economics essay on scarcity

Scarcity in economics

Definition: Scarcity refers to resources being finite and limited. Scarcity means we have to decide how and what to produce from these limited resources. It means there is a constant opportunity cost involved in making economic decisions. Scarcity is one of the fundamental issues in economics.

Examples of scarcity

• Land – a shortage of fertile land for populations to grow food. For example, the desertification of the Sahara is causing a decline in land useful for farming in Sub-Saharan African countries.
• Water scarcity – Global warming and changing weather, has caused some parts of the world to become drier and rivers to dry up. This has led to a shortage of drinking water for both humans and animals.
• Labour shortages . In the post-war period, the UK experienced labour shortages – insufficient workers to fill jobs, such as bus drivers. In more recent years, shortages have been focused on particular skilled areas, such as nursing, doctors and engineers
• Health care shortages . In any health care system, there are limits on the available supply of doctors and hospital beds. This causes waiting lists for certain operations.
• Seasonal shortages. If there is a surge in demand for a popular Christmas present, it can cause temporary shortages as demand as greater than supply and it takes time to provide.
• Fixed supply of roads . Many city centres experience congestion – there is a shortage of road space compared to number of road users. There is a scarcity of available land to build new roads or railways.

How does the free market solve the problem of scarcity?

If we take a good like oil. The reserves of oil are limited; there is a scarcity of the raw material. As we use up oil reserves, the supply of oil will start to fall.

Diagram of fall in supply of oil

If there is a scarcity of a good the supply will be falling, and this causes the price to rise. In a free market, this rising price acts as a signal and therefore demand for the good falls (movement along the demand curve). Also, the higher price of the good provides incentives for firms to:

• Look for alternative sources of the good e.g. new supplies of oil from the Antarctic.
• Look for alternatives to oil, e.g. solar panel cars.
• If we were unable to find alternatives to oil, then we would have to respond by using less transport. People would cut back on transatlantic flights and make fewer trips.

Demand over time

In the short-term, demand is price inelastic. People with petrol cars, need to keep buying petrol. However, over time, people may buy electric cars or bicycles, therefore, the demand for petrol falls. Demand is more price elastic over time.

Therefore, in a free market, there are incentives for the market mechanisms to deal with the issue of scarcity.

Causes of scarcity

Scarcity can be due to both

• Demand-induced scarcity
• Supply-induced scarcity

and a combination of the two. See more at: Causes of scarcity.

Scarcity and potential market failure

With scarcity, there is a potential for market failure. For example, firms may not think about the future until it is too late. Therefore, when the good becomes scarce, there might not be any practical alternative that has been developed.

Another problem with the free market is that since goods are rationed by price, there may be a danger that some people cannot afford to buy certain goods; they have limited income. Therefore, economics is also concerned with the redistribution of income to help everyone be able to afford necessities.

Another potential market failure is a scarcity of environmental resources. Decisions we take in this present generation may affect the future availability of resources for future generations. For example, the production of CO2 emissions lead to global warming, rising sea levels, and therefore, future generations will face less available land and a shortage of drinking water.

The problem is that the free market is not factoring in this impact on future resource availability. Production of CO2 has negative externalities, which worsen future scarcity.

Tragedy of the commons

The tragedy of the commons occurs when there is over-grazing of a particular land/field. It can occur in areas such as deep-sea fishing which cause loss of fish stocks. Again the free-market may fail to adequately deal with this scarce resource.

Further reading on Tragedy of the Commons

Quotas and scarcity

One solution to dealing with scarcity is to implement quotas on how much people can buy. An example of this is the rationing system that occurred in the Second World War. Because there was a scarcity of food, the government had strict limits on how much people could get. This was to ensure that even people with low incomes had access to food – a basic necessity.

A problem of quotas is that it can lead to a black market; for some goods, people are willing to pay high amounts to get extra food. Therefore, it can be difficult to police a rationing system. But, it was a necessary policy for the second world war.

Related pages

• Opportunity cost
• Production possibility frontiers
• Is economics irrelevant in the absence of scarcity?
• Dealing with food scarcity

12 thoughts on “Scarcity in economics”

• Pingback: Is Economics Irrelevant in Absence of Scarcity? | Economics Help

Good from what are you doing but you have to provide to us some of sample questions concerning the University level

l want to be explained further on scarcity as it is becoming hard topic for me to understand

When we even make a choice we have to forgo the other alternative.The alternative forgone in making am informed choice is also known as oppotunity

I really learned a lot in this website, thank you very much I appreciate

I want my text book explanation of social subject

Actually, I don’t understand about the entrepreneurship.. Can you please help me?.. I’m a senior high student for the upcoming school year..and We don’t have a actual class so please could you help me to understand this?😅

Thank you so much its clear

This makes some sense but the graphs just messed my head up pls help

I enjoyed the nature of information

The only “problem” with the free market is when it is interfered with. It is a natural process, by interfering with it you are indirectly interfering with nature. Everything on our planet is finite, everything has to be paid for. Every action has an equal and opposite reaction. The is no free lunch. Interfering with the free market is like kicking a can down the road, it may seem just and righteous in the instant, but it is by no means sustainable ultimately over time.

Thank you so much

Comments are closed.

Module 1: Economic Thinking

Understanding economics and scarcity, learning objectives.

• Describe scarcity and explain its economic impact
• Describe factors of production

Figure 1. Food, like the wheat shown here, is a scarce good because it exists in limited supply.

The resources that we value—time, money, labor, tools, land, and raw materials—exist in limited supply. There are simply never enough resources to meet all our needs and desires. This condition is known as scarcity.

At any moment in time, there is a finite amount of resources available. Even when the number of resources is very large, it’s limited. For example, according to the U.S. Bureau of Labor Statistics, in 2016, the labor force in the United States contained more than 158 million workers—that’s a lot, but it’s not infinite. Similarly, the total area of the United States is 3,794,101 square miles—an impressive amount of acreage, but not endless. Because these resources are limited, so are the numbers of goods and services we can produce with them. Combine this with the fact that human wants seem to be virtually infinite, and you can see why scarcity is a problem.

Throughout the course, you will find these “Try It” boxes with questions to help you check your understanding and apply the concepts from the reading. Choose an answer, then select “check answer” to get feedback about how you did.

When faced with limited resources, we have to make choices. Again, economics is the study of how humans make choices under conditions of scarcity. These decisions can be made by individuals, families, businesses, or societies.

Let’s consider a few decisions that we make based on limited resources. Take the following:

1. What classes are you taking this term?

Are you the lucky student who is taking every class you wanted with your first-choice professor during the perfect time and at the ideal location? The odds are that you have probably had to make trade-offs on account of scarcity. There is a limited number of time slots each day for classes and only so many faculty available to teach them. Every faculty member can’t be assigned to every time slot. Only one class can be assigned to each classroom at a given time. This means that each student has to make trade-offs between the time slot, the instructor, and the class location.

2. Where do you live?

Think for a moment, if you had all the money in the world, where would you live? It’s probably not where you’re living today. You have probably made a housing decision based on scarcity. What location did you pick? Given limited time, you may have chosen to live close to work or school. Given the demand for housing, some locations are more expensive than others, though, and you may have chosen to spend more money for a convenient location or to spend less money for a place that leaves you spending more time on transportation. There is a limited amount of housing in any location, so you are forced to choose from what’s available at any time. Housing decisions always have to take into account what someone can afford. Individuals making decisions about where to live must deal with limitations of financial resources, available housing options, time, and often other restrictions created by builders, landlords, city planners, and government regulations.

Watch it: Scarcity and Choice

Throughout this course you’ll encounter a series of short videos that explain complex economic concepts in very simple terms. Take the time to watch them! They’ll help you master the basics and understand the readings (which tend to cover the same information in more depth).

As you watch the video, consider the following key points:

• Economics is the study of how humans make choices under conditions of scarcity.
• Scarcity exists when human wants for goods and services exceed the available supply.
• People make decisions in their own self-interest, weighing benefits and costs.

Problems of Scarcity

Every society, at every level, must make choices about how to use its resources. Families must decide whether to spend their money on a new car or a fancy vacation. Towns must choose whether to put more of the budget into police and fire protection or into the school system. Nations must decide whether to devote more funds to national defense or to protecting the environment. In most cases, there just isn’t enough money in the budget to do everything.

Economics helps us understand the decisions that individuals, families, businesses, or societies make, given the fact that there are never enough resources to address all needs and desires.

Economic Goods and Free Goods

Most goods (and services) are economic goods , i.e. they are scarce. Scarce goods are those for which the demand would be greater than the supply if their price were zero. Because of this shortage, economic goods have a positive price in the market. That is, consumers have to pay to get them.

What is an example of a good which is not scarce? Water in the ocean? Sand in the desert? Any good whose supply is greater than the demand if their price were zero is called a free good , since consumers can obtain all they want at no charge. We used to consider air a free good, but increasingly clean air is scarce.

