Scarcity
Scarcity (also called paucity) is the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. It states that society has insufficient productive resources to fulfill all human wants and needs.
Concept
The notion of scarcity is that there is never enough (of something) to satisfy all conceivable human wants, even at advanced states of human technology. Scarcity involves making a sacrifice—giving something up, or making a tradeoff—in order to obtain more of the scarce resource that is wanted.[1]
The condition of scarcity in the real world necessitates competition for scarce resources, and competition occurs "when people strive to meet the criteria that are being used to determine who gets what."[1]: p. 105 The price system, or market prices, are one way to allocate scarce resources. "If a society coordinates economic plans on the basis of willingness to pay money, members of that society will [strive to compete] to make money"[1]: p. 105 If other criteria are used, we would expect to see competition in terms of those other criteria.[1]
For example, although air is more important to us than gold, it is less scarce simply because the production cost of air is zero. Gold on the other hand has a high production cost. It has to be found and processed, both of which require a great deal of resources. Additionally, scarcity implies that not all of society's goals can be pursued at the same time; trade-offs are made of one goal against others. In an influential 1932 essay, Lionel Robbins defined economics as "the science which studies human behavior as a relationship between ends and scarce means which have alternative uses."[2]
In cases of monopoly or monopsony an artificial scarcity can be created. Scarcity can also occur through stockpiling, either as an attempt to corner the market or for other reasons. Temporary scarcity can be caused by (and cause) panic buying.
See also
- Abundance mentality - concept by Stephen Covey
- Artificial scarcity
- Economic shortage
- Energy crisis
- Post-scarcity economy
- Scarcity heuristic - psychological phenomena
- Trade-off
Notes
- ^ a b c d : pp.5–8 Heyne, Paul; Boettke, Peter J.; Prychitko, David L. (2014). The Economic Way of Thinking (13th ed.). Pearson. ISBN 978-0-13-299129-2.
{{cite book}}:|access-date=requires|url=(help) - ^ Robbins, Lionel (2014) [1932]. An Essay on the Nature and Significance of Economic Science (2nd ed.). London: Macmillan. p. 16.
References
- Milgate, Murray (March 2008). "goods and commodities". In Steven N. Durlauf and Lawrence E. Blume (ed.). The New Palgrave Dictionary of Economics (2nd ed.). Palgrave Macmillan. pp. 546–48. doi:10.1057/9780230226203.0657. Retrieved 2010-03-24.
{{cite encyclopedia}}: Cite has empty unknown parameter:|coauthors=(help) - Montani, Guido (1987). "Scarcity". In Eatwell, J. Millgate, M., Newman, P. (ed.). The New Palgrave. A Dictionary of Economics. Vol. 4. Palgrave, Houndsmill. pp. 253–54.
{{cite encyclopedia}}: Cite has empty unknown parameters:|month=and|coauthors=(help)CS1 maint: multiple names: editors list (link) - Malthus, Thomas R. (1960) [1798]. Gertrude Himmelfarb (ed.). On Population (An Essay on the Principle of Population, as It affects the Future Improvement of Society. With Remarks on the speculations of Mr. Godwin, M. Condorcet, and other writers). New York: Modern Library. p. 601. Retrieved 2010-03-24.
- Burke, Edmund (1990) [1774]. E. J. Payne (ed.). Thoughts and Details on Scarcity. Indianapolis, IN: Liberty Fund, Inc. Retrieved 2010-03-24.
