The scarcity principle is a psychological phenomenon where people perceive items or opportunities as more valuable when they are limited in availability. This principle suggests that scarcity creates a sense of urgency or desire, leading individuals to place higher value on scarce resources or opportunities compared to abundant ones.
Essentially, people have a tendency to place a higher value on things perceived as rare while devaluing things seen as common or abundant.
Learn more about how marketers take advantage of the scarcity principle to persuade people to purchase goods and services.
The Psychology Behind the Scarcity Principle
The scarcity principle is caused by several psychological factors, including:
- Perceived value: When something is scarce, people often perceive it as more valuable because it becomes associated with rarity and exclusivity.
- Fear of loss: The idea of missing out on something desirable can create a fear of loss, prompting individuals to act quickly to obtain the scarce resource or opportunity.
- Social proof: The fact that something is scarce can serve as social proof of its desirability, reinforcing the idea that it is valuable and worth pursuing.
- Increased attention: Scarcity tends to focus people’s attention on the limited resource or opportunity, amplifying its perceived importance and attractiveness.
- Psychological reactance: The restriction or limitation of a resource can trigger psychological reactance, leading individuals to desire it more as a way to regain their freedom of choice.
Examples of the Scarcity Principle
Browsing through the weekly ad for your local grocery store, you notice several items with a large notation beside them stating “Limited Quantity!” Suddenly, you want to rush down to the market and get some of the peaches, strawberries, and plums the store assures you are in short supply.
Why do we suddenly want something more when we learn it is scarce or limited? Psychologists refer to this tendency as the scarcity principle, sometimes referred to as the scarcity technique or feigned scarcity. People tend to place a higher value on items that are scarce while placing a lower value on items that are plentiful.
Marketers are also well aware of this tendency and use it often to advertise and sell products and services.
Consider how often you see or hear the following types of phrases each and every day:
- “Hurry! Limited time offer!”
- “Last chance sale!”
- “Only five items left in stock!”
Such statements urge you to get in on the offer while there’s still time; to add the item to you online cart and click purchase before someone else beats you to it. Such tactics work surprisingly well. If you’ve ever felt a sense of urgency to make a purchase before a sale ends or before a product runs out, you’ve just been influenced by the scarcity principle.
How Scarcity Impacts Consumers
Consider the number of U.S. consumers who head out to shop the day after Thanksgiving, known as “Black Friday.” The infamous shopping day relies on the scarcity technique to draw shoppers into the stores.
Since the sale only lasts one day and many items are limited on a first-come, first-serve basis, people know that if they don’t get to the store and buy the items they want, they may not be able to get them later.
Evidence of Scarcity Has the Greatest Impact
Of course, just telling people something is scarce doesn’t necessarily mean they will believe it. The scarcity principle is more likely to have an effect when people actually have proof of scarcity. If they have actually searched for an item they want only to find that it is sold out or limited, they are more likely to want the item even more and find it even more desirable.
Classic Research on the Scarcity Principle
Researchers have also demonstrated the effectiveness of scarcity in experimental settings. In a 1975 study by Worchel, Lee, and Adewole, volunteers were given a chocolate chip cookie to taste and then rate on several different areas. In some cases, the cookie was drawn from a jar of 10 cookies, while in other instances, it was taken from a jar containing only two cookies.
Despite all of the cookies being exactly the same, volunteers rated the cookie drawn from the jar containing two cookies as better than the one drawn from the jar containing 10 cookies.
Scarcity Can Lead to Bad Decisions
But scarcity doesn’t just drive people to buy things they normally wouldn’t or rate things as more desirable than they would be otherwise. It also makes people more likely to make mistakes and bad decisions.
The Urge to Act Quickly
One of the primary effects of scarcity is the urge to act quickly. When faced with a limited opportunity or resource, we may feel pressured to make a decision without fully evaluating its consequences. This can lead to impulsive choices that we later regret.
