Scarcity

This article is about the economic concept. For the social psychology concept, see Scarcity (social psychology). For the book by Sendhil Mullainathan and Eldar Shafir, see Scarcity: Why Having Too Little Means So Much.
People queue up for soup and bread at relief tents in the aftermath of the Great Seattle Fire of June 6, 1889

In economics, scarcity "refers to the basic fact of life that there exists only a finite amount of human and nonhuman resources which the best technical knowledge is capable of using to produce only limited maximum amounts of each economic good."[1] If the conditions of scarcity did not exist and an "infinite amount of every good could be produced or human wants fully satisfied ... there would be no economic goods, i.e. goods that are relatively scarce..."[1] Scarcity is the limited availability of a commodity, which may be in demand in the market or by the commons. Scarcity also includes an individual's lack of resources to buy commodities.[2] The opposite of scarcity is abundance. Scarcity plays a key role in economic theory, and it is essential for a "proper definition of economics itself".[3]

"The best example is perhaps Walras' definition of social wealth, i.e., economic goods.[3] 'By social wealth', says Walras, 'I mean all things, material or immaterial (it does not matter which in this context), that are scarce, that is to say, on the one hand, useful to us and, on the other hand, only available to us in limited quantity'."[4]

— Guido Montani (1987)

British economist Lionel Robbins is famous for his definition of economics which uses scarcity: "Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses."[5] Economic theory views absolute and relative scarcity as distinct concepts and is "quick in emphasizing that it is relative scarcity that defines economics."[6] Current economic theory is derived in large part from the concept of relative scarcity which "states that goods are scarce because there are not enough resources to produce all the goods that people want to consume".[6]

  1. ^ a b Samuelson, P. Anthony., Samuelson, W. (1980). Economics. 11th ed. / New York: McGraw-Hill.
  2. ^ Siddiqui, A.S. (2011). Comprehensive Economics XII. Laxmi Publications Pvt Limited. ISBN 978-81-318-0368-4. Archived from the original on 2023-07-01. Retrieved 2020-09-13.
  3. ^ a b Montani G. (1987) Scarcity. In: Palgrave Macmillan (eds) The New Palgrave Dictionary of Economics. Palgrave Macmillan, London.
  4. ^ Montani, Gudio (1987) in "Scarcity" citing Walras, L. 1926. Elements of Pure Economics, or the Theory of Social Wealth. Trans. W. Jaffé. London: George Allen & Unwin, 1954. Reprinted, Fairfield: A.M. Kelley, 1977.
  5. ^ Robbins, p. 15
  6. ^ a b Raiklin, Ernest; Uyar, Bülent (1996). "On the relativity of the concepts of needs, wants, scarcity and opportunity cost". International Journal of Social Economics. 23 (7): 49–56. doi:10.1108/03068299610122416.