The Negative Effects of Perceived Scarcity and Strategies to Alleviate Them
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Authors
Mah, Justin
Issue Date
2025-12-09
Type
Capstone
Language
en
Keywords
scarcity , perceived scarcity , actual scarcity , financial scarcity , psychological scarcity
Alternative Title
Abstract
Perceived scarcity has drastic negative effects such as, increased stress, anxiety and lower subjective well-being despite individuals not experiencing actual scarcity. This review will explore the effects of perceived scarcity and its effect on executive function, prosocial behaviour and risk-taking behaviour. It will then look at ways to overcome the negative impact of perceived scarcity. Utilizing Mullainathan and Shafir's scarcity theory as a framework, this review will methodologically filter through recent research articles on how perceived scarcity influences these phenomena based on the aforementioned themes. This review found that perceived scarcity increases cognitive load and leads to cognitive tunneling but does not always lead to worse decision making. It also found that those experiencing perceived scarcity have disproportionate risk-taking tendencies and engage in less prosocial behaviour. Lastly, abstract thinking and focusing on increasing prosocial behaviour are key methods to reducing perceptions of scarcity. These implications demonstrate ways to escape the feelings of scarcity and provide clinical insights to help clinicians aid individuals suffering from perceived scarcity.