THE SCARCITY MINDSET: MEANING AND BEHAVIORS ASSOCIATED – (CHAPTER 02)

***Continued from Chapter 01 (Covered previously: Meaning, Progressive & Degenerative impact, Loss Aversion, Psychological Roots)

Link to Chapter 01:

THE SCARCITY MINDSET: MEANING AND BEHAVIORS ASSOCIATED – (CHAPTER 01)

Forms in which Scarcity Mindset may Manifest

A) Believing That Situations Are Permanent: . . . . . . . . . . We think “Well, that’s just the way it is” instead of changing our frame of mind and seeking out our own happiness. Thinking this way depletes our energy, harms our self-esteem, and makes life a burden in general. Nothing is permanent. There are moments in our lives that will take our breath away. An abundant mentality thinks this way and sees life as dynamic and mouldable; something that is ours to shape and make to our liking. Perhaps most importantly, an abundant mentality sees life as an adventure.

B) Using Thoughts And Words Of Scarcity: . . . . . . . . . . What we tell ourselves ultimately becomes an extension of us if left unchecked. When negative thoughts arise, which is quite natural, one way is to become an observer and refuse to engage with them. Everyone is afraid of rejection. However, a recent study from Stanford reports that people tend to overestimate their chances of being rejected. Furthermore, even if we do happen to get rejected usually it is just a matter of widening our pool and continuing along our path.  Rejection doesn’t happen as often as we tend to think—and even if does, it’s simply a matter of moving forward.

C) Comparison/ Being Envious Of Others: . . . . . . . . . . This kills gratitude and stokes the fire of scarcity. When it comes to bettering our circumstances, we can consciously choose to devote our time and energy towards doing so and not wasting it on envious thoughts and feelings. Comparing ourselves to other people is a sure-fire way to stay stuck. The truth is we have no idea what the financial situation of another person or business is. Furthermore, everyone’s definition of success is different. It is important that we define what success means to us so that we can act accordingly.

D) Not Being Generous: . . . . . . . . . . When one lives with a scarcity mindset, they are more apt to “skim off the top” with time, money, relationships, etc. These actions have unintended consequences and make it less likely to generate the positive effects that we seek in our own lives. If we believe in lack, by default, we believe in giving less of ourselves. This does not necessarily mean money, it also means being generous by smiling, saying kind words, investing our time in people, and simply serving a greater good.

E) Overindulgence: . . . . . . . . . . When one thinks in terms of scarcity, they are most likely to overeat, overspend and, in general, become more gluttonous. This is because of another temptation: instant gratification. When we think of money as a scarce resource, there is a tendency to use that resource for pleasure. But pleasure could reinforce the scarcity mindset that one already possesses.

For instance: Let us say that we are having a tough day, feel down on ourselves, and need something positive. We could do something constructive like spending some time with the family (abundance)…or…we could buy that new, cool gadget that we have wanted with our credit card (scarcity). Here the abundant choice has absolutely nothing to do with money. We are focusing our time on what matters the most and not succumbing to some temporary pleasure that, while good for a time, does nothing more than add to the notion that we simply do not have enough.

F) There is too much competition: . . . . . . . . . .We live in an incredibly abundant universe, which means that there are plenty of clients, press opportunities, deals, contracts, blog readers and customers to go around. The best we can do is take care of our side of the street and focus on how our business serves people. Furthermore, we are living in a “share economy” where collaboration has taken centre stage. A classic example is AirBnB and Uber. The truth is this kind of economy, where people are sharing resources, talents, and skills rather than competing with one another, has opened the door for more opportunity within the markets.

G) There is not enough resources/ Economy is Bad: . . . . . . . . . .Lack of resources and funds stops people from doing a lot. Sometimes people use this as an automatic excuse out of fear. There is always someone making money regardless of the state of the economy. Those who curb their scarcity mentality are trained to see opportunity in everything. Many people found themselves in a position of having to create their own businesses because they could not find forms of traditional employment. We also have women starting businesses at a faster rate than ever before. Much of this came as a result of a bad economy.

