The Economics of Scarcity
Scarcity simply refers to the fact that we have limited resources (money, time, materials) but unlimited wants and needs. Because we can’t have everything, we’re forced to make choices about what matters most.
When something is hard to get, we tend to want it more. This explains why gold is expensive, why people chase exclusive experiences, and why limited-edition products create so much excitement.
This applies to more than just physical items. Time is scarce. Unique skills are scarce. If you have a rare combination of qualities, like being honest, hardworking, and smart, you become more valuable because that combination is uncommon.
The trick is learning to spot when scarcity actually matters versus when it’s just playing with our emotions.
What is Scarcity Bias?
Scarcity bias is when we overvalue something simply because it’s rare or hard to get. The fear of missing out takes over, and we stop thinking clearly about whether we actually need it or if it’s truly better than other options.
This tendency comes from our evolutionary past. For our ancestors, scarce resources like food or tools could mean life or death, so our brains learned to grab them quickly without overthinking.
Real-World Examples
Limited-Edition Products
Companies make “only 500 available” versions of products. Even if they’re basically the same as the regular version, people go crazy for them.
“Only 3 Left!” Messages
Online stores show warnings like “Only 3 left in stock” or “12 people viewing this now” to create panic. You end up buying impulsively, even though the item is probably widely available.Flash Sales and Countdown Clocks
“Sale ends in 2 hours!” makes you buy things you don’t really need. The ticking clock makes the deal feel more valuable than it is.Playing Hard to Get
In dating, someone who’s emotionally distant or unavailable often seems more attractive. Making yourself scarce can actually increase your appeal.Bidding Wars
At auctions or when buying houses, competition makes people pay way more than something is worth. The same house might sell for much less without multiple buyers fighting over it.Cryptocurrency Hype
Bitcoin is marketed as “only 21 million will ever exist,” which drives people to buy even when prices are unstable, fearing they’ll miss out.Job Offer Pressure
Employers say “we need an answer by Friday” to rush you into deciding. You might accept a worse offer rather than risk losing the “rare” opportunity.
How To Protect Yourself
First, check if it’s actually rare or just marketed that way.
Then ask yourself: “Would I want this if it were always available?”