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Scarcity is when our unlimited wants exceed our limited resources forcing us to make choices.  ( from week 2 slide)

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VIDEO #1

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VIDEO #2

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VIDEO #3

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University of London International Programmes

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Scarcity and Exchange- EconMovies #1: Star Wars

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EconMovies explain economic concepts through movies. In this episode, I use Star Wars to introduce the concepts of scarcity, choices, self-interest, incentives, cost/benefit analysis, voluntary exchange, and economics systems. Good luck studying economics. May the force be with you!

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PICTURE #1

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PICTURE #2

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WEBSITE #1

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Economics is a vast and complex field, but in some ways it can be reduced down to one simple principle:

The scarcer the resource, the more we are willing to give up in order to get it;
the more common the resource, the less we are willing to give up in order to get it.

That means that on the one hand, a plot of land in the heart of the city will nearly always fetch more than the same size plot of land in the country; on the other, no one would ever bribe the Maitre D to get into a McDonald's.

Why do we put up with boorish behavior and ignorant decision making from the people above us in our company? Why is the customer "always right"?

Because they're the ones with the money. And despite recent estimates placing the wealth of the world at over 65 trillion dollars, we still see ourselves as a common resource in pursuit of a scarce one. Yet in order to turn that equation around, there are only two things you need to understand:
1. You are surrounded by an abundance of visible and invisible money
Years ago I was at a seminar about raising money for film production. When the producer up in front of the room was asked where she intended to get the money for her next film, she said simply "from wherever it is now."

But unlike our successful producer, most of us think that our personal sources of income are limited to our jobs, or the government, or the beneficence of a wealthy relative. We fail to see the opportunities for wealth which surround us every minute of every day.

Here's the simple rule of thumb:

Anywhere there is a positive difference to be made, there is money to be made. If you can't (or won't) make any difference, you're unlikely to make very much money.

2. You are (or can create yourself as) a 'scarce resource'

My first mentor, Stuart Wilde, used to regale us for hours with stories of gas station operators who would attract customers from miles around with their five-star hotel-quality restrooms, or purveyors of knick-knacks who made hundreds of thousands of dollars from people who wanted to "take home a little piece of the store."

His point was always to begin your quest for wealth by working on yourself - your energy, your skills, and your well-being.

"As you become more and more skilled in what you do and happier and happier in yourself," Stuart would say, "people will be drawn to you. They will want to spend time hanging out in your energy. And when they show up - bill 'em!"

The point is this:

As long as you see money as a scarce resource, you will continually inconvenience yourself in order to get it. As soon as you have created yourself as the scarce resource, the money will inconvenience itself to get you.

With all my love,
For more by Michael Neill, click here.

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Economics is a vast and complex field, but in some ways it can be reduced down to one simple principle: The scarcer the resource, the more we are willing to give up in order to get it; the more common the resource, the less we are willing to give up in order to get it.

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WEBSITE #2

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Getty Images

Will economic uncertainty make you save more - or spend more? The answer may depend on your childhood experience, a new study suggests.

The research, published in Psychological Science could help explain why poverty can sometimes be so difficult to escape. In two different experiments, researchers led by Vladas Griskevicius of the University of Minnesota studied people who had been raised either in relative financial comfort in middle or upper class households or had had some childhood experience with poverty. In the first experiment, 168 people were shown either images of the current recession-such as houses displaying foreclosure signs and people standing in long unemployment lines- or pictures of natural scenes.

They were then asked to make 20 choices, which involved deciding whether they preferred to receive either a small amount of money - $30 - the day after the experiment or a larger amount - $41 - a month later. Another task involved choosing between a guaranteed reward of small amounts of cash or gambling on getting larger, but uncertain monetary rewards later.

People who had viewed the nature scenes- no matter what their background- tended to choose later, larger rewards and make safe choices rather than gambling. But among those who had first viewed recession images, the wealthier and poorer participants made diverging choices: the better-off participants increased their tendency to go for long term over short term gain, while the poorer ones chose more immediate rewards and made more risky gambles.

The second experiment involved 61 participants who either read a purported New York Times article headlined "Tough Times Ahead: The New Economics of the 21 st Century" or an article that appeared as if it came from a similarly reputable source, and, like the first, was also unpleasant and, in addition, potentially boring. It detailed a tale of someone's lengthy search for lost keys.

MORE: How Americans Are Living Dangerously

Participants then performed a task designed to measure the appeal of certain branded luxury items such as Rolex watches, Gucci clothing or accessories, or Porsches. The volunteers were shown images of these items, and had to move a lever that would simulate either approaching the object or avoiding it as quickly as possible. The task is a standard method for tracking how attracted people are to certain objects; in previous studies the response times correlated well to real life actions: alcoholics, for example, tended to approach drinks faster than those who weren't addicted.

Again, only the people who had seen the economically troubling article showed differences related to their upbringing. Those who had grown up comfortably were slower to approach the luxury goods after being cued to consider the bad economy, while those who had experienced poverty were faster to move towards them.