It is like the old saying goes, Necessity is the mother of invention. It just so happens that often those inventions lead to abundance. In an effort to feel comfortable and secure, many would-be entrepreneurs forego creating businesses despite their desires because they feel like traditional employment is more secure.

Scarcity And Abundance Loops at Play (Using an example of Art)

Scarcity Mindset At Play (With Instances around us To Support Recognition)

Many organizations use psychological alteration to influence favorable decisions to maximize profit. Understanding how scarcity works allow us to be aware of such tactics and be prepared. Some examples of these are:

A) Time-limited scarcity: . . . . . . . . . In time-limited offers, the user needs to decide before a set deadline- this adds a sense of urgency to the decision-making process.

Instances: – – – – The most common real-life scenario is waiting until the last minute to complete projects/study for exams. In such cases, focus and attention levels increase and so does prioritizing. Flipkart indicates the count-down timer showing when the discounted price ends, which influences the user to grab the product deal before it expires.

B) Quantity-limited scarcity: . . . . . . . . .This is considered more powerful than time-limited scarcity, as availability depends on popularity or supply and is therefore unpredictable. This can be of the following types:

i) Limited Supply: – – – Items with limited supply are valued and desired more. Oil prices soar in countries like India due to limited supply, whereas the opposite is true in countries like Kuwait, Saudi due to availability. Amazon showcases “only 2 left in stock”, representing a product’s diminishing availability thus influencing the user to make the decision quickly.

ii) Popularity: – – –The popularity of an item represents the social proof that it must be good and valuable and triggers us to grab the deal. Myntra is used to showcase “18 people added this item to their cart” in their product page which informs the user that the product they are viewing is popular and might get over soon.

iii) Limited Supply and Popularity: – – – – This is more effective than the above two. Not only do we desire an item when it is scarce, but we also want it, even more, when we have to compete for it. Stamps and antique pieces are quite valuable because they are unique and cannot be easily supplied. People then outbid each other to possess the item which makes the value of the item increase significantly.Booking.com showcasing “only 6 rooms left” along with “6 people are looking at this moment”.

C) Access-limited scarcity:: . . . . . . . . .When access to certain information is limited, it is perceived as having higher value because of exclusivity, especially when it’s bound to social status.

Instances: – – – – Priority pass membership provides access to special airport lounges which include free complimentary food, alcohol, Wi-fi, and discounts on shopping. One Plus implemented an invite-only sales strategy which helped them create a great buzz in the market. People ‘lucky enough’ to be invited felt more privileged. This resulted in over 25 million visits to the site and close to a million sales in less than a year after launch.

D) Ban or Censorship:: . . . . . . . . .When anything interferes with our prior access to some item, we desire it more and want to have even more than before.

Instances: – – – – The ‘Romeo and Juliet’ effect highlights that the greater the parental disapproval of a relationship is, the more that relationship intensifies.

E) One-of-a-kind Special Events:: . . . . . . . . .‘Now or never’ scenarios. We seek to experience ‘once in a lifetime opportunities’, because of their unavailability later on.

Instances: – – – – Reliance Jio provided great introductory offers in India at the time of its launch which attracted a lot of customers. In Kanchipuram, the idol of Aththi Varadar is available for darshan once every 40 years for only a few days. Lakhs of devotees visit the temple to experience this once in a lifetime opportunity.

Ways to deal with Scarcity Mindset

Content Curated By: Dr Shoury Kuttappa

THE SCARCITY MINDSET: MEANING AND BEHAVIORS ASSOCIATED – (CHAPTER 01)

Most of us can remember playing musical chairs as a child. As the music played and we marched around the circumference of the circle of chairs, we anxiously awaited the music to stop so we could fight for that last seated spot. There was something about that one-on-one physical competition and face-to-face conflict fighting for something tangible that added spice to the game. This is often one of the youngest experiences that we have of a scarcity mentality that can be translated to adult life

Simply put, Scarcity is the condition of having insufficient resources to cope with demand. When we are faced with limited resources, we strive to make effective use of them in the process of making important decisions. Economics is the study of how we use our limited resources (time, money, etc) to achieve our goals. This definition refers to physical scarcity.

