Behavioral economists and psychologists have identified the scarcity heuristic as a mental shortcut whereby people place value on an item based on how easily it might be lost, especially to competitors.  The scarcity heuristic does not only apply to a shortage in absolute resources, but according to Robert Cialdini, author of Influence: Science and Practice, the scarcity heuristic leads to us to make biased decisions on a daily basis.

Please allow me to repeat that:  Research shows that the scarcity heuristic is “informing daily decisions.”

In their article The Scarcity Bias featured in the International Association of Applied Psycohology’s journal Applied Psychology, Luigi Mittone and Lucia Savadori wrote:

“The perception of scarcity is sustained by a competitive pressure on the demand side, and the consumer infers from this competition that the scarce good should possess some inner intangible property… In our view, scarcity can act as a direct positive attractor on the consumers’ preference structure, without necessarily being mediated by any social or cultural factor.  For example, a psychological theory that suggests an explanation for scarcity effects on the perceived utility of a good, is “uniqueness theory” (Snyder & Fromkin, 1980). According to this theory, consumers may desire scarce goods as a way to differentiate themselves from others.  people perceive scarce goods as a vehicle for acquiring a higher status symbol, or as being of higher quality…Moreover, the scarcity condition involves a partner (competitor) to create scarcity, while the abundant condition does not.  …we think this bias should not be considered irrational tout court since it is extremely useful in the context of competition for resources, and helps development and survival of the species.”[1]

These researchers suggest that people often desire scarce resources to differentiate themselves from competitors. Additionally, in their opinion behaving in this way “helps development and survival of the species.”

Over the course of time, I intend to make the case that the scarcity heuristic is a logical fallacy.  This way of thinking is not helping our development or survival.  Further, contrary to popular belief, I suggest that competition is interfering with the “real” order of the universe, and that, because scarcity is not central to this reality, we should make every effort to shift from a scarcity mindset to one of abundance.

Categories: Blog

Tags: Abundance, economics, Economy, Generative Economy, Generative King Archetype, mindset, order, scarcity, Scarcity Heuristic