Tuesday, June 19, 2018

Scarcity/Abundance

Definitions

Scarcity principle can be defined as ”You put more value to the things that are limited.” Abundance principle is basically the inverse of scarcity and can be defined as ”You put less value to the things that are in excess.”

Basics of scarcity and abundance

When the availability of something is limited, it becomes more valuable. When things are the least available, they are the most desirable. If a thing is scarce or it becomes scarcer, it has more value to people. For example, sometimes a mild defect makes some collectibles more valuable compared to original ones. Large amounts of similar collectibles make all of them a lot less valuable or desired. Scarcity principle is not just about material things. It relates to information, knowledge, and communication. Same works with abundance too. They also relate to each other. When things are abundant and they become scarce the reaction to scarcity is even stronger than scarcity working by itself. People who have nothing are not likely to revolt against the government. People who have something that is taken away, because of the government, are more likely to revolt.

The power of the scarcity principle comes from the two major sources. First, people have a tendency to try to find short-cuts. Saving energy is the most important task of your brains and body. You know that things are typically better when they are harder to acquire. You associate scarcity with quality. And you are most likely to be right, but not always. The other main source of power within the principle is that when a thing becomes less available, your lose freedom to make choices. The power of this source is the strongest, when you have lost your freedom to choose. Then, you start finding a way to get your freedom to choose back. Banning something or censorship both increases a desire to have something. When something is prohibited, its desirability increases via losing a freedom to choose. When it comes to the abundance, the first source is the same, the desire for short-cuts and the second source, is a bit different. It is too easy to choose.

Combination of rarity and competition drives our desires for something to new levels. Lots of people and scarce items create unwanted consequences. Advertisers can sell their products by showing how many other people are interested in their items. If you really want to sell something, try to sell it by having all the people who are interested in it at the sample place at the same time. You definitely do not want to create an image that you have plentiful of those items to sell and no competition.

How to use/avoid effects of scarcity and abundance

It is better to have scarce resources up to some point, when you want to achieve something. Whether it is about time, money, physical labor or some other type of resource. Putting a deadline that is tight is better than having unlimited amount of time to do something. The most probable thing that happens is that you start doing things later. You should put enough time that it is possible to do something rather than waiting for a very likely failure. When it comes to money or physical labor, most solutions are focused on adding resources, instead of doing things better. This is especially typical for politicians. Coping with scarcity do not belong to their vocabularies. It is easy to use other people´s money as a leverage to get what you or your financier want and think they are abundant.

According to Robert Cialdini, a typical reaction to scarcity is a physical agitation. When you see something become less available, your ability to think diminishes. Physical agitation is a sign that you need to think why you want to have it. Most often you just want to own it. You want to use it. If this is the reason, you should remember that limited availability does not really make it better. You should always be reflecting on how you feel about things. There should be an emotional arousal as a first sign. You should calm yourself and pursue a rational state of mind. After calming down, you should ask yourself why do you want to have it? In case of an abundance, you will feel indifference. You do not really care if you use some item or lose it. The speed of getting rid of things increases. For example, you will use toilet paper faster, when you have bought a large amount of it.

All in all, optimizing the amount of resources is hard. Having enough scarcity, but not too much is not easy. There has to be some slack. Everything cannot have maximum efficiency, because whe things go wrong at that point, shit hits the fan and big failures happen.

Sources:

Influence, Robert B. Cialdini
Pre-Suasion, Robert B. Cialdini

-TT

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