Once we enter that professional world, that “every person for (him/her)self” way of thinking often re-emerges as many people fight for a single job opening or a chance at being promoted. People in the corporate world are conditioned to think in this limiting way, and we may have been influenced as well.

When we think of the word ‘scarcity’, many of us will immediately think about money. After all, it is expensive to live, and many of us concern ourselves by stretching each Rupee. However, scarcity is a mindset. It comes in many other forms – time, relationships, health, intelligence, judgment, willpower, etc. Scarcity orients the mind automatically and powerfully toward unfulfilled needs. For example, food grabs the focus of the hungry. For the lonely person, scarcity may come in poverty of social isolation and a lack of companionship.

Having thoughts and feelings of scarcity automatically orient the mind towards unfulfilled wants and needs. Furthermore, scarcity often leads to lapses in self-control while draining the cognitive resources needed to maximize opportunity and display judgment. Willpower also is depleted, which makes one prone to feelings of giving up. People in this state attend to the urgent while neglecting important choices that will have a drastic effect on the future. A scarcity mindset is exactly that: a mindset.

Progressive Impact

On the positive side, scarcity prioritizes our choices, and it can make us more effective. Scarcity creates a powerful goal dealing with pressing needs and ignoring other goals. For example, the time pressure of a deadline focuses our attention on using what we have most effectively. Distractions are less tempting. When we have little time left, we try to get more out of every moment.

Scarcity contributes to an interesting and a meaningful life. When there is always time for everything, there is no urgency for anything. A life without limits would lose the beauty of its moments, and it would become boring. For example, resolution of midlife crises consists in accepting mortality. Midlife often heightens the feeling that there is not enough time left in life to waste. We overcome the illusion that we can be anything, do anything, and experience everything. We restructure our lives around the needs that are essential. This means that we accept that there will be many things we will not do in our lives.

Scarcity forces trade-off thinking. We recognize that having one thing means not having something else. Economists call this the opportunity cost—the alternative use of the money. Doing one thing means neglecting other things. However, slack frees us from making trade-offs. For example, as our budget grows, the purchase of the iPad takes up a smaller and smaller portion of our disposable income. Thus, a bigger budget makes decisions less consequential and lessens feelings of scarcity.

Degenerative Impact

The context of scarcity makes us myopic (exhibiting bias toward here and now). The mind is focused on present scarcity. We overvalue immediate benefits at the expense of future ones (e.g., procrastinate important things, such as medical check-ups, or exercising). We only attend to urgent things and fail to make small investments even when future benefits can be substantial.  To attend to the future requires cognitive resources, which scarcity depletes. We need cognitive resources to plan and to resist present temptations. 

A key concern in the management of scarcity is to economize cognitive resources. Cognitive resource is about allocating our limited information-processing abilities. Concentrating our effort on one or—at most—a few goals at a time increases the odds of success. For example, research suggests that the best way to get more done in less time requires one to avoid exhaustion and skillfully manage energy by getting sufficient sleep (8 or more hours), more breaks, or daytime naps.

Loss Aversion:

When we see something which we want becoming less available, we get physical anxiety. This is worse when there is direct competition. The focus narrows and emotions rise making it difficult to feel calm. Opportunities appear more valuable to us when availability is limited. The idea of potential loss plays a significant role in human decision making. People seem to be more motivated by the thought of losing something than by the thought of gaining something of equal value. We prefer avoiding a loss than pursuing gains. The FOMO(Fear of Missing Out) is directly associated with this.