What could explain how childhood poverty leads people to risk resources and settle for short term gain when it seems more logical to act cautiously with money? The researchers suggest that while this type of action seems foolish economically, it may reflect a deeper evolutionary survival strategy. In biology, focusing on short term gains can be the key to survival under conditions of scarcity.

MORE: How Bullying and Abuse May Age Children Prematurely

Previous studies have shown that when facing an uncertain environment where the risk of early death is high, organisms ranging from rats to humans tend to mature earlier sexually, reproduce at a younger age and even show signs of aging more rapidly. This "live fast, die young" strategy can be successful under such conditions: "spending" your energy rapidly when you aren't likely to have much time to do so will pay off in the form of leaving offspring more often than waiting will. "Early life environments characterized by higher levels of unpredictability... lead people to enact faster strategies, which speeds up the timing of their physiological development and sexual maturation," the authors write.

Studies involving human subjects also support the role of uncertainty in changing risk calculations. In the well-known " marshmallow test "- where children have to choose between one treat now or two treats later - their decisions are influenced by how reliable the delivery of previous rewards was by the researchers.

MORE: Why the Rich Are Less Ethical: They See Greed as Good

While the implications on financial decisions may not seem as profound as those for evolutionary development, the scientists say their results may lead to deeper understanding of why people seem to get caught in a cycle of poverty. If those who have experienced social hardships are more inclined to take bigger economic gambles, then an environment in which financial organizations are ever-ready with loans, at high interest rates, can prove ruinous for the borrowers in the long run. "These findings underscore that behaviors that might appear foolish or irrational from an economic perspective can be deeply rational from an evolutionary perspective," the authors write. Appreciating that deeper reason behind why some people spend what they do may lead to more effective ways of helping them save.

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Will economic uncertainty make you save more - or spend more? The answer may depend on your childhood experience, a new study suggests. The research, published in Psychological Science could help explain why poverty can sometimes be so difficult to escape.

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WEBSITE # 3
As resources become scarce, conservation efforts increase.

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The Desire for What is Scarce
This articles explains that many of the decisions we make daily are related to scarcity whether we’re aware of it or not.  This is particularly true for money.  The abundance, or scarcity of money, directly affect us daily.  This article also made the point that we, people, are a resource.   Our energy, our skills, and our wellbeing are all resources that we can cultivate to benefit ourselves.  As we cultivate our talents we become a resource that other people will be drawn to and desire.

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The Psychology of Scarcity
This article explains how economic scarcity in childhood can affect decision making later in life.  Experiencing financial scarcity lead to riskier financial decisions and opposed to the decisions made by people who were affluent.  This article went on to state that there are similarities in decision making in the biological world of organisms when faced with scarcity of resources.  The author suggested that this similarity could lead to understanding poverty cycles in people.  We found it interesting to examine reactions to scarcity from an evolutionary perspective.

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Resource Scarcity
This article shows the correlation between scarcity and abundance in resources.  It raises comparison between a resource that is considered superior, and therefore having more value, to another.  How once the superior and abundant resource has been harvested to the point of scarcity, the inferior resource increases in value.  The article uses oil as an example of this.  Oil pockets that were less rewarding at one time are now being mined at a greater cost due to higher extraction costs.  The scarcity plus the extraction cost now lead to a much more expensive commodity.

We found it important to remember that values fluctuate and in particular, rise as resources decrease.

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Scarcity Flow Chart
This image is a simple, easy to understand flow chart of unlimited wants and limited resources will lead to scarcity.  From that point we have choices to make.  Basically, what will be produced, how it will be produced and for who it will be produced.

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Scarcity of Consumer Goods
This image is an example of what scarcity of goods can look like to the consumer.  We don’t believe many people in Canada have witnessed this kind of scarcity.  It’s important to remember that this is reality for many people in the world.

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PICTURE #3

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Oil Sands Resource Scarcity
This image is a visual example of website #3.  That as a resources become less abundant, increased effort is needed to retrieve less plentiful supplies which increases the resource’s value through scarcity as well as increased operational costs.  This helps us to understand the connection to rising costs.

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What is scarcity?
This video shows that unlimited needs as well as unlimited wants are not met with unlimited resources, which forces people to make choices.  This is the formula for scarcity.  The example used in this video is having to choose between a computer and a smart phone.  In Canada it doesn't really feel like we are dealing with scarcity because we see an abundance of goods in stores and on line but the reality is that we can't have it all.
This video was very simplistic in its explanation, maybe too simplistic

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Scarcity and Choice
this video talks about unlimited wants, that even if we get everything we want there will always be some thing we want. With all of this unlimited wants there are limited resources. Scarcity is when there is not enough product, service or resource to satisfy everyone's wants at a zero price.

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EconMovies (star wars)
This video talks about how Star Wars relates to scarcity. Explains that we as consumers make choices best on our best interest. When making a choice you are looking at the benefits and the cost of you decision. Buyers tend to want a low price while sellers what a high price. This video explains that economics is all around us, and the choices we make all affect economics.