Title: Scarcity and Consumer Decision Making: Is Scarcity a Mindset, a Threat, a Reference Point, or a Journey?
Abstract: Previous articleNext article FreeScarcity and Consumer Decision Making: Is Scarcity a Mindset, a Threat, a Reference Point, or a Journey?Kelly Goldsmith, Vladas Griskevicius, and Rebecca HamiltonKelly Goldsmith Search for more articles by this author , Vladas Griskevicius Search for more articles by this author , and Rebecca Hamilton Search for more articles by this author PDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinked InRedditEmailQR Code SectionsMoreThis special issue brings together research examining the impact of scarcity on consumer decision making. A consumer’s ability to meet consumption goals may be challenged by scarcity of resources, such as money or time, or scarcity of products. Scarcity may be short-term, triggered by the loss of a job or by product stockouts, or it may be chronic, related to a consumer’s socioeconomic status.Over the past decade, there has been a surge of academic interest in scarcity, perhaps triggered by the 2008 financial crisis, and likely to be accelerated by scarcity related to the COVID-19 global pandemic. In 2013, Mullainathan and Shafir published their book Scarcity: Why Having Too Little Means So Much, which proposed that scarcity of diverse resources, such as money and time, can have similar cognitive and behavioral consequences. Recent conceptual papers have highlighted the effects of resource scarcity on consumer self-regulation (Cannon, Goldsmith, and Roux 2019), reviewed the effects of financial constraints on consumer decision making (Hamilton et al. 2019a), and integrated work on product and resource scarcity to better understand the consumer decision journey (Hamilton et al. 2019b). Roundtables on the topic of scarcity convened at the 2018 and 2019 Association for Consumer Research Conferences drew large numbers of attendees, highlighting the opportunity to bring together work on this topic in a special issue of the Journal of the Association for Consumer Research.The more recent interest in the effects of scarcity on consumer behavior follows decades of earlier work on the topic. As the field of consumer behavior developed in the 1970s and 1980s, researchers began to highlight challenges faced by consumers with scarce resources (Hill 2008). In his classic book The Disadvantaged Consumer, Alan Andreasen (1975) suggests that the problems faced by impoverished consumers in the marketplace are fundamentally different from those faced by middle-class consumers. In addition to potential discrimination in the marketplace (Alwitt and Donley 1996), impoverished consumers face both scarcity of income and scarcity (restricted availability) of products, requiring them to develop emotional and behavioral coping strategies to manage their interactions in the marketplace (Hill and Stephens 1997; Hill 2002).As research on scarcity has evolved, four distinct research perspectives on the effects of scarcity have emerged (Hamilton et al. 2019a): resource scarcity, environmental uncertainty, social comparison, and choice restriction. Literature on resource scarcity suggests that scarcity of any resource shifts the consumer’s attention (Mullainathan and Shafir 2013) and changes the way they allocate scarce resources (Shah et al. 2012); we refer to this perspective as scarcity as a mindset. Literature on environmental uncertainty suggests that scarcity changes consumers’ expectations of and interactions with their environment (e.g., Mittal and Griskevicius 2016); we refer to this perspective as scarcity as a threat. Literature on social comparison emphasizes the role of scarcity relative to others and in self-regulation (Piff et al. 2010; Cannon et al. 2019); we refer to this perspective as scarcity as a reference point. Finally, literature on choice restriction suggests that scarcity limits the consumer’s ability to evaluate, choose, and consume products and services that they need or want (Botti et al. 2008; Hamilton et al. 2019b); we refer to this perspective as scarcity as a journey. Using these four perspectives as a framework, we will explain how the articles in this special issue build on these points of view, and identify important questions still to be answered.Four Perspectives on Scarcity and Consumer Decision MakingIn this section, we provide a brief overview of these four perspectives on scarcity and consumer decision making, introduce the articles in the special issue, and suggest future research directions stemming from this work.Scarcity as a MindsetIn contrast to earlier work on scarcity that focused on differences in the experiences of impoverished versus middle-class consumers, Mullainathan and Shafir’s (2013) book Scarcity: Why Having Too Little Means So Much changed the nature of the discussion about scarcity by suggesting that scarcity of