Unfortunately, we can’t have everything we want in life, which is where scarcity factors in. Naturally, people place a higher value on scarce objects and a lower value on the ones that are available in plenty- we call it the scarcity effect. This is another useful mental model.
This effect pretty much explains why people stock-piled on things like essential groceries in March 2020 before right before the lockdown started or why someone realizes the value of money only after they go broke. But that isn’t all that there is.
The most ubiquitous effect of the scarcity effect could be on your relationships with people. A lot of you might have this misplaced notion that, by being more social, or by hanging out with friends at parties, you could appear valuable to your friends and expand your social circle. But that is just the temporary value and attention that will, at best, increase your dopamine levels for a bit.
But if you want to come off long-term valuable as a person, you need to create that kind of value through scarcity. By this, I do not mean that you should cut yourself off from the rest of the world. Just know where to stop/step back, or in other words- learn to create boundaries. At the end of the day, you don’t want to compromise on your self-respect and, more importantly, your time. You risk losing your value every time you are readily there for people, as the saying goes, “Absence makes the heart grow fonder”. This brings me to one of the laws from the book ‘48 laws of power’ which says, “Too much circulation makes the price go down. The more you are seen and heard from, the more common you appear.”
Scarcity effect in marketing-
We are mostly aware of how the forces of demand and supply operate in real life. The marketing field uses the scarcity principle to create more demand for goods and services. How? By simply decreasing the availability of their products and charging premium prices for the same. Which means decreasing supply of a product increases demand for that particular product. Markets work according to the psychological principle that scarcity invokes fear or threat when consumers fear missing out on a product, and consider anticipated regret if they don’t purchase the scarce product. Successful organizations like Google, Starbucks effectively utilise the scarcity principle, which has benefited them over years.
Example- When you like something on an e-commerce site. But it comes with a message that “only few lefts.” Or “2 left.” You immediately purchase it. That shortage of that item triggers your emotion to buy it before the stock runs out.
The scarcity effect works in the favour of marketers. In a pretty much similar way, a common man can utilise the scarcity effect to his advantage.
It’s the simple supply-demand relationship. The price of a product increases when its supply is limited and overshadowed by the demand. Similarly, the value of a person surges when he is not too much available.
Make sure that the things and people you are investing in are worth your time. Again, do not spend too much time on any particular thing or person, because time is the scarcest resource on the planet. In this limited time, you should strive to accomplish as much as possible. Well, some people learn about the value of time only when it is gone, but that doesn’t essentially do them any good, does it? Make sure you steer clear of the glitz and glamour of what you see in the movies wherein it is shown that the more you value friendships and relationships, the more positive light you are seen in. That isn’t how things operate in real life. In fact, you diminish your value by always being available for people. You could achieve a lot more if you use that time judiciously. Attaching extra importance to people can also backfire. Movies neglect the bigger picture and their sole purpose is to entertain the masses and make money out of it.
Also note that we do mean that you kill your social life. It is necessary to have a decent social life.
Here, a cost-benefit analysis could really help you decide on the things that you should be placing relatively more value on, thereby saving you a lot of time and energy.
- Weigh the pros and cons of both sides in that make note of what you could gain as well as lose by being scarce.
- Set your priorities right. In the end, it is you, and only you, that can make a difference in your own life. Nobody will be there with you forever. In fact, the concept of forever is non-existent.
- You don’t own anyone anything. So, stop acting like one. Most of the people you know will ditch you when the situation demands.
The bottom line is, time is scarce; you could still make the most of it by being scarce/ by making a limited appearance in people’s lives. Being the center of attention isn’t what you should strive for. If there’s anything you should be striving for, that should be utilizing the scarce resources to your advantage.