Productive Resources

Having established that resources are limited, let’s take a closer look at what we mean when we talk about resources. There are four productive resources (resources have to be able to produce something), also called factors of production :

• Land:  any natural resource, including actual land, but also trees, plants, livestock, wind, sun, water, etc.
• Econ omic capital:  anything that’s manufactured in order to be used in the production of goods and services. Note the distinction between financial capital (which is not productive) and economic capital (which is). While money isn’t directly productive, the tools and machinery that it buys can be.
• Labor:  any human service—physical or intellectual. Also referred to as human capital .
• Entrepreneurship : the ability of someone (an entrepreneur) to recognize a profit opportunity, organize the other factors of production, and accept risk.

Productive resources and factors of production are explained again in more detail in the following video:

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What Is Scarcity?

Production and demand.

• Natural Resource Scarcity

Scarcity and the Market

The bottom line.

Scarcity is an economic concept where individuals must allocate limited resources to satisfy their needs. Scarcity occurs when demand for a good or service is greater than availability. Scarcity affects the monetary value individuals place on goods and services.

Key Takeaways

• Scarcity is an economic concept where individuals must allocate limited resources to satisfy their needs.
• Scarcity limits the choices available to consumers in an economy.
• Some natural resources that are easily and widely accessible eventually prove scarce as they are depleted from overuse.
• Scarcity affects the monetary value individuals place on goods and services.

Investopedia / Mira Norian

If goods and services are abundant and unlimited, there is no need to make decisions about allocating resources. However, scarcity limits the choices available to consumers in an economy. Scarcity makes goods more valuable and sellers can set higher prices. 

Scarcity also describes the relative availability of factors or production or economic inputs. Suppose producing a widget requires two labor inputs: workers and managers, with one manager required per 20 workers. The available labor pool consists of 20,000 workers and 5,000 managers. There are more available workers than managers. Yet, workers are a relatively scarce resource, since they're needed for a ratio of 20 per manager for production, but outnumber managers by a ratio of only 4 to 1 in the labor pool.

Societies face limitations when trying to increase supply. Production capacity, land available for use, time, and labor are all considerations. Another way to deal with scarcity is by reducing demand through quotas , rationing , or price caps .

Scarcity forces consumers to make choices that come with associated opportunity costs . Opportunity cost is the cost of what is given up, compared to the value of the alternative.

Natural Resource Scarcity

Abundant common resources over-consumed at zero cost at first often prove limited. Climate isn't a tangible asset and its value is hard to calculate, but the costs of climate change affect companies and societies. Air is free, but clean air has a cost in terms of the economic activity discouraged to prevent pollution for health and quality of life .

Some natural resources that may appear free because they are easily and widely accessible eventually prove scarce as they are depleted from overuse in a tragedy of the commons . Economists increasingly view a climate compatible with human welfare as scarce goods because of the cost of protecting them and place a price on them for a cost-benefit analysis .

Governments may require manufacturers and utilities to invest in pollution control equipment, or to adopt cleaner power sources. Governments and the regulated industries eventually pass costs to taxpayers and consumers.

Scarcity may denote a change in a market equilibrium raising the price based on the law of supply and demand . In those instances, scarcity denotes a decrease over time in the supply of the product or commodity relative to demand. The growing scarcity reflected in the higher price required to attain a market equilibrium could be attributable to one or more of the following:

• Demand-induced scarcity reflects rising demand
• Supply-induced scarcity caused by diminished supply
• Structural scarcity attributable to mismanagement or inequality

Does Scarcity Mean Something Is Hard to Obtain?

Scarcity can explain a market shift to a higher price, compare the availability of economic inputs, or convey the opportunity cost in allocating limited resources. The definition of a market price is one at which supply equals demand, meaning all those willing to obtain the resource at a market price can do so. Scarcity can explain a market shift to a higher price, compare the availability of economic inputs, or convey the opportunity cost in allocating limited resources.

When Is Scarcity Intentionally Created?

This article is free to read and other content is easily reproduced intellectual property , including films and music, but may derive their scarcity from copyright protection . Inventors of new drugs and devices must secure patents to deter imitators. Many free goods may have an indirect or hidden cost .

How Does Monetary Policy Affect Scarcity?

In the U.S., the Federal Reserve controls the money supply. When governments print too much money, the value of the money decreases. Supply is high and money is less scarce. However, too much money in an economy can lead to inflation. Governments tend to keep the money supply relatively scarce through contractionary policy. The main contractionary policies employed by the United States include raising interest rates, increasing bank reserve requirements, and selling government securities.

When individuals must allocate limited resources to satisfy their needs, scarcity occurs. Scarcity limits the choices of consumers in an economy. Scarcity can affect a country's money supply, natural resources, available labor, and means of production.

ScienceDirect. " Population and Technological Change in Agriculture ."

SSRN. " Relative Prices and Climate Policy: How the Scarcity of Non-Market Goods Drives Policy Evaluation ."

Energy & Climate Intelligence Unit. “ Climate Economics - Costs and Benefits .”

Economics Help. " Scarcity in Economics ."

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ENCYCLOPEDIC ENTRY

One of the defining features of economics is scarcity, which deals with how people satisfy unlimited wants and needs with limited resources. Scarcity affects the monetary value people place on goods and services and how governments and private firms decide to distribute resources.

Conservation, Earth Science, Social Studies

Water Truck in India.

Getting clean potable water in the hotter months of the year is a challenge for many New Delhi residents as the population grows and the clean water supply shrinks. Water trucks arrive to tens or even hundreds of people waiting for their daily supply of c

Photograph by Hindustan Times

Scarcity is one of the key concepts of economics . It means that the demand for a good or service is greater than the availability of the good or service. Therefore, scarcity can limit the choices available to the consumers who ultimately make up the economy . Scarcity is important for understanding how goods and services are valued. Things that are scarce, like gold, diamonds, or certain kinds of knowledge, are more valuable for being scarce because sellers of these goods and services can set higher prices. These sellers know that because more people want their good or service than there are goods and services available, they can find buyers at a higher cost.

Scarcity of goods and services is an important variable for economic models because it can affect the decisions made by consumers. For some people, the scarcity of a good or service means they cannot afford it. The economy of any place is made up of these choices by individuals and companies about what they can produce and afford.

The goods and services of any country are limited, which can lead to scarcity . Countries have different resources available to produce goods and services. These resources can be workers, government and private company investment, or raw materials (like trees or coal). Certain limits of scarcity can be balanced by taking resources from one area and using them somewhere else. Sellers like private companies or governments decide how the available resources are spread out. This is done by trying to strike a balance between what consumers need or want, what the government needs, and what will be an efficient use of resources to maximize profits . Countries also import resources from other countries, and export resources from their own.

Scarcity can be created on purpose. For example, governments control the printing of money, a valuable good. But, paper, cotton, and labor are all widely available across the world, so the things required to make money are not themselves scarce. If governments print too much money, the value of their money decreases, because it has become less scarce. When the supply of money in an economy is too high, it can lead to inflation . Inflation means the amount of money needed to buy a good or service increases—therefore money becomes less valuable, and the same amount of money can buy less over time than it could in the past. It is therefore in a country’s best interest to keep its paper money supply relatively scarce. However, sometimes inflation can help an economy . When money is less scarce, people can spend more, which triggers a rise in production. Low inflation can help an economy grow.

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Introduction

In economics, scarcity refers to limitations–limited goods or services, limited time, or limited abilities to achieve the desired ends. Life would be so much easier if everything were free! Why can’t I get what I want when I want it? Why does everything cost so much and take so much effort? Can’t the government, or at least the college or local town, or if not that, my parents just give it to me–or at least make a law so that if I want to buy pizza, there is a pizza shop nearby that has to sell me pizza at a dollar a slice?

That you can’t have everything you want the moment you want it is a fact of life. Figuring out how individuals, families, communities, and countries might best handle this to their benefit is fundamental to what economics is about.

You are probably used to thinking of natural resources such as titanium, oil, coal, gold, and diamonds as scarce. In fact, they are sometimes called “scarce resources” just to re-emphasize their limited availability. Everyone agrees natural resources are scarce because they take a lot of effort, money, time, or other resources to get, or because there seems to be a finite amount available.

But what constitutes a lot of effort, money, time, or other resources? Does it matter if something is finite if we can easily substitute something else? It all depends on your circumstances. Most people don’t think of water as scarce, but if you live in a desert, water is scarce. If you are a teenager or in college, iPhones or the hottest sneakers or the recognition of your peers or a person of interest are as scarce–as difficult to acquire–as gold. If you are running out of space on your hard drive but you can substitute cloud computing, is storage space scarce?

