- Your alarm goes off – it’s 6:30 in the morning. You’re faced with a decision: do I hit snooze a few times and get up at 7:00, or should I start the day now?
- Your bonus check comes in at work. Should you pay down debt, or buy a few more groceries?
- Your boss needs a few shifts covered. Do you stay late or go home and enjoy your evening?
- You live in a third world country. Do you use clean water for drinking or do you water your crops for food later?
We’re constantly making choices. In fact, choice is the cornerstone of economics, and at the end of every choice is a scarce resource. Your time, money, labor, and everything you own is affected by scarcity. There is just never enough to satisfy all our wants.
Scarcity in Economics
The concept of scarcity is easy to see when we put it in such simple terms. Even children know the basic idea of scarcity. Think about when you were a kid. “Mom, can we get this!!” How many times did you ask to add a candy bar or toy to the cart when you went to the store with your mom? Most of the time, there wasn’t enough money to get all the kids toys and candy bars each time we went to the store. That’s scarcity at work! Eventually, we learned to save our own money and bought toys and candy ourselves – learning the value of scarcity first hand!
Economics is no different today than when we were kids. We are limited by time, money, location, and energy. Sometimes we don’t have any input on how much of a resource we are given (like time) but how we allocate those resources is the very definition of economics.
Scarcity in Society
Scarcity doesn’t just affect us on a personal level. Every business, government, and society is affected by the constraints of scarcity. Think about oil. Sure, we can go to the gas station and fill up today, but we can’t expect to use oil the way we do today forever. It’s a scarce resource and will run out one day. Can that take hundreds or thousands of years? Possibly, but the concept still holds true.
There’s a reason why Proverbs 24:33-34 says, “A little sleep, a little slumber, a little folding of the hands to rest and poverty will come on you like a thief and scarcity like an armed man.” You only have so much money, so much energy and so much time. Use it wisely.
What helps you to make better decisions with your money, energy and time?
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{ 5 comments… read them below or add one }
The concept of scarcity certainly weighs heavily on me when I’m making decisions. But apart from that – I would say that the concept of need comes up.
If i need it – I’ll do it. If i determine that I don’t need it – it falls to the backl burner.
The idea of opportunity cost comes to mind too Tim. When making financial decisions: my wife, Mandy, and I try to think about what we WON’T be able to do with the money if we spend it on something else. For example, if we spend $100 to go to a major league baseball game, that’s $100 we can’t invest in retirement. Knowing how compound interest works, it sometimes makes us never want to spend money
Sarcity is the foundation of every socioeconomical problem and man effort at creating alternative choice has only confounded them let see scarcity as perameter of our real potential the rest would fall in place.
I often think about scarcity in relation to time — our time on this earth is short. It’s a shame to waste it.
@ ZPI – Aah, yes. The ‘need’ factor. That certainly plays a big part in how you allocate resources. It all comes down to what’s a bigger priority (those basic needs usually sit right on top!)
@ Mike – Everything is an opportunity cost. We can’t have it all – something needs to be sacrificed! Good point!
@ Mabu – well put! I agree
@ Paula – Absolutely, time is our most valuable asset. We can’t get more of it, no matter how much money we have.
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