Q:

How does scarcity affect people?

A:

Quick Answer

Scarcity inspires people to obtain something that they feel may be unavailable in the future. An action performed in response to scarcity can be driven by survival instinct or by the desire to exercise control over a person's circumstances.

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Full Answer

An item must have real or perceived value to be considered scarce. When a valuable item is perceived to be scarce, the demand for the item inevitably rises. This increase in demand causes the item to become even more desirable and leads to a further increase in price. Since human behavior is very predictable in regard to scarcity, carefully manipulating the supply of products has become an extremely effective marketing tool for both individuals and retailers

Legislative action can also lead to scarcity. For instance, the passage and enforcement of prohibition laws actually led to an increase in the demand for alcohol. Envy can be closely related to scarcity. If there is even the perception that a particular good or service is reserved for a particular few people, others have an even greater desire to obtain it. Luxury items are priced to exploit this desire, and the perception of scarcity is often used as a justification for paying high prices for an item.

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