In fact, economists view everything people want, strive for, or can’t achieve effortlessly as scarce. For example,

Every time you turn on the tap and get fresh water, that fresh water is part of what economists deem as scarce. Instead of paying your water bill, you could instead hike down to the local river and fill your water bottle in the local stream or creek, as did your forbears only 100 years ago. That would involve your time, and even in the most pure of natural circumstances your worry about whether deer might have polluted the stream or creek with bacteria. Not to mention if you want to shower in clean water or water the summer vegetables you want to grow with clean water. The air we breathe and the sun that shines on us is free. But if the air we breathe or the sunlight we bask in are not as perfect or fresh or unpolluted as we envision, are you personally willing to pay more to make it so? If we make sweeping governmental, regulatory changes, are we sure that those changes are not major changes that might affect our friends or others on the earth badly? Or that won’t come back to bite us, even making pollution worse? Time is scarce. Every minute you spend reading this is a minute you could alternatively spend reading a novel, catching a baseball game, talking to your friends or family, or working at a soup kitchen. Every time you have to give up something to enjoy what you want, the thing you want is scarce.

Since to an economist, everything people desire or demand is probably scarce, your next question may be how you can analyze the costs and benefits . Or you may want to know how to supply those desirable goods and services. You may want to ask more about productive resources , including natural resources . If you are intrigued by why diamonds–which seem so frivolous–cost so much more than water–which seems so essential, you might want to skip to margins and thinking at the margin .

Definitions and Basics

Natural Resource , 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….

In the News and Examples

They Clapped: Can Price-Gouging Laws Prohibit Scarcity? , by Michael Munger. Econlib, January 8, 2007. See also associated podcast,

Munger on Price Gouging , on EconTalk.

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….

Chris Anderson on Free , EconTalk podcast. May 12, 2008.

Chris Anderson talks with EconTalk host Russ Roberts about his next book project based on the idea that many delightful things in the world are increasingly free–internet-based email with infinite storage, on-line encyclopedias and even podcasts, to name just a few. Why is this trend happening? Is it restricted to the internet? Is there really any such thing as a free lunch? Is free a penny cheaper than a penny or a lot cheaper than that? The conversation also covers whether economics has anything to say about free….

Richard McKenzie on Prices , EconTalk podcast. June 23, 2008.

Richard McKenzie of the University California, Irvine and the author of Why Popcorn Costs So Much at the Movies and Other Pricing Puzzles, talks with EconTalk host Russ Roberts about a wide range of pricing puzzles. They discuss why Southern California experiences frequent water crises, why price falls after Christmas, why popcorn seems so expensive at the movies, and the economics of price discrimination….

Diane Coyle on the Soulful Science , EconTalk podcast.

Diane Coyle talks with host Russ Roberts about the ideas in her new book, The Soulful Science: What Economists Really Do and Why it Matters. The discussions starts with the issue of growth–measurement issues and what economists have learned and have yet to learn about why some nations grow faster than others and some don’t grow at all. Subsequent topics include happiness research, the politics and economics of inequality, the role of math in economics, and policy areas where economics has made the greatest contribution….

Daniel Botkin on Nature, the Environment and Global Warming , EconTalk podcast.

Daniel Botkin, ecologist and author, talks with EconTalk host Russ Roberts about how we think about our role as humans in the natural world, the dynamic nature of environmental reality and the implications for how we react to global warming….

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.”…

Who coined the phrase “the dismal science”? See The Secret History of the Dismal Science: Economics, Religion, and Race in the 19th Century , by David M. Levy and Sandra J. Peart. Econlib, January 22, 2001.

Everyone knows that economics is the dismal science. And almost everyone knows that it was given this description by Thomas Carlyle, who was inspired to coin the phrase by T. R. Malthus’s gloomy prediction that population would always grow faster than food, dooming mankind to unending poverty and hardship. While this story is well-known, it is also wrong, so wrong that it is hard to imagine a story that is farther from the truth. At the most trivial level, Carlyle’s target was not Malthus, but economists such as John Stuart Mill, who argued that it was institutions, not race, that explained why some nations were rich and others poor….

Advanced Resources

Is Economics All About Scarcity? , by Arnold Kling. Blog discussion on EconLog, January 17, 2007.

… I am two-handed on this issue. On the one hand, just because food, say, has become more abundant does not mean that we can ignore scarcity. At any moment in time, for a given state of know-how, the conventional definition of economics as dealing with the allocation of scarce resources among competing ends applies. On the other hand, some of the most interesting economic observations concern relative abundance. Look at our standard of living compared to 100 years ago. Look at South Korea compared with North Korea. Robert Lucas famously said that “The consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them it is hard to think of anything else.”…

Related Topics

Incentives Cost-Benefit Analysis Efficiency Productive Resources Property Rights What is Economics?

Introduction to Choice in a World of Scarcity

Chapter objectives.

In this chapter, you will learn about:

• How Individuals Make Choices Based on Their Budget Constraint
• The Production Possibilities Frontier and Social Choices
• Confronting Objections to the Economic Approach

Bring It Home

Choices ... to what degree.

Does your level of education impact earning? Let’s look at some data from the Bureau of Labor Statistics (BLS). In 2020, among full-time wage and salary workers, median weekly earnings for those with a master’s degree were $1,545. Multiply this average by 52 weeks, and you get average annual earnings of $80,340. Compare that to the median weekly earnings for full-time workers aged 25 and over with just a bachelor’s degree: $1,305 weekly and $67,860 a year. What about those with no higher than a high school diploma in 2020? They earn an average of just $781 weekly and $40,612 over 12 months. In other words, data from the BLS indicates that receiving a bachelor’s degree boosts earnings by 67% over what workers would have earned if they only obtained a high school diploma, and a master’s degree yields average earnings that are nearly double those of workers with a high school diploma.

Given these statistics, we might expect many people to choose to go to college and at least earn a bachelor’s degree. Assuming that people want to improve their material well-being, it seems like they would make those choices that provide them with the greatest opportunity to consume goods and services. As it turns out, the analysis is not nearly as simple as this. In fact, in 2019, the BLS reported that while just over 90% of the population aged 25 and over in the United States had a high school diploma, only 36% of those aged 25 and over had a bachelor's or higher degree, and only 13.5% had earned a master's or higher degree.

This brings us to the subject of this chapter: why people make the choices they make and how economists explain those choices.

You will learn quickly when you examine the relationship between economics and scarcity that choices involve tradeoffs. Every choice has a cost.

In 1968, the Rolling Stones recorded “You Can’t Always Get What You Want.” Economists chuckled, because they had been singing a similar tune for decades. English economist Lionel Robbins (1898–1984), in his Essay on the Nature and Significance of Economic Science in 1932, described not always getting what you want in this way:

The time at our disposal is limited. There are only twenty-four hours in the day. We have to choose between the different uses to which they may be put. ... Everywhere we turn, if we choose one thing we must relinquish others which, in different circumstances, we would wish not to have relinquished. Scarcity of means to satisfy given ends is an almost ubiquitous condition of human nature.

Because people live in a world of scarcity, they cannot have all the time, money, possessions, and experiences they wish. Neither can society.

This chapter will continue our discussion of scarcity and the economic way of thinking by first introducing three critical concepts: opportunity cost, marginal decision making, and diminishing returns. Later, it will consider whether the economic way of thinking accurately describes either how we make choices and how we should make them.

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• Section URL: https://openstax.org/books/principles-economics-3e/pages/2-introduction-to-choice-in-a-world-of-scarcity

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Scarcity in today´s consumer markets: scoping the research landscape by author keywords

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• Published: 29 September 2022
• Volume 74 , pages 93–120, ( 2024 )

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• Haoye Sun 1 &
• Thorsten Teichert   ORCID: orcid.org/0000-0002-2044-742X 1  

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Scarcity refers to not having enough of what one needs. This phenomenon has shaped individuals´ life since ancient times, nowadays ranging from daily-life scarcity cues in shopping scenarios to the planet’s resources scarcity to meet the world´s consumer demand. Because of this ubiquity of scarcity, the topic has been attracting attention from scholars and practitioners in different areas. Studies regarding scarcity were conducted across disciplines, based on different assumptions, and focused on distinct study subjects. A lack of mainstream about this topic hindered the convergence of core ideas among different schools of thought. In this article, we take an integrative socio-economic perspective to join diverse findings on scarcity affecting consumer markets, identify topic-specific research questions still to be answered, and provide suggestions for future and integrative research opportunities. A systematic review based on author keywords from 855 publications analyzing scarcity affecting business-consumer interactions serves as a database. Exploratory factor analyses based on author keywords identify shared patterns within and linkages across discourses stemming from various disciplines and theories. Results differentiate distinct research foci in the consumer behavior, socio-political, and other disciplinary research realms. A mapping of these research themes identifies the scarcity-related interplay among consumers, producers, and other stakeholders. Findings point out research directions for future studies at both the research realm level and the interdisciplinary level.

