Is Scarcity Real or Perceived? — Recommended Reading

Mullainathan, S. and E. Shafir, Scarcity: Why Having Too Little Means So Much. 2013, New York: Time Books.  

[You can read a free Introduction to the book at]

Is scarcity real or perceived?  “In economics, scarcity is ubiquitous.  All of us have a limited amount of money; even the richest people cannot buy everything.  But we suggest that while physical scarcity is ubiquitous, the feeling of scarcity is not.”  So say a Harvard economist and a Princeton psychologist, in their recent book Scarcity, which suggests that the scarcity mindset wreaks havoc on the behavior of human beings.

“Scarcity is not just a physical constraint.  It is also a mindset.  When scarcity captures our attention, it changes how we think…We are proposing something much more universal: Scarcity, in every form, creates a similar mindset.  And this mindset can help explain many of the behaviors and the consequences of scarcity…Scarcity creates its own trap…A scarcity trap: a situation where a person’s behavior contributes to her scarcity… Scarcity today creates more scarcity tomorrow.”

Through many experimental studies of their own, in the growing field of behavioral economics, these researchers find that, “..economics is meant to follow the logic of scarcity.  It is fitting then that its predictions are truer for those who actually have the scarcity mindset.”  Even simple experiments that randomly induced a moment of perceived scarcity were able to demonstrate significant reductions in intelligence, cognitive bandwidth, self-control.  “Scarcity predictably creates an additional load on top of all their other concerns.  It consistently and predictable taxes bandwidth.”

Acknowledging that, “ prevailing view explains the strong correlation between poverty and failure by saying failure causes poverty.  Our data suggests causality runs at least as strong in the other direction: that poverty—the scarcity mindset—causes failure.”

This research in behavioral economics complements the Ecosynomic explanation of the experience of collapse in scarcity-based agreements, as described in the 1,700 responses from 89 countries to the harmonic vibrancy survey and through our field work with dozens of organizations.  The behavioral economics research shows that a little scarcity goes a long way, having a huge effect on your experience, and the Ecosynomics research shows what people are learning about how to shift from scarcity-based  agreements to abundance-based agreements.

Another excellent book in the trend of researchers explaining a vast amount of academic research in very accessible, practicable terms, after you read Scarcity you will be much more aware of what conditions invoke the scarcity mindset, how to recognize the onset of those conditions, and what to do about it.