Psychology of Scarcity

Framed field experiment on resource scarcity & extraction: Path-dependent generosity within sequential water appropriation

Alexander Pfaffa
Maria Alejandra Vélez
Pablo Andres Ramos
AdrianaMolina

• We look for durable effects of past resource scarcity via effects on past behaviors
• We implemented a novel framed field experiment with farmers from rural Colombia
• Our treatments are orderings of scarcities, higher to lower versus lower to higher
• Upstream takes a larger share of higher resources if they have faced low resources
• Worse for downstream, this triggers more extraction by midstream following upstream

2015-06-02

Scarcity Frames Value

Anuj K. Shah
Eldar Shafir
Sendhil Mullainathan

Economic models of decision making assume that people have a stable way of thinking about value. In contrast, psychology has shown that people’s preferences are often malleable and influenced by normatively irrelevant contextual features. Whereas economics derives its predictions from the assumption that people navigate a world of scarce resources, recent psychological work has shown that people often do not attend to scarcity. In this article, we show that when scarcity does influence cognition, it renders people less susceptible to classic context effects. Under conditions of scarcity, people focus on pressing needs and recognize the trade-offs that must be made against those needs. Those trade-offs frame perception more consistently than irrelevant contextual cues, which exert less influence. The results suggest that scarcity can align certain behaviors more closely with traditional economic predictions.

2014-11-21

Novotney, A. (2014). The psychology of scarcity. Monitor on Psychology, 45(2), 28

Being poor requires so much mental energy that those with limited means — be they sugarcane farmers in India or New Jersey mall-goers — are more likely to make mistakes and bad decisions than those with bigger financial cushions.
This is the psychology of scarcity, says Princeton University psychology and public affairs professor Eldar Shafir, PhD, who with Harvard University economist Sendhil Mullainathan, PhD, explores how people's minds are less efficient when they feel they lack something — whether it is money, time, calories or even companionship.
This scarcity mindset consumes what Shafir calls "mental bandwidth" — brainpower that would otherwise go to less pressing concerns, planning ahead and problem-solving. This deprivation can lead to a life absorbed by preoccupations that impose ongoing cognitive deficits and reinforce self-defeating actions. Shafir and Mullainathan offer insights into how to ease the burden in the 2013 book "Scarcity: Why Having Too Little Means So Much" (Times Books).

2014-02-01

Scarcity or abundance caused by people or the environment as determinants of behavior in the resource dilemma. 

Rutte, C. G.,
Wilke, H. A.,
Messick, D. M.

There is evidence that people respond differently to people-induced scarcities and abundances than to nature-induced ones. In a resource dilemma game, half of 72 subjects were confronted with a scarce remaining resource and the other half with an abundant one. Half of the subjects in each of these conditions learned that scarcity and abundance could be attributed to the members of their own group, while the other half believed that these circumstances were due to the environment. We found that subjects harvested more from the resource in abundance than in scarcity conditions. Furthermore, the difference in harvest size between scarcity and abundance conditions was greater in the environment condition than in the group condition. These results are contrasted to predictions derived from a rational economic analysis and a psychological model that accounts for the results is discussed.

1987-05-01