Is Scarcity as Much About Psychology as it is Economics?

Dan Nixon at Bank Underground:

Mind over matter: is scarcity as much about psychology as it is economics?: “Unlimited wants, scarce resources”. This is the economic problem.  But once basic needs are met, how much should scarcity – having “enough” – be understood as a psychological problem? Is it possible to cultivate an “abundance mindset”? And what does all of this mean for how economics is taught?

The rise and rise of psychology in economics

Over recent decades there’s been a step change in the use of ideas from psychology in economics research.

The vast literature on behavioural economics, for example, has challenged the core assumptions of an entirely rational, self-interested account of human behaviour.  Much, too, has been written on the economics of happiness and how we might improve on GDP per capita as a measure of progress.  Even aside from research, the way we consume things (ie our economic activity) has become increasingly psychological over time:  as basic needs are met with greater ease, the argument goes, we consume “ideas” (such as information in blogs) more than “stuff”.

Far less has been written about the psychological aspect of scarcity. Yet this could have big implications, given the central role that scarcity plays in economic theory. ...