a wide variety of resources (e.g., both time and money) can trigger similar changes in cognitive processing, which they term a scarcity mindset. These authors propose that scarcity focuses the consumer’s attention on the resource that is scarce, potentially leading to enhanced productivity and more efficient use of that resource. However, while focusing on a scarce resource can yield benefits, it can also lead to tunneling, that is, neglecting other resources and obligations. For example, an impending deadline for a project (time scarcity) may focus a consumer’s attention on completing that project, but progress on other projects is likely to suffer, even if those other projects have the potential to generate greater long-term rewards. Further, scarcity seems to impose a cognitive “bandwidth tax,” such that scarcity of one resource, such as money, occupies so much of one’s mind that scant cognitive resources remain available for other tasks (Mani et al. 2013).This perspective of scarcity as a mindset facilitated an increase in consumer behavior research examining scarcity for several reasons. First, this perspective allows for both positive and negative effects of scarcity, and both short-term and long-term consequences, widening the range of dependent measures that can be studied. Second, this framework allows more people to identify with feelings of scarcity. For example, many people who do not experience scarcity of money may experience scarcity of time, which tends to be a signal of high status (Bellezza, Paharia, and Keinan 2017), whereas scarcity of money is often associated with low status. Consumers may recognize the same patterns of focusing and tunneling in their behavior in response to scarcity of time or money. Finally, this framework offers the opportunity for researchers to both measure and manipulate a scarcity mindset, allowing them to study the effects of scarcity across a wider range of consumers and resources (e.g., Sharma and Alter 2012; Roux, Goldsmith, and Bonezzi 2015).In this special issue, new work by Anandi Mani, Sendhil Mullainathan, Eldar Shafir, and Jiaying Zhao explores the cognitive effects of scarcity among those living in conditions of relative (rather than absolute) scarcity. Their article, “Scarcity and Cognitive Function around Payday: A Conceptual and Empirical Analysis,” explores the behavioral and psychological impacts of minor changes in cash flows among the working poor in the United States. The authors examine how the number of days from a consumer’s last paycheck affects the consumer’s cognitive performance on widely accepted tests of cognitive function (e.g., the Stroop Task; study 2). They find that, even though all participants lived in conditions of relative scarcity (e.g., all participants made less than $40,000 per year in total household income, and 41% of the sample made less than $20,000 per year in total household income; study 2), the distance from payday exerted a meaningful influence on participants’ cognitive abilities, such that their cognitive abilities decreased as the number of days since the prior payday increased. These results provide support for the cognitive “bandwidth tax” demonstrated in prior work with subsistence farmers (Mani et al. 2013) and suggest that consequential fluctuations in scarcity exist even among those living in conditions of relative scarcity in developed countries.One implication of the perspective of scarcity as a mindset is that scarcity of different types of resources, such as scarcity of time versus money, can have a similar impact on cognitive processing. This suggests that consumers may be able to address different types of scarcity similarly, by engaging in compensatory consumption. In their review, Cannon and colleagues (2019) draw from Mandel and colleagues’ (2019) framework for compensatory consumption to highlight certain compensatory patterns that scarcity commonly engenders.Multiple articles in this special issue examine the degree to which more abundance of one resource may compensate for scarcity of another resource. In “Monetary Scarcity Leads to Increased Desire for Assortment,” Anneleen Van Kerckhove, Renaud Lunardo, and Gavan Fitzsimmons propose that considerations of financial scarcity (vs. scarcity of space or a control condition) increase consumers’ desire for a larger choice set. They suggest that this occurs because financial scarcity poses a threat to consumers’ freedom of choice, which larger choice sets can help alleviate. This work supports and extends prior work showing that consumers who feel financially “stuck” often seek out variety in their assortments (Yoon and Kim 2018). Further, it may support the bidirectionality of a relationship between scarcity and a maximizing mindset. A maximizing (vs. satisficing) mindset has been shown to activate feelings of scarcity (Goldsmith, Roux, and Ma 2018), and it is