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Imagine going to the shop with only $5 to spend. You find 2 items you really want, a movie or a new video game. Now you have to make a choice. That’s exactly what scarcity is. The Oxford Dictionary defines scarcity as the state of being in short supply or a shortage.
When resources are scarce, we need to weigh the pros and cons of different options and choose the one that makes the most sense for us.
There are two primary categories of scarcity: absolute and relative. Absolute scarcity means the physical constraints of resources, whereas relative scarcity relates to the worth we assign to those resources.
For instance, diamonds are not considered absolutely scarce; however, due to the high value we, as a society, attribute to them, they are deemed relatively scarce.
Now we know the condition, scarcity, but what is the scarcity principle? The scarcity principle is what happens in our brain where limited availability makes something seem more valuable or desirable, which triggers a fear of missing out (FOMO) on a product that is being sold.
Let’s say a movie theater has quite a lot of tickets for a movie. The owner of the movie theater advertises the movie and says there are only a limited number of tickets left. This is what would create the scarcity principle. It’s not necessarily a bad thing, but it is a way that company owners can get you to spend money on a product/service.
Understanding scarcity is important, but more important is knowing how to integrate it into your daily routine, whether at work or in the classroom.
Become an Expert at What You Do: Deepen your knowledge in an area relevant to your field. Be the "go-to" person for that specific subject. This sets up the foundation for scarcity in the future.
Be Productive, Not Just Busy: Focus on work that matters. When you manage your time efficiently and deliver quality results, people respect your schedule and realize your time is valuable.
Be an Exceptional Collaborator: Develop a reputation for being reliable, easy to work with, and a strong problem-solver in group dynamics. People will specifically ask for you on their teams.
Understanding what scarcity is and how to integrate it into your life, it helps us improve both our work/education and our personal lives.
Happy New Year,
Atharv Wani
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