Your Brain on Scarcity
It’s no secret that small-business owners are looking for every edge they can get to gain an advantage over their competition in the marketplace. But one of the most powerful strategies used isn't really new at all -- it's been around since our ancestors were living in caves, but it still holds tremendous sway over consumers today: Scarcity.
“I think the reason Scarcity works is because it plays into our brain’s natural tendency to perceive scarcity, even when it doesn’t necessarily exist. Our brains are hard-wired to forecast what will happen next in order to survive, and Scarcity tricks people by triggering that same instinctual response today. Scarcity affects us on a primal level, and it makes whatever is scarce seem more valuable.”- Scarcity Expert Dr. Pirouz Khan
You see it daily in almost every 'sale' or ' last chance' ad you are hit with.
Scarcity is not just an effective marketing strategy, however. Scarcity affects how our brains process information and determine what we value.
Studies show that when you present two items side by side, but only highlight the one that's limited in quantity, people's brains will be drawn to it. Researchers believe it's an adaptive trait from the earliest days of mankind when a human’s survival depended on their ability to perceive when vital things like food and water became scarce.
Today, people process scarcity similarly. When people perceive something as rare they become hyper-focused on it. That’s because heightened cognitive processing kicks in, which often elicits anxiety. And the anxiety is what leads us to take action and buy. Scarcity, in other words, is a powerful force.
Can a heavy diet of scarcity actually change your brain?
Yes, according to Scarcity: Why Having Too Little Means So Much by Sendhil Mullainathan and Eldar Shafir- “Scarcity is not just a physical constraint. It is also a mindset. When scarcity captures our attention, it changes how we think—whether it is at the level of milliseconds, hours, or days and weeks. By staying top of mind, it affects what we notice, how we weigh our choices, how we deliberate, and ultimately what we decide and how we behave. When we function under scarcity, we represent, manage, and deal with problems differently.”
Scarcity in itself isn’t a negative thing, but when we have it constantly in our minds, it is going to lead us to behave in one way over another. Scarcity changes the brain because of what happens when you are processing information at a higher level. Scarcity utilizes the insular cortex (responsible for processing emotions) as well as the amygdala (conditioned fear responses). In other words, when there is a scarcity cue our body processes it as a danger or threat. The body is forced to respond almost reflexively.
The Scarcity Trap
When given the chance to break free from scarcity, most people won’t necessarily do so because of how it affects their decision-making process. Scarcity triggers the brain into taking shortcuts that fill in for missing information. Scarcity also induces errors in judgment, which can lead us astray but don’t necessarily make us more creative either. These loops can become ingrained. It might make you focus your attention on the things you want but doesn’t always help decision-making when it comes to what we need.
Breaking Free from Scarcity Control
Scarcity is in the background all the time, but it can be broken once you know how to recognize it when it comes up.
First of all, scarcity happens for one reason: Either we perceive something as scarce, or someone else does. When we respect or trust the person saying that something is scarce, we tend to believe it. The person can be a product brand or your neighbor next door. Scarcity is in the eye of the beholder, so be sure to choose wisely.
Secondly, one of the main keys to breaking scarcity's control over your life is to take the time to reset your mindset. Scarcity will try to convince you that you can't afford something, but the truth is you actually can; it's just a matter of prioritizing what you spend your money on.
And lastly, sometimes fighting back against scarcity's messages adding a little abundance to the mix. Scarcity says you don't have enough time, but abundance says it's OK to be late—sometimes. Scarcity tells you that you can't afford something, but abundance reminds you that there are ways to pay for the things that matter without going broke. Scarcity says no one is interested in what you're selling, but abundance urges you to keep pitching until the right person signs on the dotted line. Scarcity would have you believe a little perspective won't help against its barrage of messages designed to get a rise out of you and control your life. But understanding how your brain works against scarcity's many tricks could be exactly what enables you to walk away from this fight with your financial and mental sanity intact while still getting everything that really matters in your life.