characterized by a preference for large choice sets (Cheek and Schwartz 2016). Interestingly, no research to date has directly tested for scarcity as an antecedent to maximizing tendencies. Future research might test this directly, in addition to exploring other instances when scarcity of different resources (e.g., money vs. space) produces divergent behavioral outcomes.Despite similarity in consumers’ cognitive reactions across different types of scarce resources, their emotional reactions to scarcity of different types may vary. An article in this issue by Alice Lee-Yoon, Grant E. Donnelly, and Ashley V. Whillans, entitled “Overcoming Resource Scarcity: Consumers’ Response to Gifts Intending to Save Time and Money,” examines differences in consumers’ responses to gifts designed to alleviate scarcity of one resource versus another. To develop their hypotheses, they draw from research suggesting that while scarcity of time (i.e., busyness) is often seen as an indicator of status (Bellezza et al. 2017), the opposite is true for scarcity of money. They contend that consumers who receive gifts designed to remediate a scarcity of money will experience negative affect, as such gifts activate feelings of relative inferiority. Conversely, when the same gift is presented as remediating a scarcity of time, such negative emotions should not be expected, because there are not commensurate negative self-attributions. Lee-Yoon and colleagues support their predictions in several experiments where the same gift (e.g., a Starbucks gift card) is framed as saving the recipient either money or time (between subjects). They consistently observe that gifts framed as saving the recipient money increase negative emotions relative to those framed in terms of saving time. Thus, there seem to be limits to the degree to which we can generalize responses to scarcity of one type of resource to scarcity of another type of resource and, by extension, the degree to which compensatory consumption is desirable and/or effective.Scarcity as a ThreatWhile research on scarcity as a mindset suggests that the effects of scarcity happen even in the short term, work on scarcity as a threat emphasizes the long-term impact of chronic scarcity on consumer decision making. Life history theory (for a review, see Griskevicius et al. 2013) proposes that humans must decide between investing scarce resources in somatic effort (e.g., personal growth), a slower reproductive strategy, or investing in reproductive effort (e.g., courtship), a faster reproductive strategy. Work conceptualizing scarcity as a threat builds on this theory to explain why childhood resource levels (e.g., socioeconomic status) often moderate how consumers respond to scarcity threats as adults. Consumers who were raised in relatively stable environments respond to scarcity threats by exerting effort toward long-term goals; for example, news of a recession may encourage a consumer raised in a high socioeconomic status household to increase their retirement contributions, consistent with their slow strategy (Mittal and Griskevicius 2016). Conversely, consumers raised in low socioeconomic status households might respond to the same news by spending money in the present with less concern for the future, consistent with their faster strategy (Mittal and Griskevicius 2016).Three articles in this special issue (Hansla and Johansson 2020; Mittal, Laran, and Griskevicius 2020; Thompson, Banerji, and Hamilton 2020) reveal that childhood experiences of scarcity and uncertainty can moderate consumers’ behavioral response to a variety of present threats. Relevant to the study of scarcity and emotions, in their article “How Early-Life Resource Scarcity Influences Self-Confidence and Task Completion Judgments,” Chiraag Mittal, Juliano Laran, and Vladas Griskevicius demonstrate that people from poorer backgrounds become less self-confident in the face of a threat and are more likely to believe they are unlucky. In “Risky Spending after Experienced Loss: The Moderating Effect of Socioeconomic Background,” Andre Hansla and Lars-Olof Johansson observe that after experiencing a loss (vs. gain), those from poorer (vs. richer) childhoods increased their gambling behavior (e.g., purchasing actual lottery tickets; study 2). They demonstrate that this behavior arises in part as a method for coping with disappointment. Work by Debora V. Thompson, Ishani Banerji, and Rebecca W. Hamilton also examines coping strategies, providing further support for the moderating role of childhood resources in how consumers cope with disappointment, in their article “Scarcity of Choice: The Effects of Childhood Socioeconomic Status on Consumers’ Responses to Substitution.” In it, they reveal that consumers who grew up with fewer resources are more likely to devalue an initially chosen alternative when they learn it is unavailable. This tendency