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Scarcity principle


Principles > Scarcity principle

Principle | How it works | So what

 

Principle

I want now what I may not be able to get in the future.

How does it work?

If something is difficult to get, then getting it demonstrates to ourselves and others that we are in control of our environment. Threatening to take something away is showing the other person that you are in control. The desire of scarcity is thus the competitive urge to maintain control.

Aristotle knew this too, commenting in his 'Rhetoric':

'That is why what comes to us only at long intervals is pleasant, whether it be a person or a thing; for it is a change from what we had before, and, besides, what comes only at long intervals has the value of rarity.'

Controlling supply and demand

If you can control supply, then you have a significant lever on demand. The De Beers company buys huge quantities of diamonds on the world market, simply to keep them scarce so that their high price is maintained.

Scarcity must mean that

If something is not scarce, then it is not desired or valued that much. Praises from a teacher who seldom praises are valued more than praises from a teacher who is liberal with his or her praise.

Scarcity is non-linear process. As something becomes more scarce or less scarce, the desire for it does not change in a proportionate way.

If everything is scarce, then scarcity itself lacks its value and people become too used to it. Studies of retail sales have shown that if more than about 30% of goods have 'sale' sticker on them, the effectiveness of this method decreases.

Retail sales

'Whilst stocks last', 'This week only', 'Last one!'. Scarcity is a principle known by all retailers who milk it right down to the last drop. If something is rare, it seems we find it somehow more desirable.

A shortage of anything sends people scurrying to the shops to stock up (often fueling the shortage and keeping the spiral going).

Banned substances

Scarcity is the lack of something. When we realize that we do not have something, we desire it. Banning it only makes things worse.

Just telling someone that they should not do something makes it more desirable. When 'Lady Chatterley's Lover' was first published it got banned. Many black-market copies were sold and it made the author, D. H. Lawrence, famous.

People flock to see a heavily censored film. Music which is banned on radio stations shoots up the charts.

Competitive pressures

Competition uses the scarcity principle, as  only one person or team can win. This also highlights the social nature of scarcity: we judge ourselves against others. When they have things we do not, we become jealous.

Parent-child games

Parents often try to control children in their rationing of attention and affection. Children soon pick up on this and play the game in reverse.

The natural rebelliousness of teenagers comes out in scarcity games as parents restricting what their children actually cause them to rebel. 'Don't you dare take those drugs' may actually be the wrong thing to say, particularly if the child has a contrarian preference.

This game continues in other forms as we grow to adulthood, and telling people not do to things perpetuates the 'banned substances' game.

So what?

You can ration pretty much anything, including goods, time, attention, friendliness, agreement and so on.

Create envy, showing how people have what you are selling. Indicate how the supply is running short as everyone else getting one.

See also

Scarcity Principle, Transactional Analysis, Games, Control needs, Theories about decision errors

January Sales

Aristotle, Rhetoric, Book 1, Chapter 11

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