Scarcity
Definitions and Basics
Scarcity and Choices, at SocialStudiesforKids.com.
Think of a thing that you like to have. What would your life be like if you suddenly couldn’t get any more of it?…
Some fruits and vegetables are scarce in markets sometimes because those fruits or vegetables grow only at certain times of the year. Because the supply of fruits and vegetables is lower, there is a better chance that those fruits and vegetables will be scarce, or not always available. You may find that the market has no strawberries at all. Why? Either no shipments of strawberries came in, or so few strawberries came in that by the time you got there, they were all gone….
Scarcity, at Khan Academy
Scarcity Video and Quiz, at EconEdLink.
David Henderson, TANSTAAFL: There Ain’t No Such Thing as a Free Lunch, at Econlib. March 3, 2014.
What is a scarce resource? You could count the pineapples in Hawaii, the Mercedes Benzes in Beverly Hills, and the steel in South Korea, and you still wouldn’t know whether they are scarce. Here’s how you would know: At a zero price (and not a price set at zero by government regulation or caused to be zero by a government subsidy), is there enough of the good to satisfy everyone’s demands? If not, the good is scarce.
Steven Horwitz, Costs, Cancer, and Making Better Choices, at Econlib. January 7, 2019.
For economists, scarcity means that people can imagine more possible ways in which they can put a good to use than there are goods that can be used. The greater that gap, the more scarce something is.
Competition, from the Concise Encyclopedia of Economics
“Competition,” wrote Samuel Johnson, “is the act of endeavoring to gain what another endeavors to gain at the same time.” We are all familiar with competition—from childhood games, from sporting contests, from trying to get ahead in our jobs. But our firsthand familiarity does not tell us how vitally important competition is to the study of economic life. Competition for scarce resources is the core concept around which all modern economics is built….
In the News and Examples
Is water a scarce resource? How is it priced? Continuing Education: David Zetland on Water provides some discussion prompts to use in conjunction with Zetlands’ EconTalk episode. March 4, 2015.
David Zetland of Leiden University College in the Netherlands and author of Living with Water Scarcity talks with EconTalk host Russ Roberts about the challenges of water management. Issues covered include the sustainability of water supplies, the affordability of water for the poor, the incentives water companies face, and the management of water systems in the poorest countries. Also discussed are the diamond and water paradox, campaigns to reduce water usage, and the role of prices in managing a water system.
Natural Resources, from the Concise Encyclopedia of Economics
The earth’s natural resources are finite, which means that if we use them continuously, we will eventually exhaust them….
Or will we? Are all natural resources truly finite? See Robert L. Bradley, Resourceship: Expanding ‘Depletable’ Resources, at Econlib. May 7, 2012.
Mineral resources, not synthetically producible in human time frames,1 are fixed in the earth. As each is mined, less supply remains, suggesting that cost and, thus, price must increase as production cumulates.
Yet, for virtually all minerals, the opposite seems to be true: As more is mined, more is discovered to be mined. Prices and costs do not inexorably rise. What was high-cost yesterday has become lower-cost, undercutting the perennial complaint that “the easy stuff has been found.” Overall, there seems to be little difference between minerals and general goods and services.
Try this online lesson about planning a prom to explore scarcity with students. Scarcity, Choice, and Decisions at TheMint.org.
Your class has been engaged in various fund-raising projects during the past several years, and you now have a total of $9,635 to spend on a big bash – your last school dance. You may not spend more than this amount on the dance, but you do not have to spend all of it on the dance. Any money “left over” can be used for a class project, designed to help your school or community.
A Little History: Primary Sources and References
Lionel Robbins, biography, from the Concise Encyclopedia of Economics
Robbins’ most famous book was An Essay on the Nature and Significance of Economic Science, one of the best-written prose pieces in economics. That book contains three main thoughts. First is Robbins’ famous all-encompassing definition of economics that is still used to define the subject today: “Economics is the science which studies human behavior as a relationship between given ends and scarce means which have alternative uses.”…
Is scarcity really the “fundamental economic problem?” Nobel laureate James M. Buchanan didn’t think so. See Donald J. Boudreaux, What Should Economists Do? An Appreciation, at Econlib. March 4, 2019.
For almost 90 years now we economists have been taught from our freshmen days that economics is the study of how to allocate scarce resources, each with multiple possible uses, in ways that satisfy as many human wants as possible…
So what is economists’ proper subject matter? What should we economists do? Buchanan’s answer is that we should study the entire universe of voluntary exchange.
Advanced Resources
They Clapped: Can Price-Gouging Laws Prohibit Scarcity? by Michael Munger. Econlib, January 8, 2007.
Hurricane “Fran” smashed into the North Carolina coastline at Cape Fear at about 8:30 pm, 5 September 1996. It was a category 3, with 120 mph winds, and enormous rain bands. It ran nearly due north, hitting the state capital of Raleigh about 3 am, and moving north and east out of the state by morning….
There were no generators, ice, or chain saws to be had, none. But that means that anyone who brought these commodities into the crippled city, and charged less than infinity, would be doing us a service….
Resourceship: Expanding ‘Depletable’ Resources, by Robert L. Bradley. Econlib, May 7, 2012.
“[Economic theory is] plainly inadequate for an industry in which the indefinite maintenance of a steady rate of production is a physical impossibility, and which is therefore bound to decline,” wrote Harold Hotelling in 1931 in the most cited article in the history of mineral economics.2 Yet today, over eighty years later, Hotelling’s static, formalistic framework has some real-world explaining to do.