Psychological Roots:

Psychological Reactance Theory:- ‘Reactance is unpleasant motivational arousal that emerges when people experience a threat to or loss of their free behaviors. So, when something (a product or service) which is generally easily available becomes scarce, this perceived ‘threat’ to our freedom to have it makes us crave it significantly more than before.

Anticipated Regret:– Another unpleasant emotional state that may influence our buying choices is anticipated regret. In other words, the feeling we experience when we imagine what it would be like if the decision we are currently making is the wrong one.

***To be continued in Chapter 02 (Forms of Scarcity Mindset, Instances around us, ways to identify and mitigate) Link to Chapter -02:

THE SCARCITY MINDSET: MEANING AND BEHAVIORS ASSOCIATED – (CHAPTER 02)

Content Curated By: Dr Shoury Kuttappa

MENTAL/ BRAIN BANDWIDTH: PERCEPTION AND DISCERNMENT

Everything we do (thinking and doing) occupies some bandwidth. Some things occupy a little and others a lot.

Examples of things that occupy a little, for most people, are walking, drumming your fingers, or tapping your foot, and things that we are expert at because we have done them often. Examples of things that occupy a lot are talking, listening to information, doing anything we have to concentrate hard on, doing things that we are not expert in because we have not done them before.

Driving a car is a good way to envisage this. When we were learning to drive, we had to concentrate extremely hard. We would not have been able to hold a conversation while driving. Almost all our attention was involved in trying to drive. Now that we are an expert, we do not usually have to use so much of our attention. Of course, we still must use a fair amount, but we could also have a conversation while driving. But then, every now and then while we are driving along, something happens that means we have to focus more: the traffic increases, we come to a part of the journey where we have to look out for a turning, roadworks happen, the weather becomes difficult. Then we will find that we tend to stop conversation; we might turn the radio off; we have instinctively realised the need for more brain bandwidth for driving.

A few more interesting examples:

What is Mental Bandwidth (or Cognitive Bandwidth)?

Bandwidth is what allows us to reason, to focus, to learn new ideas, to make creative leaps and to resist our immediate impulses. Bandwidth refers to our cognitive capacity and our ability to pay attention, make good decisions, stick with our plans, and resist temptations.

Cognitive bandwidth is the maximum amount of thinking that is available per unit of time. It can be simplified a step further. We use the term ‘bandwidth’ to refer to two broad, related components of mental function:

Time Scarcity Vs Mental Bandwidth

Scarcity creates a powerful goal that inhibits other considerations. By constantly drawing us back to that urgent unmet goal, scarcity taxes our bandwidth and our most fundamental capacities. Busy people all make the same mistake: they assume they are short on time, which of course they are. But time is not their only scarce resource. They are also short on bandwidth. For instance, although the room seems quiet, it is full of disruptions—ones that come from within. Such internal disruptions stem from scarcity. An unrealized need can capture our attention and impede our ability to focus on other things.

The impacts of scarcity on mental bandwidth can be a vicious cycle. Feelings of scarcity, whether money or time, prey on the mind, thereby impairing decision-making. When we are busy, we are more likely to make poor time-management choices – taking on commitments we cannot handle, or prioritising trifling tasks over crucial ones. A vicious spiral kicks in, our feelings of busyness leave us even busier than before.

This scarcity mindset consumes ‘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. When we focus heavily on one thing, there is just less mind to devote to other things. We call it tunnelling — as we devote more and more to dealing with scarcity we have less and less for other things in our life.

A Cognitive Bandwidth Formula

A simple but different approach to cognitive bandwidth can be demonstrated by a formula that we can all use to find mental balance:

1. Throughput: The actual amount of thinking done per unit of time…the throughput depends on the complexity of the stuff we are working on.
2. Overhead: Overhead is the cost of doing stuff where we must care about organization, task switching, etc, and is paid against the bandwidth limit.
3. Bandwidth: The bandwidth is fixed at some level which we can barely change.