can be viewed as an adaptive strategy for managing feelings of disappointment among a population for whom such choice restrictions were more likely to be faced in childhood (for discussions, see Hill [2020] and Viswanathan and Lalwani [2020], also in this special issue).Scarcity as a Reference PointA third perspective draws from the behavioral decision theory (BDT) literature to describe scarcity based on comparison to a reference point. In their review, Cannon, Goldsmith, and Roux (2019, 105) define resource scarcity as “sensing or observing a discrepancy between one’s current level of resources and a higher, more desirable reference point.” If we understand scarcity as a negative gap from a reference point, it is not surprising to view scarcity as being associated with negative affect. This follows from the notion that “not having enough” of an important, self-relevant resource must necessarily feel bad. Indeed, this has been supported in certain prior findings (e.g., Sharma and Alter 2012). However valid, this assumption tells us little about the specific negative emotions that derive from scarcity. Further, this assumption obfuscates our ability to hypothesize if and when there could be positive emotions linked to scarcity, in certain capacities. Two articles in this special issue address these questions directly, and in doing so, they provide more nuanced insights into the negative, as well as positive, emotions that are associated with scarcity.The first of these articles, by Anthony Salerno and Brianna Escoe, titled “Resource Scarcity Increases the Value of Pride,” tests for a second-order consequence of scarcity and its inherent negative affect by examining how consumers manifest affect regulation following scarcity threats. The authors provide evidence that one way in which consumers attempt to regulate the negative affect that scarcity triggers is by pursuing feelings of pride, a positive emotion associated with personal achievement and agency. For example, in one study, the authors observed that consumers who first wrote about a time they had experienced scarcity subsequently evaluated an advertisement that activated feelings of pride more positively than those in a control condition. The same was not true, however, for other advertisements associated with different positive emotions (e.g., happiness, awe, gratitude; study 1). Thus, when scarcity was activated, consumers pursued pride, specifically, as opposed to positive affect more generally, as one means to counteract their experienced negative affect.The second article, by Julian Givi and Christopher Y. Olivola, titled “How Do I Like My Chances (to Unfold)? Why Perceived Scarcity and Anticipated Hope Lead Consumers to Prefer Increasing Probabilities of Obtaining a Resource,” examines an overlooked relationship between scarcity and another specific positive emotion, hope. They test for the relationship between scarcity and hope in the context of consumer choice between probability sequences. For ascending probability sequences, the likelihood of obtaining a valued outcome improves across successive rounds (e.g., a 5% chance of winning, followed by a 10% chance, then a 15% chance, and so on). For descending probability sequences, the opposite is true (e.g., a 95% chance of winning, followed by a 90% chance, then an 85% chance, etc.). The authors find that consumers show a robust preference for ascending (vs. descending) probability sequences because descending probability sequences make the desired outcome feel increasingly scarce as rounds progress. They show that as scarcity increases, hope dwindles, and because consumers prefer to feel increasingly hopeful, ascending probability sequences are generally favored.Given that self-confidence and luck perceptions are likely to influence the ability to experience pride (Salerno and Escoe 2020) and one’s evaluations of probabilistic sequences (Givi and Olivola 2020), respectively, juxtaposing these finding with others in this special issue (Hansla and Johansson 2020; Mittal et al. 2020) suggests that childhood uncertainty may be a worthwhile moderator to consider when advancing the study of the relationship between scarcity and specific emotions.Scarcity as a JourneyA significant limitation of manipulating scarcity in a laboratory setting and measuring behavior in the context of a single session is that this does not allow us to understand the temporal stages of scarcity and their impact on consumer decision making. Work on scarcity as a journey (e.g., Hamilton et al. 2019b) considers both chronic effects of scarcity and the effects of scarcity across stages of the consumer decision journey. Although a great deal has been learned over the past decade about the relationship between scarcity and consumer decision making, little is known about whether certain mainstays of the marketer’s tool kit (e.g., probabilistic