The Psychology of Scarcity

On the Psychology of Scarcity: When Reminders of Resource Scarcity Promote Selfish (and Generous) Behavior 

Caroline Roux, Kelly Goldsmith & Andrea Bonezzi
Journal of Consumer Research, forthcoming
Abstract: Consumers often encounter reminders of resource scarcity. However, relatively little is known about the psychological processes that such reminders instantiate. In this article, we posit that reminders of resource scarcity activate a competitive orientation, which guides consumers’ decision making towards advancing their own welfare. Further, we reveal that this tendency can manifest in behaviors that appear selfish, but also in behaviors that appear generous, in conditions where generosity allows for personal gains. The current research thus offers a more nuanced understanding of why resource scarcity may promote behaviors that appear either selfish or generous in different contexts, and provides one way to reconcile seemingly conflicting prior findings.

Individually Prudent, Institutionally Abhorrent

Sandra Bland is the latest (and I predict, tragically, not the last) in a string of unfortunate encounters between police and citizens. ICYMI, she was arrested during a minor traffic stop and [mysteriously] died in police custody. Huffpo has the transcript of the arrest. ATSRTWT. Unfortunately, a great deal of nattering and legal analysis so far has dealt with the speck of the arrest, ignoring the log of her jailhouse death. But as long as we're on the topic anyway, there's something that's been bugging me for a while now and this incident fits the trope.

viz.: There are a great many privately rational decisions that end up collectively irrational. In terms the Scholastics would recognize, it is often prudent for an individual to defer to even unreasonable requests made by belligerent police. The alternative, after all, can be a beating, a tasing, or a broad-daylight street execution. It is often prudent to avoid certain parts of town at certain times of day. The alternative can be a mugging, a stabbing, or an unking. It is often prudent to remain reasonably sober at certain social gatherings. The alternatives are unsavory.

The trouble with our rhetoric, with our language perhaps, is that it's all too easy to conflate the part for the whole, and the whole for the part. Most of us don't want to live in an America where cops are a pack of undisciplined goons with no regard (or knowledge!) of the laws of the land. Most of us don't want to live in an America where racial animus is as thick as Okefenokee midges on an August afternoon. Most of us don't want to live in an America where it's okay to take sexual license with an incapacitated woman.

Alas, we have the institutions we have, not the ones we want. For individuals, it is wise to treat the rest of society as if it were a force of nature. It wouldn't be victim-blaming to advise folks in flood-prone areas to stock up on some extra sandbags. For society, it is an arrogant slight to accept an unjust status quo. When a politician or pundit tells college-aged girls to dress modestly and avoid strong drink, the subtext is tacit acceptance of the "she's asking for it" trope. It's reasonable to expect that people speaking far-mode generalities to be speaking of the class rather than the instance.

The same intuitions apply to an appreciation of EE violations. It might be (usually is, indeed) individually rational to raise prices during an emergency, but folks don't like living in a world where the iron laws of scarcity make it necessary.

We have the laws of economics we have, not the ones we want.

Can Exchange with a Robot Be Euvoluntary?

Can it?

Work is the price we pay to get the things we want. If that price drops to near zero, isn't that cause for celebration? Or is dignity irreversibly tied to labor? So much of human history (especially the written parts) are bound up in the things people do to produce goods and services, it strains the imagination to picture the alternatives.

Even if we could more accurately imagine what a post-labor world would resemble, what influence do we have here and now in shaping its institutions? Is it even our duty to do so? Does the knowledge problem vanish when contemplating future events?

From the point of view of the post-robot revolution, we're behind a Rawlsian veil. Be a help and not a burden.

h/t Other Sam

Not The Onion: Bottled Water Edition

Via T-Gill, Western Washington University to ban bottled water on campus.

Bottled water and water privatization is detrimental to the environment, to human rights to water and simply doesn't make sense in a region where we have clean, amazing tap water,” said Carolyn Bowie, a member of Students for Sustainable Water at Western. “When WWU implements this change, we will proudly support our local water source, Lake Whatcom, and be a leader in standing up against water privatization in the United States and around the world.​ This change is important because it means upholding Western's values in sustainability and social justice.

Water in bottles is not euvoluntary because... sustainability?

I often wonder what people who have not studied economics imagine the role of price is. Surely they have something in mind. I can't for the life of me fathom what it might be.

Here She Comes, Miss Rent Contest.

My regular readers could easily be forgiven for concluding that when I use the term "rents", I mean "political rents." I write about political rents because they tend to be the most salient sort for what I care about. But a rent is simply a return to ownership of a scarce resource. The chief difference between a political rent and other sorts is that a political rent is conjured from dust and spit in the chambers of men to whom have accrued the thaumaturgy of statecraft, an Eblis O'Shaughnessy wrung out of the pleas of constituents.

But are not other rent contests no less contrived? There's nothing in the state of nature that insists on one and only one Stanley Cup or welterweight champion belt or Rubik's Cube Memorial Ziggurat or whatever. I don't actually follow any of this stuff. The point is, endowments of the land and its resources are the joint product of nature's bounty and humanity's industry. Contests like "world's fastest sheep shearer" have nothing so ever to do with the distribution of the surf and the wind, but rather sprout from the rich loam of human imagination alone.

