“Opportunities seem more valuable to us when their availability is limited.”Robert Cialdini, “Influence: The Psychology of Persuasion”
The last time you bought anything online, there’s a good chance the website read, “Only 3 items in stock” or “Only 2 left at this price”.
Even when you consider that this is marketing mind games, there’s an itch to act now before it’s too late.
Let’s jump right into what scarcity is, how it works, and how to avoid being influenced to make sketchy decisions.
What is scarcity and why does it influence you?
When discussing scarcity, it usually relates to limited land, labor, oil, or whatever they teach you in Principles of Economics.
Most people tend to underestimate how scarcity impacts their lives and decisions.
You can define scarcity as the increased desire for nearly everything you might lose or which has a limited supply.
Limited supply propels demand because our minds are wired to associate limited access with higher quality and importance. Before you know it, scarcity can cause you to focus on things you wouldn’t care for otherwise.
Examples of using scarcity to create urgency
Here are a few examples of how companies use scarcity as a weapon to create urgency and attract your attention (and dollars):
- Limited edition
- Only 3 left at this price
- Back in stock for a limited time only
- 50 % off the next 48 hours
- Almost sold out
- Sign up now to get a 10% discount
“Something that, on its own merits, held little appeal for me had become decidedly more attractive merely because it would soon become unavailable”Robert Cialdini, “Influence: The Psychology of Persuasion”
Limited supply combined with competition is scarcity on steroids. Just think about how auctions and flash sales can get people to lose all sensibility in a blink. It’s a clever way for companies to replace abundance with sudden scarcity.
Save or lose?
Here’s a quick quiz: Which of these two arguments is the most effective?
- You can save up to $3,000 per year if you isolate your house.
- You can lose up to $3,000 per year if you don’t isolate your house.
Both result in the same monetary outcome. But the second phrasing is the one that activates our scarcity sensor. And here’s why.
Loss aversion is our preference to avoid losing something compared to gaining something of equal value. Psychologists Amos Tversky and Daniel Kahneman once proved that losing $100 is twice as painful as the pleasure of earning $100.
We care more about what we already possess than what we could potentially get.
What’s the problem with scarcity?
As you’ve now seen, scarcity is an influential force that can hijack your attention in a split second.
You could argue that scarcity creates focusing illusion; that is, when your mind attaches too much importance to one factor instead of looking at all available data points.
Your mental bandwidth can only handle so much simultaneously; if you focus on the things you don’t have, you can’t think clearly about anything else. This causes you to act and think irrationally, as you’ll see in the next section.
Fear of Missing Out
Did you ever exit an interesting conversation only to answer a call on your phone?
Or maybe you’ve felt excluded because you missed out on a night out, a concert, the latest gossip, or not checking your social feed for a day?
Fear of missing out is the sense of scarcity when you worry that your peers:
- Know something you don’t
- Possess more or something you don’t have
- Are up to something exciting while you’re not
That something is secondary; what’s important at the moment is that you feel like you’re missing out on an opportunity.
Other times, you can also FOMO about choosing the wrong or lesser thing – anything from picking the wrong education to second-guessing what you just ordered to eat at the restaurant.
In reality, there are often more important things to ponder – and it’s never as bad as we fear to be missing out. It pays to accept that you shouldn’t jump on any opportunity.
Why censorship and bans have the opposite effect
Attempts of control and censorship limit our freedom and thus present another source of scarcity.
The problem is that we will morph into defiant 4-year-olds if someone forbids us to do something. As opportunities become less available, most people feel their freedom diminish. Therefore, bans and censorship have the opposite effect and increase our desire.
It’s funny how scarce things – either in a restricted or exclusive way – make people:
- Want it more
- Feel more inclined and “attracted”
- Believe it’s more important than before
- Find it more persuasive.
When we bleep out swearwords, they become more exciting to learn.
If you can’t buy alcohol before age 21, you might spend hours figuring out creative ways to get your hands on a sixpack.
Guns N’ Roses, once dubbed “the most dangerous band,” intentionally made up a warning and put it on one of their concert posters:
The surgeon general deems Guns N’ Roses bad for your health but worth the risk
Scarcity is an influential shortcut that helps us decide on quality and value. We generally believe things that are difficult to possess must be better than things that are easy to own.
In conclusion, let’s sum up a few essential parts:
- People are more concerned about keeping or losing than saving or earning
- Relations and possessions are most valuable to you when you fear that you can lose them
- We tend to focus on what we lack instead of what we have
- Scarcity makes you believe that there’s never enough
As you see, scarcity can be very misleading. My take is that there’s just one uniquely scarce thing:
If you have enough time, you can always build more wealth, get healthier, grow friendships, and even pursue all the FOMO crap you can possibly dream of.
Everything else’s scarcity is debatable.