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1 Introduction

Scarcity refers to basic limitations in economic transactions resulting from the gap between resource availability and individuals’ needs (Cannon et al. 2019 ). The notion of “resource” covers a wide range of forms, including commodities, services, profits, energy, water, time, etc. (Goldsmith et al. 2021 ; Hamilton et al. 2019 ). It is undeniable that nowadays more individuals in the world have enough material, emotional as well as spiritual resources to satisfy their living needs and development desires. However, even in times of material abundance in the Western hemisphere, scarcity is not an outdated topic for researchers and practitioners. If we look back on our online/offline shopping experience, scarcity appeals such as “limited edition”, “last chance”, and “max 2 products per consumer” will always pop into our minds. Global events also remind us of the universality of scarcity and its impact on consumers and society (Hamilton et al. 2019 ). Economic development and even recovery after the 2007–2009 global financial crisis are constrained because of the unbalance between consumers´ resource demands and the scarcity of resources supply (Brown et al. 2014 ). Recently, the Covid-19 pandemic has led to the manifestations of various and unexpected forms of scarcity in consumer markets (Hamilton 2021 ), such as the scarcity of grocery products (Omar et al. 2021 ), water scarcity (Boretti 2020 ), as well as the scarcity of operational resources and capabilities (Shaheen et al. 2022 ). The scarcity of the above-mentioned resources jointly builds up a society with scarcity and even puts people in a scarcity mindset. All those examples highlight the ubiquity and multiformity of scarcity, making this concept an umbrella framework for socio-economic limitations in today´s consumer markets.

Scarcity causes difficult trade-off situations for consumers, marketers, and policy makers: how to effectively allocate the scarce resources to meet needs (Shi et al. 2020 ). Scarcity is thereby a fundamental proposition of classic economic theory, which states that economic actors need to treat resources as limited. As a basic economic problem, scarcity attracts researchers to optimize resource planning using mathematical and modeling methods; this provides strategic orientations. Meanwhile, psychologists suggest that scarcity is not a ubiquitous manifestation in reality but a situated phenomenon perceived by economic actors. More specifically, psychological studies show that individuals tend to think and behave differently based on the perceived scarcity of resources (O’Donnell et al. 2021 ; Shah et al. 2015 ); this creates business opportunities (Shi et al. 2020 ). The concept of scarcity has been linked to a wide range of socio-economic research subjects in consumer markets, such as consumer responses (Hamilton et al. 2019 ), revenue management (Heo et al. 2013 ), supply chain management (Fleischmann et al. 2020 ), sustainable consumption (Waris and Hameed 2020 ), corporate strategy (Zhou et al. 2007 ), and policy-making (Quesnel et al. 2019 ). Such an advance in scientific knowledge across a wide variety of disciplines generally motivates the need for evaluation studies assessing interdisciplinary scientific research (Wagner et al. 2011 ).

The general understanding of scarcity is that the phenomenon contains different dimensions based on different resource conditions (Datta and Mullainathan 2014 ; Fan et al. 2019 ). In a recent publication focused on product scarcity, Shi et al. ( 2020 ) recognized a variety of scarcity phenomena, including: physical product scarcity, service product scarcity, natural resources scarcity, the scarcity of managerial resources, as well as the scarcity of psychological resources. There is however a lack of studies that capture individuals’ experiences of scarcity across multiple domains (De Sousa et al. ( 2018 ). Even review studies so far aggregated empirical findings about single scarcity dimensions, e.g. on the impact of product scarcity on consumer responses (Hamilton et al. 2019 ; Shi et al. 2020 ), on supply chain management in the era of natural resource scarcity (Kalaitzi et al. 2018 ), as well as on scarcity of time and mental resources in the healthy diet field (Jabs and Devine 2006 ).

We argue a broader perspective is needed to investigate multiple as well as interdisciplinary dimensions of scarcity and their linkages. Focused studies cannot offer a comprehensive framework that captures various aspects of scarcity with all-embracing breadth, let alone can they reveal interconnections of scarcity dimensions and their core concepts across research themes and disciplines. From the perspective of knowledge integration, critical questions can better be answered from a more holistic perspective, and the diffusion of discoveries can be more widely promoted across different research fields (Aboelela et al. 2007 ). Accordingly, the current paper seeks to link different dimensions of scarcity in consumer markets to provide a systematic review regarding the socio-economics of the umbrella concept of scarcity. Specifically, this paper aims (1) to identify the main existing research streams in the field of socio-economics that address the scarcity of different resource types in consumer markets; (2) to integrate the main findings of these research streams, and categorize them into underlying research realms; (3) to point out future research directions for each research realm; (4) to sketch possibilities of transferring ideas and methods across the identified research realms.

2 Methodology

Informetrics provides a set of tools to systematically analyze research and its development over time (Kuntner and Teichert 2016 ; Wagner et al. 2011 ). It uses meta-information provided within academic publications to gain insights at an aggregate level of research fields. Typically, co-citation analyses are conducted to map the research landscape of a scientific discipline (Acedo and Casillas 2005 ; Frerichs and Teichert 2021 ). This approach bases on the idea that single publications are built upon each other, such that joint references indicate an overlap of underlying research topics. This mode of analysis works well within a scientific discipline, where there are shared protagonists and idea-providers that are jointly been cited by following articles. However, co-citation analysis can fail in mapping an interdisciplinary landscape. Here, the same topic can be addressed from complementary angles, while referring to different protagonists' works. Thus, a lack of co-citations need not imply different topics but may hint at divergent lenses applied in its analysis.

Given the highly heterogeneous and interdisciplinary nature of the scarcity discourse, our paper deviates from common co-citation analysis and instead carries out an informetric analysis based on author keywords. Author keywords refer to the list of topic-specific words hand-picked by the authors to describe the articles´ issues (Lu et al. 2021 ). These keywords are generally chosen such that they provide general information about the papers´ topics that are been investigated. This holds as author keywords determine the publication success, the paper’s attractiveness to potential readers, and even its dissemination to certain fields. Therefore, authors mostly include informative, most relevant, and refined words with standardized academic expression as keywords (Uddin and Khan 2016 ). As important entities of meta-data, author keywords play a significant role in bibliographic analysis to clarify scientific knowledge structures, identify subject hotspots, and detect research trends (Lu et al. 2021 , 2020 ). Thus, in this paper, we identify research streams based on author keywords. Figure  1 shows the framework of the paper.

Research framework of the current study

2.1 Data collection

Following standard practice in scientometric research (Chen et al. 2019 ; Shi et al. 2020 ), the internationally leading database of Web of Science (WoS) is used to capture the relevant literature. WoS is known to index the influential literature in different fields, thus is regarded as the high-quality database WOS for bibliometric analysis (Shi et al. 2020 ). Both the Social Sciences Citation Index (SSCI) and the Emerging Sources Citation Index (ESCI) were selected as they jointly represent an especially broad spectrum of the international literature in social sciences (Wörfel 2019 ). Following the procedure applied by previous articles executing author keywords analyses (Farooq et al. 2018 ; Keramatfar and Amirkhani 2019 ), we separated an article search phase from its analysis phase.

In the search phase, a search term was broadly defined to identify relevant articles using based on topics (referred to in either article title, author keywords, or abstract). As stated in the first section, scarcity has been related to various resources in different disciplines. In this paper, we aim to extract the dominant resource types from the existing literature on resource scarcity in each discipline. Thus, we didn’t include the expressions that specify the resource types (e.g., financial dissatisfaction, time pressure, budget contraction, etc.) in our search term. Instead, the noun “scarcity” was used as an elementary search phrase as it constitutes the shared terminological expression used in academic articles (Shi et al. 2020 ). This search phrase was combined by AND-conditions with additional search phrases relating the topic to issues of consumer markets instead of an engineering or technical angle. For this purpose, we added a second group of search phrases relevant to the perspective of consumers (i.e. consumer* OR customer*). Note that consumers in the service sector of tourism are often labelled by different nouns (Shi et al. 2020 ; Suri et al. 2007 ), thus we added tourist-related synonyms “OR tourist* OR traveler* OR traveller* OR visitor*” into the second part of the search term.

To rule out the irrelevant and increase the data quality, the search results were restricted to peer-reviewed publications with the document types as “article”, and language as “English” (Frerichs and Teichert 2021 ). In particular, irrelevant articles with the expressions of “scarcity of research/ data/ study” were excluded by applying the additional exclusion criteria “NOT scarcity of NEAR/1 research”, “NOT scarcity of NEAR/1 data”, and “NOT scarcity of NEAR/1 stud*”. The refined hit list was exported in August 2021, consisting of 855 articles about scarcity research with the micro-level socio-economic background.

2.2 Data analysis

The data analysis part contains multiple stages. As a first step, descriptive statistics inform about the scope of selected articles and the author keywords used. By doing so, we obtain an initial picture of the interdisciplinary fields and their respective research focuses. Subsequently, a factor analysis is performed to narrow down the overwhelming information derived from hundreds of author keywords to a limited set of underlying research streams. An exploratory factor analysis (EFA) based on author keywords was carried out using the software IBM SPSS Statistics 25. EFA is an established method used to analyze interdependencies among multitudes of variables (i.e., author keywords in our paper) and to derive factors that can capture most of the information of the original variables.

These factors were interpreted as single research streams as follows. Factor loadings (FL) of single keywords inform about the keyword´s usage in a single research stream, i.e. how representative a keyword is for an identified factor (Kuntner & Teichert, 2016 ). Thus, research streams were characterized by their specific combinations of keywords. To further describe the factors, representative articles were identified based on their usage of these keywords. For each factor, the articles with an especially high absolute and relative number of referenced keywords were identified. A manual inspection of these articles served to describe exemplary works located within the research stream. Joining this bottom-up perspective of referencing individual publications with the top-down perspective of keyword statistics helped us contextualize author keywords and describe their common underlying research streams.

