to predict how much we will enjoy something is to see how much someone else enjoyed the same experience or product.  Money can buy happiness, if we use it the right way.

What Is Poverty?


Absolute poverty, also knows as extreme or abject poverty, measures the number of people living under a certain income threshold which is now $1.25 a day.  Relative poverty on the other hand is comparing individuals income with the average income.  There are currently over 1 billion people in the world living in extreme poverty.  The poverty threshold was originally developed in 1963 by Mollie Orshansky by taking the cost of the US Department of Agriculture’s economy food plan for families of three or more and multiplying that number by three.  It was determined to multiply the cost by three since the Agriculture Department’s 1955 Household Food Consumption Survey found that families spend an average of one third of their total income on food.  Poverty thresholds are now updated by the Census Bureau by using the Consumer Price Index which measures changes in the price level of a market basket of consumer goods and services purchased by households.  The thresholds are mainly used for statistical purposes.
Poverty Guidelines are another form of the federal poverty measure.  The guidelines simplify the poverty threshold so that programs such as Head Start, the Food Stamp Program, and the Children’s Health Insurance Program can use the poverty guideline to determine financial eligibility for these resources.  These programs aim to give benefits such as education and healthcare to families who cannot afford them.


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