No matter if we are talking about sports, business, clothes, etc., scarcity is not only easy to understand but also has a tremendous influence on human behavior.
Of course, you understand scarcity as something or someone that is unique or limited. For instance, you may have heard about a limited collection of watches or a new line of vanilla-flavored cookies from your favorite brand.
We get that, but we probably fail to see how this same “scarcity” places tremendous pressure on us, influencing our choices more than we realize.
We value something that is “scarce” because it is “finite.”
In theory, “scarcity” should reflect value
Take, for instance, millions of years ago when hunter-gatherers walked for days on end to find sources of water and food. Scarcity drove them to eat as much as they could when they found resources, as these were vital for survival—hence, the value.
Probably this is where the power of scarcity influences our psyche. Various entities have used this to exert influence over us for different purposes.
Consider the following experiment conducted by a company selling meat products over the phone.
Salesmen were divided into three groups:
- The first group gave the normal sales pitch.
- The second group gave the normal sales pitch and then explained that those specific meat products probably wouldn’t be available again for the next six months.
- The third group gave the normal sales pitch, mentioned the products wouldn’t be available for the next six months, and added that they knew this because they had insider information from one of the competitors.
What were the results?
The second group sold 100% more than the first group.
The third group, which used “Double-Scarcity” by highlighting both the shortage of meat and the insider information, sold 700% more than the first group.
Isn’t that amazing?
I bet those people probably weren’t meat-lovers, nor were those the best rib-eye steaks they had ever tasted. It was the influence of “scarcity” that pressured them to act.
Remember, most of the time, scarce resources reflect value, and through evolution, it seems we are almost compulsively bound to act on it.
Think of the multiple implications this has on our lives
Scarcity doesn’t just mess with our psychology like a mere program; it has some merit.
Imagine you are in front of the house of your dreams, about to place an offer. It’s a huge investment, and you probably don’t want to rush it. You want to take a couple of days to evaluate your options.
But-
How differently would you behave if you knew there were three other interested buyers and one had already made an offer?
You would probably feel a lot more pressure to act. But would that be bad?
The gimmicks
In the previous example, I wanted to point out that scarcity is signal!
The problem is that sometimes people try to take advantage of the scarcity principle to exert pressure on your decision-making.
Imagine, in the house example, that there were no other interested buyers or offers; it was just a sales tactic to make you “act” fast!
These are the bad practices that can be used against us by exploiting the principle of scarcity.
On the contrary, it is very valid and much appreciated to know if there are other people interested and we are at risk of “losing” what we want.
Let’s return to the house example: after a couple of days, you call back the salesman to make an offer, only to hear him say
“Oh, I’m so sorry, it sold. Other people were already interested, and it already had an offer the day I showed it to you.”
Wouldn’t you be mad, saying, “Why didn’t you tell me that?”
This illustrates the difference between signal and noise.