3.1 Descriptive analysis

The identified 855 articles were published in a huge amount of 500 different journals, distributed across 100 Web of Science Categories. Table 1 illustrates the Top 10 research categories and journals. This confirms a high interdisciplinary, but also reveals a highly dispersed discourse, as few journals contain more than ten publications related to the research topic. Further descriptive analysis across categories indicated that leading journals in environmental sciences (such as Water Research, Journal of Cleaner Production) and business & management (such as Journal of Consumer Psychology, Journal of Business Research) fields have been paying constant attention to scarcity research.

This particular breadth of research works is further illustrated by an analysis of keywords used by the 855 articles. A total of 120 different keywords were identified after word-stemming and cleaning. These keywords also exhibit a high dispersion, as visualized by the low concavity of the Pareto chart in Fig.  2 . No single keywords can be identified that are shared across the articles. Even the search-inherent concepts of “consumer” and “consumption” were referenced as author keywords only by a minority of identified articles (22% or 18%), suggesting a more distinct publication focus. Together, this initial inspection of publication metadata shows that standard differentiations by research categories (e.g. environmental sciences versus business & management) are insufficient to characterize the entire socio-economic discourse on consumer market scarcity. Thus, a sophisticated approach of statistical categorization is needed to systematically structure the research field.

Pareto chart of keyword frequencies

3.2 Overview on factor analysis results

A factor analysis is executed to group keywords together based on their co-occurrences. Keywords within one factor are then more likely to co-occur than keywords of different factors. Thus, the keywords assigned to each factor (based on their factor loadings) manifest the key contents of this single research stream. For example, the first factor that captures 18% of the keyword co-occurrence variance is characterized by keywords such as “uniqueness, desire, limited, luxury, social” which indicates purchase-enhancing product scarcity cues. These initial impressions are validated in the following sections by an in-depth analysis of publications belonging to this factor.

Ten factors were extracted by factor analysis to explain 50.03% of the variance in total. Eigenvalue and variance explanation of each factor are presented on the right-hand side of Table 2 . Consistent with previous studies in socio-economics (Nooteboom et al. 1997 ), a cut-off point at the FL value of 0.3 was applied to relate single keywords to their research streams. Table 2 shows the representative keywords under each factor (Table S1 provides the complete list of keywords in each factor). Factor numbers indicate the relative prominence of the identified research stream, measured by factors´ explained variance.

To reduce reading complexity, the ten identified research streams are grouped into three overarching realms (subheaders in Table 2 ). This grouping is based on a robust analysis of between-factor linkages. Hereto, pairwise correlations between keywords belonging to each two different factors are calculated. In Table 3 , the negative correlation coefficients indicate that the more author keywords belong to one factor, the less likely they belong to other factors. In other words, the correlation coefficients reflect the possibility of coexistence of articles´ factor belongingness. According to the results shown in Table 3 , we grouped the factors with the smallest conflicts (i.e., with the correlation coefficients near zero), resulting in three main research realms (marked with green lines in Table 3 ). This grouping of research streams (factors) into three overarching research realms is used in the following to arrange the discussion of single research streams. Please note that we nonetheless keep the factor numberings from factor1 to factor10 based on their decreased variance explained.

3.3 Consumer behavior research realm: a two-sided view and scarcity

Studies in consumer behavior often assume that consumers have adequate resources to purchase the products that can meet their consumption goals (Hamilton et al. 2019 ). However, many consumers experience a scarcity of products/services and/or a scarcity of process resources needed to conduct purchase behaviors (e.g., money and time) (Wang et al. 2021a , b ). Intuitively, experiencing insufficiency of what one wants to get is detrimental (Huijsmans et al. 2019 ), since a failed purchase caused by scarcity restricts consumers’ desire satisfaction (Biraglia et al. 2021 ). Interestingly, scarcity has also been found to increase consumers’ expectations for scarce products/services, and consequently prompt consumption (Aggarwal et al. 2011 ; Urbina et al. 2021 ). These findings seem to contradict each other at first glance, but their inconsistencies can be reconciled by consumers’ attributions of scarcity (Peterson et al. 2020 ).

In the consumer behavior research realm, we will talk about product scarcity and service scarcity in the retailing and service industries, respectively. Moreover, we will provide an in-depth understanding of the positive and negative effects of scarcity cues on consumer responses, and further explain the underlying mechanism for the two opposite effects.

3.3.1 Research stream (F1) on “purchase-enhancing product scarcity cues”

Scarcity cues in this research stream relate to the positive effects of the restricted availability of products or services. Such scarcity cues have been found to positively affect consumer responses, including shaping positive attitudes towards scarce products/brands, purchase intention, and willingness to pay/purchase. Following this line, previous studies confirmed a persuasive effect of scarcity appeals on consumer behaviors (Stock and Balachander 2005 ). Moreover, scarcity cues motivate non-rational consumer responses, such as luxury experiences seeking and impulsive purchases. That is because scarcity cues can lead to the conclusion of the rarity and uniqueness of products or brands (Chae et al. 2020 ). Limited-edition products can also address consumers’ desire for uniqueness (Urbina et al. 2021 ), since consuming unique products is an effective means to express consumers’ uniqueness (Bennett and Kottasz 2013 ). More importantly, scarcity serves as a differentiator of social class and social status (Bozkurt and Gligor 2019 ). Accordingly, consumers’ social-related characteristics (e.g., power state, social rejection vs. acceptance, social pressure, wealth) can moderate their reactions to scarcity cues (Bozkurt and Gligor 2019 ; Kim 2018 ; Song et al. 2021 ).

3.3.2 Research stream (F3) on “dysfunctional effects of product scarcity on consumer behavior”

This research stream complements the effects analysis of product scarcity on consumer behavior by addressing its possible negative effects. In general, scarcity messages provide urgency information to consumers, which consequently leads to a shorter deliberation and higher purchase amount, higher evaluation, as well as greater satisfaction with the scarce products (Aggarwal et al. 2011 ). Therefore, one could say scarcity is a “powerful weapon” in marketing. However, scarcity can be accompanied by “darkness” (e.g., negative affect or stress) (Huijsmans et al. 2019 ), and can even lead to negative perceptions of the scarce products and their sellers (Brannon and Brock 2001 ). As a spontaneous reaction, scarcity messages can cause negative physiological reactions. For instance, Book et al. ( 2001 ) observed the connection between scarcity promotions and testosterone levels, which indicates consumers’ aggressive reactions (Kristofferson et al. 2017 ).

Scarcity information may also cause a negative image of scarce products or their sellers. When consumers attribute the products’ scarcity information to “demand”, they tend to perceive the products to be unique (Urbina et al. 2021 ) and of better quality (Parker and Lehmann 2011 ). However, scarcity messages can also be interpreted as supply-side problems (e.g., stock-out), that evoke negative consequences, for example, lower ratings of the sellers, choice shift, as well as cancelation of purchases (Anderson et al. 2006 ; Sloot et al. 2005 ).

In summary, the framing of a product-related scarcity message can evoke completely different psychological processing and behavioral responses. Recent empirical studies provide interesting insights in this regard. Compared with supply-driven scarcity messages, such as “out-of-stock” and “unavailable”, demand-driven scarcity messages (e.g., “sold out”) lead to few negative responses to products and sellers (Kim and Lennon 2011 ; Peterson et al. 2020 ). Nevertheless, when consumers attribute scarcity as the result of accidental or non-market forces, neither positive nor negative effects on consumers’ responses are observed (Parker and Lehmann 2011 ).

3.3.3 Research stream (F5) on “scarcity issues in the (broader) consumption context”

In the previous sections, we summarized findings regarding how product scarcity influences consumers’ responses (i.e., attitudes, intentions, and behavior). Another research stream investigates consumers’ responses when facing scarcity in the broader consumption context. Two distinct themes were addressed under this umbrella, time and resource scarcity. A long tradition of research investigated causal relationships between time scarcity and impulsive and dysfunctional consumer behavior. Specifically, time pressure was found to trigger consumers’ impulsiveness, which increases their likelihood of eating ready-to-eat food without thinking about the nutritional ingredient and the following health consequences (Celnik et al. 2012 ; Machín et al. 2018 ; Sarmugam and Worsley 2015 ). More recently, the scarcity of resources (e.g., water, fuel) attracted more attention from researchers. A series of studies tried to shed light on consumers’ purchasing intention/behavior of sustainable products. In these studies, ecological knowledge and awareness of scarcity are found to be the main drivers of green consumption (Waris and Hameed 2020 ).

3.3.4 Research stream (F6) on “managing scarcity in the service industries”

Previous research streams have already covered different dimensions of scarcity based on different resource conditions in retailing. The research stream identified by factor 6 discusses the concept of scarcity in the service industry. Research addresses both positive effects of scarcity on consumer perceptions as well as negative supply-side scarcity effects.