Ignored Alternatives
Scarcity often narrows our focus, making it difficult to consider alternative options. In our haste to secure the scarce resource, we may overlook potentially better alternatives that are readily available. This tunnel vision can result in missed opportunities and suboptimal outcomes.
Emotional Decision Making
The fear of missing out (FOMO) is a powerful emotional driver that scarcity exploits. When we perceive something as scarce, our emotions can override rational thinking, leading us to make decisions based on fleeting desires rather than careful consideration.
This emotional decision-making process is prone to biases and may not align with our long-term goals.
Rushed Evaluation
Scarcity can also lead to rushed evaluation of the available information. Instead of thoroughly assessing the value and quality of a scarce resource, we may rely on superficial cues or social proof to justify our decision. This shortcut can result in poor judgments and dissatisfaction with the chosen option.
Regret and Disappointment
In hindsight, the allure of scarcity may fade, leaving us with feelings of regret and disappointment. What initially seemed like a rare opportunity may turn out to be less valuable or desirable than anticipated. This discrepancy between expectation and reality can leave us questioning our judgment and feeling disillusioned.
How to Stop the Scarcity Principle from Negatively Impacting Your Decisions
Fortunately, there are some strategies that you can use to help minimize the negative effects of the scarcity principle. Tactics that can help include:
Awareness and Mindfulness
Recognize when scarcity is influencing your decision-making process. By being aware of its presence, you can take steps to counteract its effects.
Evaluate Alternatives
Resist the temptation to focus solely on the scarce option. Take the time to explore alternative choices and consider their merits objectively before making a decision.
Delay Your Decision
Give yourself some breathing room by delaying your decision-making process. Taking a step back can help you avoid making impulsive choices driven by the fear of missing out.
Seek Additional Information
Gather as much information as possible about the scarce resource or opportunity. By seeking out more information, you can make a more informed decision based on facts rather than scarcity-induced emotions.
Consider Long-Term Goals
Think about how your decision aligns with your long-term goals and priorities. Will the scarce resource or opportunity truly contribute to your overall well-being and success, or is it just a momentary desire?
Practice Self-Control
Build your self-control muscle by resisting the urge to act impulsively when faced with scarcity. Remind yourself that scarcity is often artificially created and that there will always be other opportunities in the future.
Create Abundance
Shift your mindset from scarcity to abundance by focusing on what you already have rather than what you lack. Cultivate gratitude for the abundance in your life, whether it’s relationships, resources, or opportunities.
Set Boundaries
Establish boundaries to protect yourself from the pressure of scarcity-driven marketing tactics. Limit your exposure to sales pitches and promotional messages that exploit scarcity to manipulate consumer behavior.
Key Points to Remember
While scarcity can be a powerful motivator, it’s essential to approach it with caution. By understanding how scarcity can influence our decision-making processes, we can mitigate its negative effects and make more informed choices.
Instead of succumbing to the pressure of scarcity, take a step back, evaluate your options carefully, and consider the long-term implications of your decisions. Ultimately, by being mindful of the pitfalls of scarcity, you can empower yourself to make choices that align with your values and aspirations.
By incorporating certain strategies into your decision-making process, you can minimize the scarcity principle’s impact and make choices aligned with your values and goals.
Sources:
Cheung, T. T., Kroese, F. M., Fennis, B. M., & De Ridder, D. T. (2015). Put a limit on it: The protective effects of scarcity heuristics when self-control is low. Health psychology open, 2(2), 2055102915615046. https://doi.org/10.1177/2055102915615046
Montani, G. (1987). Scarcity. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_1318-1
Roux, C., Goldsmith, K., & Cannon, C. (2023). On the role of scarcity in marketing: Identifying research opportunities across the 5Ps. Journal of the Academy of Marketing Science, 1–6. Advance online publication. https://doi.org/10.1007/s11747-023-00956-0
[…] When something is scarce, it is typically seen as valuable. […]