9 Things to Know About the Effects of Scarcity
How scarcity can change the way you feel and act.
Posted Feb 11, 2020
Economics is the study of how we use our scarce resources — like time and money — to achieve our goals. At the core of economics is the idea that “there is no free lunch” because we “can’t have it all.” To obtain more of one thing, we give up the opportunity of getting the next best thing. Scarcity is not just a physical limitation. Scarcity also affects our thinking and feeling.
1. Setting priorities. Scarcity prioritizes our choices and it can make us more effective. For example, the time pressure of a deadline focuses our attention on using what we have most effectively. Distractions are less tempting. When we have little time left, we try to get more out of every moment.
2. Trade-off thinking. Scarcity forces trade-off thinking. We recognize that having one thing means not having something else. Doing one thing means neglecting other things. This explains why we overvalue free stuff (e.g., free pencils, key chains, and FREE shipping). These transactions have no downside.
3. Unfulfilled desires. Restriction on desirable things orients the mind automatically and powerfully toward unfulfilled needs. For example, food grabs the focus of the hungry. We will enjoy our lunch more for being deprived of breakfast. Hunger is the best sauce.
4. Mentally depleted. Poverty taxes cognitive resources and causes self-control failures. When you can afford so little, so many things need to be resisted. And resisting more temptations depletes willpower. This explains why poor people sometimes struggle with self-control. They are short not just on cash but also on willpower.
5. Mental myopia. The context of scarcity makes us myopic (a bias toward here and now). The mind is focused on present scarcity. We overvalue immediate benefits at the expense of future ones. We procrastinate important things, such as medical checkups or exercising. We only attend to urgent things and fail to make small investments, even when the future benefits can be substantial.
6. Scarcity marketing. Scarcity is the feature that increases the perceived value of a product. Many stores strategically create a perception of scarcity to motivate impulse buying. For example, the pricing practice of limiting the number of items per person (e.g., two cans of soup per person) can lead to increased sales. The sign implies that the items are in short supply and shoppers should feel some urgency about stocking up. The fear of missing out can have a powerful effect on shoppers.
7. Forbidden fruit. People desire more of what they can’t have. Scarcity functions like an obstacle to goal pursuit, which intensifies the value of the goal. For instance, warning labels on violent television programs, designed to decrease interest, often backfire and increase the number of people who watch the program. Sometimes people want things precisely because they cannot have them: "The grass is always greener on the other side."
8. Playing it cool. The scarcity effect explains why coyness often is considered an attractive attribute. Playing hard to get is a most effective strategy for attracting a partner, especially in the context of long-term love (or the marital) in which a person wishes to be sure of their partner’s commitment. A “hard to get” player likes to appear busy, create intrigue, and keep suitors guessing. As Proust noted, “The best way to make oneself sought after is to be hard to find.”
9. Focus on more meaningful activities. Scarcity can also liberate us. Scarcity contributes to an interesting and meaningful life. When time is limited, goals related to deriving emotional meaning from life are prioritized. Midlife often intensifies the feeling that there is not enough time left in life to waste. We overcome the illusion that we can be anything, do anything, and experience everything. We restructure our lives around the needs that are essential. This means that we accept that there will be many things we won’t do in our lives.