Similar to retailing context, scarcity information may also act as a cue driving consumption in the service industry. The scarcity of specific service offerings, which is regarded as the manifestation of rarity, is confirmed to have a positive impact on customer satisfaction (Moulard et al. 2021 ). As an example, Kovács et al. ( 2014 ) report higher valuations when services were offered by distinctive independent restaurants instead of standardized chain restaurants.

Service industries have their specific characteristics (Le et al. 2019 ). Unlike product industries with relatively predictable demand and considerable capacity flexibility, service industries face the issue of step-fixed physical capacity (at least over the short term), together with highly unpredictable time-variable demand patterns. This leads to e.g. a surplus seating capacity during low hours and insufficient seating capacity during peak hours (McGill and Van Ryzin 1999 ). Service providers balance fluctuating demand and revenues by employing revenue management (RM) tools, such as dynamic pricing strategy and the control of the length of staying strategy (Heo et al. 2013 ; Lee et al. 2021 ). However, customers’ attributions of scarcity may lead to different reactions to various RM tools, and further influence customer satisfaction. When scarcity is attributed to high demand, customers enhance price appreciation. As a result, they are more likely to accept the dynamic pricing strategy. However, when scarcity is caused by “control of the length of staying strategy”, customers feel disrespected (Lee et al. 2021 ), which consequently leads to low customer satisfaction (Guillet and Mohammed 2015 ; Lindenmeier and Tscheulin 2008 ).

3.4 Socio-political research realm: resource scarcity in the water-energy-food security nexus

Scarcity in consumer markets is addressed in the socio-political research realm from the perspective of scarce material resources. Given the growing societal demand for physical resources, the whole world is facing an intractable scarcity issue (Steffen et al. 2015 ), that is, the recourse demand is going beyond the planetary boundaries, equity, and inclusivity (Rockström et al. 2009 ). Research works pursue a science-based paradigm to resolve the conflicts between human beings’ development needs and the planet’s resource scarcity. Specifically, the water-energy-food (WEF) security nexus emphasizes the scarcity of water, energy, and food resources, together with their intricate interrelationships (Hoff 2011 ). Researchers take a series of socio-political perspectives (such as political economy, environmental sustainability, and human development), to highlight their independencies and synergies of water, energy, and food resource sectors (Obersteiner et al. 2016 ; White et al. 2018 ). By doing so, scholars aim to optimize policy planning that negotiates the trade-off between global societal development and the ecosystem’s resilience maintenance. This section focuses on the natural resources scarcity dimension, and discusses each sector of the water-energy-food (WEF) security nexus, together with the identified interdependencies among the three sectors.

3.4.1 Research stream (F2) on “managing water scarcity”

Water is a scarce natural resource that is closely related to climate change and the future of human beings (Molden and Sakthivadivel 1999 ). Given the important role of water and its scarcity, researchers focus on water conservation strategies, so as to optimize water supply portfolios (Fraga et al. 2017 ). Well-known strategies such as financial incentives and political mandates fail to encourage water conservation in water-consumption scenarios (Zeff et al. 2020 ). Therefore, researchers aim to provide solutions for water management from the supply-side and demand-side.

Among different strategies for dealing with water scarcity, irrigation attracts significant attention from previous studies. Note that irrigation water is demanded not only in the agricultural sector (Pérez Blanco and Thaler 2014 ), but also in the urban sector (Hof and Blázquez-Salom 2015 ; Quesnel and Ajami 2019 ). Large landscape irrigation (with non-residential purposes) also accounts for a significant volume of water consumption (Morales and Heaney 2016 ). As a result, non-residential irrigation consumers become the research focus of recent publications. Quesnel and Ajami ( 2019 ) carried out a study in this regard. In this study, they investigate the dynamic water demand for non-residential irrigation consumers in the drought region; and find that policies help prompt long-term (e.g., yearly) water conservation behavior, but short-term (e.g., weekly) actions cannot be explained by political practices. Relatedly, Quesnel et al. ( 2019 ) compare the water use behavior of consumers with potable vs. recycled water. Results reveal that potable and recycled water consumers show the same demand pattern despite the different policies and pricing tactics.

3.4.2 Research stream (F4) on “footprint as a flow indicator of scarce resources”

Measuring resources consumption is the first step to guarantee appropriate utilization of the “planet’s assets”, so that the issue of resources scarcity can be alleviated (Qiang and Jian 2020 ). Taking water consumption as an example, scholars find that the final products only contain a limited fraction of water compared to the total volume of water used for the whole production process (namely, virtual water) (Allan 1997 ). With analogy to water consumption, the application of the “virtual” concept is expanded to various resources which are used for products and services production (White et al. 2018 ). To track both direct and indirect resources consumption, the notion of the footprint is introduced. Footprint assesses the total volume of a resource that is consumed during the production process of the goods and services consumed by various groups: individuals, households, companies, regions, or countries; within its spatial boundaries and embodied within its imports (Daniels et al. 2011 ). Using the input–output analysis, scholars calculate a variety of footprints, including water (Weinzettel and Pfister 2019 ), energy (Wang et al. 2020 , 2019 ; Yu et al. 2018 ), and food (White et al. 2018 ) embodied at the international (Weinzettel and Pfister 2019 ), domestic (Wang et al. 2019 ), and (multi) regional levels (Wang et al. 2020 ; White et al. 2018 ). Based on the findings, decision-makers can formulate policies to rationally exploit, trade, and transport natural resources.

3.4.3 Research stream (F10) on “scarcity and food security"

Food security as a multidimensional concept relates to different types of scarcity. Food security includes three dimensions: availability (ability to provide an adequate supply of food), accessibility (ability to acquire enough food), and utilization (ability to absorb nutrients contained in the food that is eaten) (FAO, 1996), which are linked to supply-side food scarcity, scarcity of food access, and scarce nutrition support, respectively. Similarly, Beer ( 2013 ) categorizes the multiple dimensions of food security into two types. The first one is production-oriented food security, referring to the quantum of food available to people. While the second type is consumption-oriented security, representing the concerns about food access, health, and equity. Following the same line, risk management addresses the whole process from food production to food consumption.

Some studies specifically identified the risks of phosphorus scarcity to different stakeholders along the entire supply chain, ranging from environmental and management risks faced by food producers and traders to market-related risks encountered by food consumers (Cordell and Neset 2014 ; Cordell et al. 2015 ). Beer ( 2013 ) discusses the risk derived from uncertainty, scarcity, and value conflict in terms of both food production and food consumption. Other studies focus on only one sub-dimension of food security. For example, Wang et al. ( 2021a , b ) explored the combined impact of risk perception and the access dimension of food security status on food consumption behavior during the Covid-19 pandemic. In sum, all these works address food-related scarcity issues to specific aspects along the supply chain of food production, distribution, and consumption.

3.5 Other research realms

In previous sessions, we had a close look at the two main research realms of scarcity-related studies, namely, the consumer behavior research realm, and the socio-political research realm. Although the above-mentioned research realms can cover the majority of research topics, other dimensions of scarcity in consumer markets are also addressed from various other research realms, which can be summarized into three perspectives: economics, innovation, and operations management.

3.5.1 Competition effects of scarcity (F7)

The scarcity of managerial resources and capabilities leads to the competing interests of stakeholders in a business network (Greenley and Foxall 1996 ; Zhou et al. 2007 ). Studies talk about the conflicts between different stakeholders, and guide corporates to allocate scarce resources and managerial capabilities efficiently (Greenley and Foxall 1996 ). They emphasize the role of strategizing to address scarcity issues in competitive settings. Zhou et al. ( 2007 ) suggest that competitor-orientation strategies may improve performance in economically developing markets with scarce resources. Likewise, Crabbé et al. ( 2013 ) indicate that the economic crisis the companies are confronted with might hinder the investment in sustainable solutions, while the intention to meet customer demands drives companies to develop sustainable innovations of products and services.

3.5.2 Innovation effects of scarcity (F8)

Technological innovation offers various scarcity-related benefits, for example, fastening the production process, increasing the quality of the products, and lowering the manufacturing cost. Advances in technology have influenced and continue to play a role in solving scarcity issues in many industries (Shankar et al. 2021 ), such as the agriculture industry (Aubert et al. 2012 ), the retail industry (Kurnia et al. 2015 ), and the IT industry (Ghosh et al. 2019 ). When it comes to the retail industry, novel technology adoption has facilitated dramatic shifts in business models, whereby e.g. personnel shortages can be overcome by chatbots (Syed et al. 2020 ). Therefore, retail researchers focus especially on technology adoption in the subfield of e-commerce (Kurnia et al. 2015 ).

However, the scarcity of social resources may impede the adoption of innovative technologies even in cases of their objective superiority. For instance, the adoption of advanced agricultural technologies leads to higher productivity as well as less pollution, thus is identified as one of the most effective solutions to severe food shortages and environmental protection issues (Aubert et al. 2012 ). However, factors such as lack of information and/or scarcity of knowledge are recognized to cause the low adoption rate and the inefficiency of new technologies diffusion (Legesse et al. 2019 ). Given the heterogeneity in different industries, various factors are detected to hinder the new technology adoption. However, trust is the common factor that boosts technology acceptance in the industries we reviewed.