promotions, scarcity marketing tactics) vary in their effectiveness based on the scarcity of consumers’ personal resources. Several articles in this special issue offer important practical insights in this regard, in addition to suggesting future directions for research.In his article “Does Research on Scarcity Apply to Impoverished Consumers?” Ronald Paul Hill notes that much of the body of work on scarcity is conducted with middle-class participants and examines scarcity-among-abundance and temporary deficits, such as stockouts, rather than chronic scarcity. Do the frameworks from this literature generalize to the experiences of impoverished consumers? Hill leverages deep understanding of multiple impoverished communities—such as the rural poor, homeless consumers, juvenile felons, and Australian Aborigines—to address this question. Notably, for some parts of the consumer journey, subjective experiences with scarcity, whether temporary or chronic, seem to have consistent effects on consumer decision making.In their article “Cognitive and Affective Scarcities and Relational Abundance,” Madhubalan Viswanathan and Ashok K. Lalwani explore the effects of extreme and chronic scarcity on consumers, and the question of absolute versus relative scarcity. Based on their prior research in subsistence marketplaces, they highlight the multiple forms of scarcity that impoverished consumers face, including affective and cognitive scarcity. In portraying the experiences of impoverished consumers, they describe the important differences between living in poverty within an advanced economy with pockets of poverty versus living in a setting of more widespread poverty. In contrast to the filial ties and familiar sellers that dominate subsistence marketplaces, an impoverished consumer living within a developed economy must navigate more impersonal transactions that impose both affective and cognitive burdens.Recent work by Hamilton and colleagues (2019a, 2019b) shines a light on the implications of the time-course inherent to scarcity. Product scarcity is often leveraged as a marketing tactic (e.g., limited time offers, exclusive products) to increase consumers’ interest in a product. Hamilton et al. (2019b) compare the effects of product scarcity and resource scarcity on consumer decision making across stages of the consumer journey. Like with resource scarcity, there is evidence that product scarcity attracts the consumer’s attention and increases perceived value. Yet, while resource scarcity encourages consumers to consider a wider range of alternatives to fulfill their needs, product scarcity tends to narrow consideration sets. Chronic resource scarcity also seems to have more significant long-term consequences than chronic product scarcity, shifting consumers’ orientation toward other people, their self-esteem, and willingness to delay gratification. Thus, while some of the short-term consequences of product and resource scarcity are similar, resource scarcity appears to have a more lasting effect on consumer decision making, especially when scarcity occurs during critical periods such as childhood, as discussed in the work of Griskevicius and colleagues, cited above.As the concept of “gamification” has become popular among marketers, consumers are increasingly likely to receive promotional offers where a positive outcome (e.g., a free gift or a discount) is probabilistic in nature (e.g., only a certain percentage of customers will win). Perhaps owing to the increased pervasiveness of such tactics, academics have begun to explore when and for whom such promotions are most likely to be effective (e.g., Goldsmith and Amir 2010; Shen, Fishbach, and Hsee 2015; Duke, Goldsmith, and Amir 2018). In “‘It Could Happen for Me … but How Good Can It Be?’ Investigating the Relationship between Scarcity Beliefs, Similarity, and Perceived Value,” Elise Chandon Ince, Gustavo Schneider, and Robyn A. LeBoeuf add to this work by demonstrating that the value consumers place on such promotions varies as a function of whether they know anyone who has “won” in the past. The authors find that when similar others win a probabilistic promotion, consumers believe their own chances of winning are higher. Interestingly, this increased perception of their likelihood of winning has deleterious consequences for their valuation of the outcome: because the win feels more probable, the outcome feels less scarce, and accordingly consumers deem it less valuable. The authors draw from the literature on commodity theory to explain these results, which support the notion that scarcity increases value (Cialdini 1984; Lynn 1989, 1991; Brock and Brannon 1992).Is Scarcity a Mindset, a Threat, a Reference Point, or a Journey?The four perspectives on scarcity we reviewed are complementary in our attempt to understand consumer decision making. For example, the findings of Ince and