Michael Giberson writes in a Facebook thread about the recent flap over comments on the ethnicity of the 2013 Miss America winner: "don't ban Miss America, but why celebrate or even pay attention to a contest to pick the prettiest young woman in the land? It encourages otherwise talent and ambitious young women to devote their efforts into zero-sum contest for looking pretty instead of working on something of more lasting value."

I'm inclined to agree, even though I've myself been voted "the prettiest girl in IB" by a college of my peers. It's obvious there's an opportunity cost to preening for pageants or for following hoop dreams or for flogging your headshot in the hopes you'll be discovered by a casting director on the mean streets of LA. But in each of these cases, it's less obvious that there are any meaningful net external costs. Sure, by perfecting your makeup technique or your jump shot or your dressage, you're not contributing to the development of your own durable human capital, but it's hard to generate moral outrage against folks who typically don't end up a public burden. If a young woman wants to squander her time on leaning how to walk elegantly in heels or a young man wants to squander his time figuring out how to consistently pick up a 7-10 split (infinitive), it is my impression that you'd need to push on another margin to raise the public hackle. Becoming the world's faster frankfurter scarfer strikes me as more euvoluntary than becoming the world's heftiest dwarf tosser.

There's something close to a unanimity rule when it comes to pageant participation (as in market transactions generally). The same can't be said for taxi medallions or hairdressing licenses. Yes, these young women could be doing something else with their time, but I think the libertarians actually manage to channel (for a change) broader public opinion when they cite the absence of coercion (real coercion a la Hume and Hayek) in the rent contests arising from voluntary association. The key evidence here seems to be the pointed lack of legislative meddling in the by-laws of these voluntary associations.

And the real fruit is in the exceptions to this absence, like when Congress has hearings on performance-enhancing drugs in Major League Baseball. What's the pedestrian moral intuition there? 

Status vs. Status Goods

Relative status is a fixed-pie, zero-sum game. If there are ten people in my toy society, there will be no more than ten rank-order positions to fill. You can't create more relative status than exist agents.

Status goods have no such restriction. Like any other kind of goods, production and trade are positive-sum. Moreover, relative status using positional goods is multi-dimensional. I can be the flashiest trout fisherman on the lake in my decked-out gig bob with the flames and the lightning bolts airbrushed onto the gunwales, but the second I pilot that demonbane sucker up to the yacht club, I'm about as posh as grey dishwater. Diverse status goods allow folks to participate in more and varied status contests.

Or to refrain from participating whatsoever.

That's one of the great things about a thick economy. We're free to select the subculture in which we are most comfortable participating. Tyler Cowen notes in Create Your Own Economy that it's easier than ever to fashion the tapestry of your consumption. Some of that will be purely utilitarian, some will be for signaling, and some will be experimentation. Some will be an admixture of all three.

The alternative, the BATNA if you will, is rank ordering based on something else. You can't simply wish away the desire to obtain relative status. If not on personal possessions, then on what shall rank-ordering be based? My research on PNG cultures suggests violence as a likely candidate.

No thanks. I think it's more euvoluntary to have many leather-bound books and my apartment smells of rich mahogany.

She Just Smiled

Remember the Christchurch earthquake a little while back? Well, iconic Kiwi foodstuff Marmite is facing a production crunch that is leaving even the prime minister scrounging for jars.

Let me assure you as a purebred Yankee that Marmite is indeed superior to Vegemite in almost every possible respect. At any rate, remember this?

After several years of fairly decent free market reforms, let's hope we don't (or do, depending on your preferences) see a repeat performance from someone equally talented, but living in Auckland. Let's also hope that in the event prices rise, it's because prices contain information. In this case, the information is that there won't be any Marmite until the factory is back on its feet. Asserting central control over prices in response to a supply shock disrupts the signals that allow unexpectedly scarce goods to be allocated to their highest value use.

Do me proud, NZ.

Solve the Mystery! Why is There an Aspriin Shortage in Greece?

Market fails, government must act! Desperate citizens wander the streets holding their heads!

All because there is no aspirin. Me? I'd blame "speculators."

Look:

1. Aspirin is a homogeneous good. Aspirin is aspirin. There are slight differences in brand name, based perhaps on purity and how quickly it dissolves, that sort of thing. But aspirin is aspirin.

2. There is a world price for aspirin. People use aspirin.

3. Aspirin stores well, and is easily transported.

4. If the government sets the domestic price for aspirin below the world price for aspirin, there will be a "shortage." The reason is that I can sell it for $5 a bottle in Turkey, or $1.75 at the government-mandated price in Greece. I ship the stuff to Turkey. That's not speculation. That's a sure thing. And the only greed at work here is the greed of the idiots who blame speculators, so they can gain electoral advantage from abusing the Greek citizens who need aspirin but can't get it.

5. The shortage in Greece is not the result of scarcity. The shortage is the result of an explicit, simple government policy that is having the effect that any sophomore economics student could predict.

Greece may have the worst combination of stupidity and misplaced indignation of any state apparatus in the world.