3.5.3 Optimization models of scarcity (F9)

Last but not last, Factor 9 focuses on studies in the field of operations research, aiming to provide solutions to a variety of scarcity issues in production processes. Findings from mathematical modeling can guide decision-makers to improve the operational performance of the entire supply chain.

In this topic, studies take the operational perspective to optimize the performance of supply chain processes, including supply, storage, distribution, and consumption. They focus on different scare scenarios, such as supply scarcity (Fleischmann et al. 2020 ), capacity scarcity (Koch 2017 ), financial resources scarcity (Totare and Pandit 2010 ), and the scarcity of demand–supply balance (i.e., oversupply or shortage) (Orjuela Castro et al. 2021 ). Using various model optimization methods, researchers aim to maximize economic profitability, improve consumer services and enhance the efficiency of the logistics network.

4 Discussion and conclusion

Scarcity refers to situations where material or immaterial resources are not sufficient for needs satisfaction. In the last decades, scholars have investigated different facets of scarcity in different socio-economic areas, including (but not limited to) economics, politics, and social psychology (Fan et al. 2019 ). These studies in various disciplinary studies result in fruitful but rather fragmented work under the topic of scarcity (Shi et al. 2020 ). To connect disciplinary research areas and further facilitate knowledge exchange, the current paper provides a systematic review of the scarcity literature. Using exploratory factor analysis, we identified distinct research streams, which could be allotted into three prominent research realms.

The current paper captured various dimensions of scarcity in consumer markets, including the product/service scarcity in the consumer behavior research realm, the natural resources scarcity in the socio-political research realm, as well as the scarcity of managerial resources and social resources in other research realms (see Table 4 for details). Despite addressing various scarcity dimensions, studies in every research stream only focus on single scarcity dimensions, and are mainly located in single research categories.

As shown in Table 4 , studies identified in the consumer behavior research realm are mostly located in Business & Management , Economics , and Hospitality, Leisure, Sport & Tourism WoS categories. Researchers paid particular attention to the effects of product/service scarcity on consumer responses. Two-sided effects of scarcity cues constitute the focus in this research realm. With a series of experiments, consumer behavior studies constructed a contingency framework for understanding the positive (negative) impact of demand-framed (supply-framed) scarcity on consumer responses. Accordingly, practical guidance was provided to marketers to motivate consumption behavior.

In the socio-political research realm, studies were centered on environmental sustainability. Researchers sought to resolve the planet’s natural resources scarcity from the angle of macro policies. Specifically, natural resource scarcity was investigated with a focus on the water-energy-food security nexus. Among all types of resources, water resources received the majority of attention from previous studies in this research realm. Moreover, as flow indicators of scarce resources, footprint-related methods were widely adopted to capture the visible and invisible resources consumption. Given the research subjects in this research realm, it is not difficult to imagine that most of the articles are assigned to Engineering & Green & Sustainable Science & Technology and Environmental Sciences & Studies categories. Finally, the mixed research realm (“other research realms”) covers scarcity studies with economic, innovative, and operations research focuses.

Despite the similarity with the consumer behavior realm in terms of WoS research categories, the mixed research realm has a different focus on scarcity dimensions and research objects. Studies in “other research realms” explored the scarcity of social/managerial resources within business activities. Thus, players (from producers to customers) along the industrial supply chain are the research emphases in this realm. By using mathematical modeling, researchers could strengthen the competitive advantages of the entire supply chain and its components.

Based on the identified research streams and the research realms they belong to, we further propose avenues for future research in each research realm. We also provide directions for interconnections of different research realms of scarcity studies. Figure  3 provides an overview of the future research inspirations at the research realm level and interdisciplinary level. These ideas will be outlined in the following, starting with research opportunities within research realms, followed by a discussion of transfer potential between the three research realms.

Future research inspirations for independent research realms and their convergence

4.1 Research opportunities within single research streams

Despite the surge of studies in consumer behavior research, some research gaps were still observed by our systematic review. First, most publications focus on one single type of scarcity cues, e.g., time pressure, financial constraints. Some studies have gone a step further by comparing product scarcity with different frames (e.g., supply-framed vs. demand-framed). Nevertheless, it might be interesting to investigate two or more types of scarcity cues at the same time, such as, to compare the consumer responses under the time pressure condition versus product scarcity (Song et al. 2021 ), to explore the interaction effect between two or more types of scarcity cues (e.g., limited-quantity & limited-time). The findings can contribute to research theories in this field, and further guide marketing practices. Second, although a series of interesting phenomena of scarcity have been reported in previous studies, they remain on the surface but fail to comprehensively reveal the corresponding psychological underpinnings (Peterson et al. 2020 ). Thus, it would largely enrich the literature if future studies could shed light on the cognitive and emotional mechanisms behind different phenomena.

In the socio-political research realm, water scarcity has drawn prominent attention from scholars. In obvious contrast to water, research in food (security) is "still in its infancy". The unbalanced focus, to some extent, contradicts the notion of the water-energy-food (WEF) security nexus, which emphasizes the integration of multiple resource sectors, and the optimization of the multi-goal models (Simpson and Jewitt 2019 ). Therefore, we encourage future studies to take a holistic perspective and consider the interdependencies of various resource sectors when conducting resource scarcity research.

In terms of “other research realms”, economic, innovative, and operational themes are mostly discussed independently. However, these concepts are not isolated. Instead, they connect and cause-and-effect each other (Filipescu et al. 2013 ; Zhou and Luo 2018 ). Given their reciprocal causality, the scarcity literature in “other research realms” could be enriched by more integration of research themes. For example, a previous economic constraint can hinder, postpone or even stop firms’ future innovation processes (Woschke et al. 2017 ). Lv and Qi ( 2019 ) found that the scarcity of innovative resources should be an important consideration in terms of the partner selection of the supply chain collaborative product innovation.

4.2 Research opportunities by connecting research streams

Following the principles of scientific development, boundaries across various disciplinary studies on scarcity may become blurred over time as a result of knowledge exchange. The scarcity literature in different research realms can then benefit from each other’s findings, theories, and methods. By connecting seemingly unrelated research disciplines, researchers may take novel perspectives to ponder the unsolved research questions; studies might break away from inertial settings and analysis through knowledge integration; the practical implications in specific fields can be significantly enhanced. Under the topic of scarcity, studies that investigate different dimensions of scarcity focus on various research objects across distinct research categories (see Table 4 ). However, research objects, including consumers, firms, and society, compose a complete network in consumer markets. Firms can benefit from satisfying consumers’ needs, and consumers expect firms to integrate society's welfare into their corporate activities. In return, society ensures the sufficiency of materials and the financial resources for consumer-firm relationships (Peasley et al. 2021 ). Therefore, it is essential to explore the dynamic linkages among these research objects in various scarcity dimensions across different research categories.

Most of the studies in the consumer behavior research realm investigate how to present scarcity cues to prompt consumer purchase. The findings provide practical implications for marketers. Increasing purchase is often the only goal of such studies. However, according to previous studies on the side effects of scarcity, exposure to scarcity promotions may cause people’s aggressiveness and further increase crime (Kristofferson et al. 2017 ). Therefore, it’s harmful to focus on only marketers’ well-being. Consumer behavior studies should borrow a broader perspective from the socio-political research realm, and carefully consider the trade-off between positive and negative consequences brought by scarcity cues to different parties. Questions such as whether scarcity cues should be manipulated by marketers , and to what extent they can manipulate scarcity promotions should be answered (Hamilton et al. 2019 ). Such a socio-political view of researchers should guide policy makers to better regulate scarcity-related marketing strategies under the premise of ensuring consumer well-being and the interests of society (e.g., social stability) (Kristofferson et al. 2017 ).

Method-wise, studies in the consumer behavior research realm can benefit from a modeling approach widely used in “other research realms”. Most of the studies in the consumer behavior research realm don’t go beyond the traditional statistics. These methods are powerful to infer the basic relationships among variables, but cannot reveal the complex connections among variables, let alone provide accurate prediction results. Studies in “other research realms” have an advantage in this respect. Mathematical operations have shown their worth especially when variables have unpredictable or complicated interactions (Hannah et al. 2021 ). Thus, mathematical modeling can contribute to the studies in the consumer behavior research realm to untangle the intertwined relationships among variables. A good example would be the work of Luo et al. ( 2019 ). Following the advances of machine learning, the study adopts a causal forest algorithm to capture the complex heterogeneous effects between scarcity and price incentive. By doing so, the authors present a practical scheme to optimize the targeting strategies.