colleagues (scarcity as a journey) are particularly interesting when juxtaposed with those of Givi and Olivola (scarcity as a reference point), which reveal that consumers prefer increasing (vs. decreasing) probabilistic outcomes across sequences, due to an aversion to scarcity and a preference for increasing hope. Taken together, these articles suggest that while consumers may prefer probabilistic promotions that offer a high likelihood of winning, this is specific to how they value the promotion, as opposed to how they value its best possible outcome (i.e., the prize). In contrast, their evaluation of the prize is likely to be higher when the probability of winning is low and the outcome is seen as scarce (Ince, Schneider, and LeBoeuf 2020).Findings in this special issue pertain not only to the value consumers place on probabilistic promotions and their associated prizes but also to how consumers manage the disappointment that ensues in the likely event that the prize is not won. Here, considerations of childhood resources may be particularly important. Three articles in this special issue related to scarcity as a threat (Hansla and Johansson 2020; Mittal et al. 2020; Thompson et al. 2020) converge to suggest that how consumers manage disappointment is likely to vary as a function of the resources that were available during their childhood. They reveal that consumers who grew up poorer (vs. richer) are less surprised by negative outcomes (Hansla and Johansson 2020) and consider themselves less lucky when confronted with threats (Mittal et al. 2020) as compared to contemporaries who were raised with comparative wealth. This may contribute to their tendency to respond to such treats more adaptively (e.g., by devaluating an initially chosen alternative when they learn it is unavailable; Thompson et al. 2020).Such an adaptive response could also promote greater resilience when a probabilistic promotion resolves with an unfavorable outcome (i.e., not winning). If true, this resilience may increase the persuasiveness of probabilistic promotions, by promoting the tendency to try again even in the face of disappointing outcomes. Indeed, Hansla and Johansson’s (2020) research shows an increased tendency to continue gambling after facing a loss among those who were raised poorer (vs. richer). Future research might test this directly in order to provide deeper insights into the relationship between childhood resources and consumers’ reactions to probabilistic promotions.Finally, future research might leverage insights from the four perspectives discussed here in order to expand our understanding of noncognitive associations that are linked to scarcity, in its various forms. Several articles in this special issue suggest a fruitful avenue for such inquiry would be to examine the links between scarcity and specific emotions, beyond negative affect. Work on scarcity as a reference point supports the notion that scarcity can be linked to feelings of pride (Salerno and Escoe 2020) and hope (Givi and Olivola 2020). Work on scarcity as a threat (Hansla and Johansson 2020; Mittal et al. 2020) implies these effects may be moderated by childhood resource levels, showing that the effects of present scarcity threats on consumers’ self-confidence and sense of luck are moderated by their childhood resource levels. Other potential moderators that merit future examination would be whether consumers believe they can attenuate their scarcity through reasonable effort (i.e., perceptions of situation mutability; Cannon et al. 2019) and whether or not scarcity derives from a temporary activation (e.g., a product stockout) versus a chronic condition (e.g., socioeconomic status; Hamilton et al. 2019a, 2019b).ConclusionCollectively, the articles in this special issue provide new insight into these important questions, but there is still much more to be learned. We hope that this issue generates further research into this important topic. For example, the articles in this issue suggest interesting interactions between different forms of scarcity (e.g., Thompson et al. [2020] examine the interaction between chronic resource scarcity and short-term product scarcity). The COVID-19 crisis triggered several simultaneous forms of scarcity: hoarding and disruptions to the supply chain left many store shelves bare (product scarcity), and closure of nonessential businesses left many without a steady income (resource scarcity). Understanding how these multiple forms of scarcity will affect consumer decision making may be furthered by a better understanding of the academic literature on scarcity, including this special issue.ReferencesAlwitt, Linda F., and Thomas Donley (1996), The Low-Income Consumer: Adjusting the Balance of Exchange, Thousand Oaks, CA: Sage.First citation in articleGoogle ScholarAndreasen, Alan R. 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