The idea is to try and always make sure our throughput and overhead do not exceed our perceived total bandwidth. If we know our overhead is going to be high one day, we can try to plan for a reduced throughput (and vice versa).

Why Is This Brain Bandwidth Theory So Relevant To Wellbeing, Stress & Performance?

1. Stress and preoccupation. Three main disadvantages (among others) are:
   • That we can have too much adrenalin and have a sense of panic instead of simple alertness.
   • Cortisol has a habit of building up and over time causing problems with sleep, mental health, focus, mood, performance, and physical illnesses.
   • Preoccupation. This describes the fact that if our brain bandwidth is occupied, then we have less available to focus on the task in hand.
2. Things that occupy a lot of bandwidth:
   • Worries, anxieties, intrusive negative thoughts – if we are worried about something or someone, it’s hard to focus on our work; we’ll make more mistakes; and we’ll be snappier.
   • Processing information or tasks – such as things we are trying to learn, understand or remember
   • Anything new and unfamiliar
   • Other people being around us – they could be distracting us or making us feel unrelaxed; other people are hard to ignore
   • Working on screens – because when we are using a screen there is almost always competing information on the screen, adverts and icons and notifications designed to attract our attention away from what we are doing.
3. The consequences of that:
   • Exhaustion.
   • Mistakes and forgetfulness – the times when we have “a lot on our mind” are the times when we make mistakes.
   • Loss of executive control –the times when we snap, say and do things we don’t mean.
   • Loss of cognitive ability – it is harder to learn new things if we can’t devote our full attention.

Tips For Managing Our Mental Bandwidth

• Ignore the Generic Methods & Experiment

There are several conflicting philosophies. For instance, a penny saved might be a penny earned, yet we are also told not to be penny smart and pound foolish. The same holds true with advice for mental bandwidth, where one source might encourage multitasking, while another demand absolute singularity of focus. Rather than trying to adapt our working style to someone else’s, experiment with different techniques and keep those that are functional for us, while casting aside those that do not.

• Actively Manage Our Mental Bandwidth

Perhaps the biggest mistake many people make is allowing their mental bandwidth to be managed for them. The beeping phone, meeting request, or act performed for ritual or obligation all rob our limited mental bandwidth, and many perform these actions unquestioningly. If we allocate our focus as we see fit, and actively choose what we want to focus on, we will be in command of our mental bandwidth.

• Do A Bandwidth Cost/Benefit

Most of us are awash in meeting requests and accept without question. Everyone complains about excessive meetings, yet it is often a guilty pleasure to summon a group at our whim, or join a discussion under the assumption that our input is necessary and valuable. Simply asking ourselves whether requesting or attending is worth the cost in mental bandwidth is a great start.

• Plan For Focus Time

There are tasks that require great focus, whether performing precision or dangerous manual work, or designing a complex system or bit of code. Or, we may need to spend some time with a small group, free from distraction. Book a block in the calendar, shut off the phone, move to a different physical location, or do whatever is required to create the right circumstances to have the necessary focus to get the job done.

• Know When To Throw In The Towel

For many of us it can be tempting to put in the extra hour at the office, or delay vacations for what is perceived as a critical set of meetings or deadlines. Trying to squeeze out the last ounce of mental bandwidth can be tempting in the moment, but it is ultimately an effort with rapidly diminishing returns. Calling it a night, taking that long-delayed vacation, or even the simple act of a quick walk around the office will recharge our mental energy and make us more effective in the long run.

• Don’t Make Assumptions About Our Team

It can be tempting to assume that what works for us will be effective for others, even to the point of designing our physical spaces and policies around what we assume will allow our team to best manage and deploy their mental bandwidth. Rather than assuming, ask the team how we can help them be most effective. Allow the teams to experiment and find what works for them, and use the end result as the benchmark for success.

Content Curated By: Dr Shoury Kuttappa