How Scarcity Persuades

Image from Disney’s Jack and the Beanstalk

When was the last time you were persuaded?

Most of us can’t remember. It’s hard enough to remember our last decision, let alone the factors that influenced it. And even when we try to dissect every single component, we invariably miss something.

Take the workplace as an example. Imagine a business facing some serious decision. As part of its diligence, they form a cross-functional team. That team develops an array of options, conducts research, establishes distinct justifications, and formulates opposing points of view. They deliver whole reams of data and analysis to a Board and that Board weighs all the evidence, argues back and forth, and delivers a final, formal choice.

In that example, you can look back and declare certain bits of information as key factors influencing the decision. And you may be right. Or not. It’s hard to say. After all, unless you’re the actual decision-maker, how can you know what was most-influential to a decision?

Biographers construct enormous narratives of what they assume is a person’s preferences, desires, and motivations. Sometimes, these biographers leave out the parts where their subjects were simply influenced by others. There are times when even Churchill was simply “sold” on something without any formal rationale.

And since you are a decision-maker in your own right, you have been sold, too. Quite often.

You might not feel it. We seldom do anymore. There are no traveling salespeople knocking on our doors. Few of us peruse street markets. And hawkers don’t shout at us like they used to.

This is precisely the point, of course. The less we’re aware of persuasion tactics, the more likely we are to be open-minded, offering some level of curiosity that leads to trust. So these tactics continue to develop the lowest level of friction possible by any means necessary.

Underlying the tactics themselves are the formal principles that weigh heavily on our decision-making. Until the work of Professor Robert Cialdini, these principles weren’t well-known to the broader public. His books have helped change that, shedding light on the many ways we are persuaded in every choice we make. Every one of those books is worth reading and it’s genuinely difficult for me to pick a favorite. But the classic is Influence. No book has been recommended to me more regularly, more emphatically, even after I’ve told people I’ve read it several times.

Why? Because I think people everywhere, myself included, continue to see ways in which we create, and are confronted by, efforts that yank at these principles. Everyone wants to influence. No one wants to be influenced. So the book tries to help with these incongruent aims.

So back to the original question: when is the last time you were persuaded? It may be hard to recall but I suspect it involved one of these principles from Cialdini’s book.

Act Now While Supplies Last

A favorite of mine is the principle of scarcity. It pervades every aspect of the modern era. After all, with so much available to us today, how can we value this wealth of access? By persistently seeking and acquiring the things that no one else has.

Beyond physical objects, we also create scarcity of time with our harried lifestyles. Why? Because we sense a deep limitation. There’s only so many hours in the day (or week or month or year). So we pack them full of appointments, events, trips, and experiences. Never waste a moment!

The very idea of “wasting a moment” implies scarcity. Same with wasting money or food or any other thing to which we apply this perspective. The real idea here is that scarcity creates a very strong sense of value.

And best of all, the scarcity doesn’t have to be real. It can work just as well when it’s purely artificial. After all, the old infomercial phrase act now while supplies last is a big joke. It’s standard copywriting from the marketing department. There will be plenty of supplies. And yes, the sellers would like your order now but they’ll gladly take your order later.

This is just one small way that scarcity tactics obscure the truth. These tactics change our behavior and can occasionally lead us down frightening paths. In fact, every single instance that I want to highlight below drives at a central pattern: scarcity begets loss aversion begets fear begets strange decisions. To explain this further, consider the following from Cialdini:

The idea of a potential loss plays a large role in human decision-making. In fact, people seem to be more motivated by the thought of losing something than by the thought of gaining something of equal value.

These words lead us to Kahneman and Tversky’s loss aversion and that leads us to prospect theory. I’ve highlighted these things several times in past writings because I hope we never forget how powerful this tendency is. In fact, it’s so fundamental to this particular tactic that I’m going to declare the following:

Scarcity tactics only work when we choose to value loss more than gain.

This can be a good thing. It can also be a bad thing. Knowing when these tactics are at-work is the first step to assessing its benefit.

Inspired By Loss

Consider this by way of sports. Particularly the game of American football and the strange behavior we see in the waning minutes of a game when the winning team starts using its prevent defense. These defenses are specifically designed to leave defenders detached from the opponent, guarding a faraway endzone rather than the players themselves.

It feels very strange when you watch this defense on television. The winning team looks completely different in those moments. They no longer play to win, but rather play to not lose. They value their lead so much that they do odd things to preserve their current state rather than improve it.

Every football fan will agree that this mentality can be infuriating. It can also be effective, of course. But nothing is more painful than the moment when this tactic fails. Then it’s a disaster.

Outside of football, the point is that scarcity is about loss. Loss of opportunity. Loss of possessions. Loss of a point lead in a football game. Loss of time. It creates a hoarding mentality. We go to inordinate lengths to keep whatever is scarce. As Cialdini writes,

The joy lies not in experiencing a scarce commodity but in possessing it. It is important that we not confuse the two.

This explains why billionaires exist. There’s something fascinating about the fact that a billionaire still views money as a scarce thing. Actually, scratch that. It isn’t that a billionaire views money as scarce. The real scarcity, in their case, is the billionaire status. Specifically, the hierarchy of that status. There is only one richest person on the planet. Hence the new scarcity. That person will not want to lose that ranking.

In fact, if you ever want to create scarcity, create a hierarchy. A ranking of some kind will do nicely. This will lead entire institutions into a tarpit of deranged behavior just to keep their status position on the leaderboard. They’ll try to climb the hierarchy, for sure, but they’ll work even harder to not go down a peg.

The Power of a Threatened Status Quo

I don’t usually get topical but there have been a few stories in the news lately that reminded me of another passage from Cialdini’s book. To start, consider the latest overtures from Ray Dalio and Jamie Dimon about the “pending class war.” Then consider Dalio’s exploration of MMT as a means of anticipating and preventing the damage.

The narrative begins with wealth disparity. Countless points of data can describe that disparity very well. But disparity, as a standalone condition, does not trigger a conflagration.

If all other conditions remained equal, we wouldn’t feel the tides shifting. Dimon and Dalio wouldn’t raise the flag of warning. Such is the weight of the status quo. As long as the status quo does not drag downward, wealth disparity is just a topic for economists (armchair versions included). Why? Because scarcity, as a phenomenon, doesn’t rear its ugly head. After all, what have the rest of us non-billionaires really lost?

The minute losses become real, or even just threatened, is the minute that wealth disparity becomes a much more salient topic. A loss to the status quo, whereby it becomes harder today than yesterday, creates an entirely different environment where we are imminently more alert. As Cialdini writes (emphasis added):

It is not traditionally the most downtrodden people who are liable to revolt. Instead, revolutionaries are more likely to be those who have been given at least some taste of a better life. When the economic and social improvements they have experienced are suddenly less available, they desire them more than ever and often rise up violently to secure them.

I’m not writing about MMT, of course. Or wealth disparity. Instead, I’m writing about the mobilizing power of a threatened status quo — be it a real threat or a false one. Any perceived diminution, however minor, can quickly influence people towards oversized reactions. So if you want to influence, one way to easily do so is convince someone that they could lose something they currently have.

Some might call that fear-mongering. In some cases, it is. But when scarcity involves your health, and the doctor says you could lose you life if you don’t stop a certain bad habit, then we see this tactic as careful stewardship.

What’s the difference? I suppose it comes down to the reality of the threat. Is it real or fake? That is often a difficult question — one that people try to answer for you. Often by leaning on other principles that Cialdini provides. Understanding these principles is the first step to knowing when influence should, and shouldn’t, be welcomed.