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date: 22 October 2017

Psychological Responses to Scarcity

This is an advance summary of a forthcoming article in the Oxford Research Encyclopedia of Psychology. Please check back later for the full article.

Scarcity is typically defined as the condition of having insufficient resources to cope with demands. This condition has important psychological implications. That is, it presents significant challenges to the human cognitive system. For example, having limited financial resources requires the meticulous calculation of expenses with respect to a budget. Likewise, having limited time requires the stringent management of schedules with respect to a deadline. As such, scarcity consumes cognitive resources such as attention, working memory, and executive control, and elicits a range of predictable and even counter-productive cognitive and behavioral responses as a result. According to a series of recent studies, scarcity focuses the attention on the problem at hand. This focus of attention facilitates performance by enhancing cognitive processing of information relevant to the problem, increasing the efficiency of resource use, and stabilizing the perception of value. Such prioritization of the problem at hand may seem advantageous, but it can lead to the neglect of other information that also needs attention. For example, scarcity causes myopic and impulsive behavior, prioritizing short-term benefits over long-term gains. Ironically, scarcity can also result in a failure to notice beneficial information in the environment that alleviates the condition of scarcity. More detrimentally, scarcity directly impairs cognitive function, which can lead to suboptimal decisions and choices that exacerbate the condition of scarcity.

These findings provide new insights on what scarcity means. It means not only making tradeoffs about physical resources (e.g., if I buy X, I cannot buy Y), but also making attentional tradeoffs (e.g., if I focus on X, I cannot focus on Y). The shortage of physical resources under scarcity is accompanied by a concurrent deficit of cognitive resources (e.g., attention, executive control). The cognitive deficits under scarcity are particularly problematic because they impair performance and lead to counter-productive behaviors that deepen the cycle of scarcity. In addition, people under financial scarcity suffer from stigmas and stereotypes associated with poverty. These social perceptions of poverty further burden the mind of the poor by consuming their cognitive resources, weakening performance in the poor. Understanding the cognitive and behavioral responses to scarcity provides new explanations as to why the poor remain poor, identifies the psychological causes of scarcity, and illuminates potential interventions to stop the cycle of scarcity. These insights have important implications for the design and implementation of policies and services targeting the populations under scarcity.