By Paul Sills

Scarcity is a particularly relevant principle of influence because it applies to our everyday lives, both personally and professionally. Being aware of the effects that the scarcity principle has on our thinking, and adopting strategies to successfully address such effects, is vital to achieving our goals.

The scarcity principle refers to the imbalance between our unlimited wants and our limited means. Scarce resources such as time, skills and money force us to make choices, which result in opportunity costs for every decision we make.

Fascinated by the human mind, a behavioral economist at Harvard University, Sendhil Mullainathan, investigated scarcity as an economic principle in relation to human interaction (Cara Feinberg “The Science of Scarcity” Harvard Magazine, May-June 2015).

Mullainathan discovered that the effects of scarcity on the brain are not limited to decisions regarding economics but reach into in all aspects of our lives.

One of the catalysts for Mullainathan’s research was the Second World War Minnesota University study on starvation (David Baker and Natacha Keramidas, “The Psychology of Hunger” (2013) 44 APA 9 at 66).

In 1944, 26 male volunteers moved into the university’s football stadium and voluntarily ate to reduce their calories so that researchers and relief workers could develop methods for starvation recovery. This was known as the Minnesota Starvation Experiment and lasted almost a year. The first three months involved eating a normal diet of 3,200 calories per day, then six months of 1,570 calories per day, followed by subsequent rehabilitation periods of restricted and unrestricted calorie intakes. The psychological and physiological effects of starvation were investigated.

The semi-starvation period produced the most dramatic results in the experiment. Aside from the physical appearance of the men, decreases in strength and heart rate, the psychological results were most profound. Hunger consumed the subject’s whole mindset. The men would dream of food, talk and read about food and savour the meals they were given during this time. Some even discussed opening restaurants or becoming farmers when the experiment ended.

Three key questions

Nearly 70 years after the publication of the findings, this experiment attracted the attention of Professor Mullainathan. To him, the findings demonstrated that “scarcity had stolen more than flesh and muscle – it had captured starving men’s minds” (Sendhil Mullainathan, Eldar Shafir, Scarcity: Why having too little means so much (Henry Holt and Co. 2013) at 67).

Mullainathan honed-in on three key questions in relation to scarcity and human behaviour: what happens to our thinking and decision-making when we feel we have too little of something? Why do people often make irrational decisions when faced with scarcity? And finally, why are there so few programmes and regimes that take this into account?

To explore these questions, Mullainathan teamed up with Eldar Shafir, professor of psychology at Princeton University, and their findings were presented in Scarcity.

Through their work, it was determined that just as food had taken over the minds of the Minnesota volunteers, scarcity affects our mental capacities wherever it occurs.

Essentially, the pair concluded that regardless of whether it is food, time or money that is absent, “scarcity captures the mind” (Ibid at 14.) In other words, scarcity is a mindset.

Mullainathan and Shafir concluded that if our minds are focused on one particular thing, our ability to balance our other commitments, exercise self-control and pay attention all suffer. Interestingly, the pair liken our thinking in these situations to that of a computer. Having multiple programmes open at once slows the computer down, compromising its ability to be used to the full extent of its ability. This is just like the human brain. While we don’t lose any of our skills, we instead lose the ability to fully apply ourselves. The cost of this is a lack of curiosity about outside issues and an inability to imagine long term effects and consequences.

Balancing work and life

It is often a struggle to balance our commitment to being a successful professional on one hand with our personal commitment to families, friendships and desire to be positive and caring members of society.

Time is a commodity, and this often forces us to make irrational decisions, surrendering to immediate gratification. Scarcity therefore shapes our behaviour as it rearranges what is important to us at any particular time. Although we have goals and expectations, scarcity of resources can force us to act in a way that tunnels our thinking, which can result in actions that would not have occurred if we had unlimited resources. Therefore, we must develop techniques to avoid the manipulative influence of scarcity.

Robert Cialdini proposes a two-stage response to the pressures resulting from the scarcity principle (Robert B Cialdini Influence: The Psychology of Persuasion 284 SE 2 at 80):

Notice the signs of a “scarcity response”. If you feel an increased heart rate or a general feeling of being “on edge,” then most likely you are reacting emotionally. Taking the time to realise you are overwhelmed with the expectations upon you and the subsequent scarce resources you have (ie, time) is a beneficial first step in responding to the effects of scarcity. Pausing to take a few deep breaths is a good way to collect your thoughts before proceeding.

Once you are in a cool headspace, work out the driving force behind your actions. Are you acting irrationally because of limited time and/or money? Would you be acting differently if you had unlimited resources? If yes – take the time to map out a plan, including potential steps for a way forward. This is a very effective way of getting back on track in terms of your goals and expectations. Writing out a plan is a helpful way to visualize a clear way forward. Given that the scarcity principle distorts our thinking, putting our thoughts on paper is a good way to ‘declutter’ our minds.

Unfortunately, we will never have enough of what we desire. We will forever be overwhelmed with the pressures of the scarcity principle unless we accept its realities and adopt strategies to successfully balance life’s commitments.

Paul Sills paul.sills@paulsills.co.nz is an Auckland barrister and mediator, specialising in commercial and civil litigation. He is an AMINZ Mediation Panel member.