Scarcity affects cognitive biases: The case of the illusion of causality

Abstract

Previous research indicates that economic scarcity affects people's judgments, decisions, and cognition in a variety of contexts, and with various consequences. We hypothesized that scarcity could sometimes reduce cognitive biases. Specifically, it could reduce the causal illusion, a cognitive bias that is at the heart of superstitions and irrational thoughts, and consists of believing that two events are causally connected when they are not. In three experiments, participants played the role of doctors deciding whether to administer a drug to a series of patients. The drug was ineffective, because the percentage of patients recovering was identical regardless of whether they took the drug. We manipulated the budget available to buy the drugs, tough all participants had enough for all their patients. Even so, participants in the scarce group reduced the use of the drug and showed a lower causal illusion than participants in the wealthy group. Experiments 2 and 3 added a phase in which the budget changed. Participants who transitioned from scarcity to wealth exhibited a reduced use of resources and a lower causal illusion, whereas participants transitioning from wealth to scarcity were unaffected by their previous history.