Our company is well set up for virtual meetings, yet I feel like I am getting fewer social interactions than I need. This is social scarcity. When we are experiencing scarcity in one part of our lives — be it time, money, social, spiritual, physical, according to authors Sendhil Mullainathan and Eldar Shafir in “Scarcity: Why Having Too Little Means So Much,” our “mind orients automatically, powerfully, toward unfulfilled needs.” I met that need by getting a puppy.
This pandemic has left all of us with some needs unfulfilled, and it will cause us to make decisions that may satisfy our focus on the aspect of our lives where we are experiencing the scarcity at the expense of other areas that may be equally important later.
One of our clients moved back to the states and is frustrated with their housing situation and feels compelled to solve it. Their decision involves where they want to live, in what type of home or rental, and how long they need to be comfortable with their choice. Because of the virus, the stakes are potentially higher than normal. We don’t know what the housing market is going to look like post-COVID-19. If their unfulfilled need is to buy a home, then it will be difficult to wait and understand the benefits of slowing down such as testing communities, potentially lower home prices, and simply settling in to their new lives here.
We had a conversation about a home they were going to buy that I did not think was right for them, and I finally said, “No matter how many ways you ask me the question, my recommendation isn’t going to change.”
Scarcity creates this tunneling effect where we are laser-focused on only one thing. For many of us, it is COVID-19, which affects each of us differently. Workers at a restaurant forced to close may be obsessing about how we will manage when unemployment runs out.
In order to step away from the tunneling, we need to create a different environment. For the unemployed person, for example, they may want to see what flexibility their landlord may have in regard to breaking a lease, begin to look at expenses that they can adjust such as health insurance, and understand what options they may have regarding hardship withdrawals from their retirement plan.
The puppy may prove to be a long-term effect of my short-term scarcity reaction. But since we have always had dogs, it didn’t feel like a big risk. Try to get outside your own scarcity to improve your response to it.
Spend your life wisely.
Ross Levin is the chief executive & founder of Accredited Investors Wealth Management in Edina.