Scarcity value

Economists understand that price is determined by the forces of supply and demand. The scarcer the supply of a desired commodity at a particular time, the higher the price it can command. Think of the price of roses on the eve of Valentine’s Day. Scarcity alone does not lead to a high price. Rare diseases for one do not benefit from any demand and only command a high price in their cure rather than acquisition. Supply and demand need to work together to achieve scarcity value.

Scarce resources like oil, diamonds, and billionaires willing to give money to certain objects of affection for a certain period, are valued highly, if they are even to be found and met without a surrounding retinue. But a

more common resource is time. There is a recent movie that uses time as a finite resource and a new form of currency. Even without this sic-fi musings though, how we allocate time is ruled by the dynamics of supply and demand.

A wealthy and powerful person, who is well known and eager to be heard, is likely to be in higher demand as keynote speaker than an unknown who needs not just an introduction but some well-argued justification of his surprise inclusion for the honor.

Ordinary social dealings with a constant partner, friend, or lover involve the principle of scarcity value. Someone always available and ready to cancel a lunch set three weeks before with a wild excuse (I have to replace my liver) just to accompany on a whim a much desired significant other for the moment is apt to be treated eventually with contempt for being too readily available, and not scarce enough -- where’s the thrill? The repository of lustful thoughts can then become too confident of her power to summon at a moment’s notice her perhaps uber-powerful and busy lover to even entertain doubts of not always getting her way. In fact, she may then just for the heck of it cancel an appointment made only 30 minutes earlier after someone more desirable just asked her for lunch too (sorry, my betrothed surprised me and is waiting downstairs right now) -- so, can you just go off on your own and check your stock market prices on your iPad as you chew your salad.

The supply of powerful people is overtaken by demand from petitioners or those who simply want to claim bragging rights -- I had strawberry cake with her yesterday. There are only a set number of waking hours even for people suffering from insomnia. Mathematically then, purely social engagements are probably no more than a total of six hours maximum per day, if you exclude work time and travel with bodyguards, and no sirens.

The unavailable time next week for someone seeking an appointment may open up only six months from today. Still, the Fence Sitter’s Rule on scheduling states that the farther away the designated date, the higher the likelihood of cancellation. Thus, the most feasible appointment is usually within a 48-hour window. Beyond that, the cancellation option becomes tempting.

Can scarcity be artificially created?

It is not enough to restrict the time available for allocating to a particular person one is trying to establish a scarcity value with -- tell her I’m busy. The other part involves demand. Thus, a decline in demand, in this case desire, erases all value, as scarcity becomes irrelevant and even a blessed relief -- thank God, the pest is no longer texting and nagging. If there is no buyer for a product, in this case somebody’s company, what scarcity value can arise from that? It’s a case of unsold inventory that does not leave the shelf. So, artificial scarcity only works if demand is at least constant if not increasing.

The whole point of artificial scarcity is based on the belief, usually mistaken, that predictable availability of one’s company leads to its devaluation as a commodity. Does artificial unavailability make eventual presence more treasured? Does scarcity of contact lead to a rise in desirability, like a thwarted craving for chocolate? And yet this game, for that is what it is, can be timed badly. What if desire has already shrivelled up? What if a scarcer and more attractive alternative has entered the picture?

In economics too the idea that value automatically rises from scarcity declines with the entry of a substitute product. From scarcity then, the situation turns into total unavailability coupled with the absence of demand. Zero denotes the scarcest value which is also the most bereft of meaning.