Studies in the socio-political research realm aim to manage the trade-off between societal development and resource scarcity by optimizing political planning. The majority of studies in this research realm analyzed objective secondary data from institutional databases, but ignored the self-reported data from customers, who are actually the resource consumption group. As a result, some potential customer-related explanatory variables (e.g., factors) are widely absent in these analyses (Villar-Navascués and Fragkou 2021 ). To bridge the gap, future studies could learn from the studies in the consumer behavior research realm, which take a perspective of consumers, and include consumer-related factors (e.g., psychological factors) to reveal the underlying behavioral mechanism. To be more specific, qualitative methods that capture subject data (e.g., interviews) should compensate for the current lack of measurement of customers’ subjective attitudes/perceptions. By combining subjective interview data and objective database data, researchers can better explain the reasons behind customers’ decision-making on resource consumption.

Environmental sustainability is the core of scarcity studies in the socio-political research realm. Researchers propose effective macro policies to regulate the sustainable management of natural resources. In other words, studies in the social-political research realm try to solve the scarcity problem at the society level, while most research in “other research realms” investigates the business organization at the enterprise level. These two research realms are quite irrelevant at the first glance, resulting in limited crossover research between them. However, the framework of the triple bottom line of sustainability reflects the connections between sustainability and business management (Dao et al. 2011 ). The framework states that the success of firms should be measured by their economic, social, and environmental achievements (Melville 2010 ). Thus, studies in the socio-political research realm and “other research realms” should notice the value of each other, and launch more discourses on the conjunctions between sustainability and business activities (Melville 2010 ). As an example, Melville ( 2010 ) explores how information systems can address scarcity by improving environmental sustainability through the belief-action-outcome path. As an extension of this work, Dao et al. ( 2011 ) combine the triple bottom line of sustainability and supply chain management, and argued about the importance of operations in entire supply chains in a sustainable manner. Accordingly, Bengtsson and Ågerfalk ( 2011 ) take a triple bottom perspective of sustainability to design sustainable logistical operations. Addressing scarcity along entire sustainable supply chains can address profit goals (cost/benefit maximization), people goals (stakeholder satisfaction), and planet (environmental impact) goals at the same time.

Last but not least, studies in “other research realms” tend to address scarcity issues by optimizing single aspects of business activities on the industry side. Optimal solutions for entire supply chains and each part are derived by mathematical calculations. However, people are the important components of corporations, and are the decision-makers for all business activities. As a result, managerial decisions always violate the assumption of rational behavior (Brouthers et al. 2008 ), and consequently, lead to imperfect or suboptimal decisions, especially under complex situations. Therefore, taking people’s irrationality into account when optimizing the interests of firms/supply chains brings more reality to business studies. Taking supply chain management (SCM) as an example, Wieland et al. ( 2016 ) argue SCM studies should not assume the decision-maker to be always objective and rational. Instead, SCM should develop models which can stand up to irrational agents and more complex decision-making (Sterman and Dogan 2015 ). Consumer behavior studies are quite advanced in this regard. A series of irrational behaviors (e.g., panic buying, unhealthy eating) have been measured and analyzed by studies in this research realm. In future research, “other research realms” studies could borrow the methods or theories regarding irrationality from the consumer behavior research realm to improve the robustness of their mathematical modeling when relaxing the rational choice assumption. One such example is the work from Sterman and Dogan ( 2015 ), which combines emotional factors (i.e., stressors arising from scarcity or poor supplier delivery performance) with operational modeling to explain customers’ irrational hoarding and phantom ordering.

5 Limitations

Our paper is not without limitations. The current study focused on the socio-economics of scarcity. Yet in fact, scarcity was also investigated from an engineering perspective. We argue that it is already complicated enough to identify main research streams from the fuzzy studies in consumer markets, and propose the possible linkages among various research realms. Further studies may include a wider range of scarcity literature.

Although we carefully filtered out the irrelevant publications, it is possible that there are still some outliers in our dataset. Given the big amount of data, we argue it is impossible to individually check every publication by eyeballing. Nevertheless, due to the careful filtering and the low rate of outliers in such a large set of data, we believe that outliers can barely influence the robustness of our findings.

As a fast-emerging topic, scarcity has been attracting more and more attention from scholars. Every day new work springs up to contribute to scarcity research. The study’s findings are based on the most up‐to‐date literature available at that time. However, we do believe that some recently-published important work appeared after our dataset retrieval. Thus, we encourage future studies to review the most recent work to expand our research.

Availability of data and material

On request.

Code availability

Not applicable.

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Sun, H., Teichert, T. Scarcity in today´s consumer markets: scoping the research landscape by author keywords. Manag Rev Q 74 , 93–120 (2024). https://doi.org/10.1007/s11301-022-00295-4

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Principle of Scarcity Essay

In economic theory, the principle of scarcity refers to the limited amount of resources available to fulfill human needs and desires. It is a fundamental basis of economics as the existence of scarcity creates the necessity of choice. The principle of choice, selecting a path of action that presents the most benefits based on the available information at the given point in time, is the core of economic operations. Any individual, group, or country desire goods and services which must be created from resources. In addition, the creation of goods requires the use of abstract means such as research, skill, and time, which also require certain resources. The continuous limitation of resource availability requires a cost and benefit analysis for every decision. The most common interpretation of economic resources is the inputs used to produce goods and services. There are a variety of available resources, including human, natural, financial, and technological. They are necessary to sustain the economy, which is fundamental to human civilization. Therefore, to sustain our existence, resources must be continuously managed to balance human needs and available inputs. Any disbalance most often results in negative consequences and possibly catastrophic outcomes, as evident throughout the history of economics.

Resources are considered scarce because, in order to acquire them, we are faced with the necessity of a tradeoff. Each decision results in an opportunity cost of lost alternatives. There is a limited quantity of every imaginable resource, even if it seems abundant. Goods and resources which are abundant have little to no value (in economic terms) and may be provided for free. However, because something is free does not imply there is no resource cost behind it as materials, time, and energy was necessary for its creation. Value is determined by the intersection of need and desire to meet the constraints of scarcity and purchasing power.

Scarcity is often based on context. For example, the abundance of water in one location does not imply the same for another place. However, even abundant resources can have limitations. Clean air can be polluted to the extent of becoming dangerously unbreathable, notably at the desire to satisfy human needs with industrial production. Therefore, there is a constant necessity for choice in how resources should be managed. For the most part, I agree that resources are scarce based on the provided examples. It should be considered that the economic principle of scarcity is based on demand. Therefore, from an economic perspective, exceptions occur when the resource is not demanded in any manner despite being limited in amount.

Economics is based on the principle that human desires are essentially unlimited. Many economic theories are based on psychological and sociological studies of human behavior. Psychology and history both show that given the opportunity, humans engage in an uncontrolled consumption of resources. The fact that resources are scarce and limited is the only factor that causes a form of behavior considered rational. However, that is an ideological approach that may not fit all real-life contexts. There is a stark difference between human needs and human wants. There is a point where these aspects overlap, but a significant amount of the population will feel satisfied once their basic resource needs are fulfilled. Human desire relies heavily on perception. A person rarely wants something they do not need. Therefore, the problem of resource scarcity becomes the issue of allocation. Various economic theories suggest how society can maximize utility through the proper distribution of resources to satisfy the balance between human needs and human desires.

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Health and economic scarcity: Measuring scarcity through consumption, income and home ownership indicators in Norway

It is widely recognised that income alone may not accurately reflect people's economic circumstances. In recent years, there has been increasing focus on multidimensional measures of economic scarcity. This study employs the newest survey data from Consumption Research Norway to explore the relationship between economic scarcity and self-reported health (SRH) in Norway. It defines economic scarcity by identifying disadvantaged social groups in terms of consumption, income and wealth/homeownership. Using propensity score matching, we compare health outcomes for economically disadvantaged and advantaged social groups – finding that consumption measures of scarcity are significantly associated with health, while there is no significant relationship between health and homeownership. When using matching estimators, health scores differ significantly between people with higher and lower incomes, but the associations are weakened when other socioeconomic variables are controlled for. This study applies empirical evidence from Norway to the existing health literature and contributes to a relatively new analytical approach by incorporating consumption into the prediction of health outcomes.

• • Consumption measures of scarcity have a significant association with health.
• • There is no significant relationship between health and homeownership.
• • Health scores differ significantly between people with higher and lower income when using propensity score matching estimators.
• • But the associations are weakened when controlling for other socioeconomic variables.

1. Introduction

In recent years, consumption-based indicators have become increasingly central to debates on poverty, life quality and health. Consumption has been recognised as a better measure of a household's economic situation than income, especially for households with few resources ( Attanasio & Pistaferri, 2016 ; Deaton, 1992 ; Meyer & Sullivan, 2003 ). One advantage of using consumption is that it not only captures the objective aspect of the economic condition, but also involves a social and comparative component, which accounts for deprivation that is disproportionate to resource. In other words, it reflects the health outcomes for those who have lower levels of resources than the majority of society ( Townsend, 1979 ). Therefore, by focusing on comparative levels of living standards, studies using consumption-based indicators can incorporate objective economic situations with subjective wellbeing under certain cultural and structural circumstances ( Townsend, 1979 ).

Conceptualising the term ‘economic scarcity’, we aim to capture broader aspects of socioeconomic marginalisation in this paper. We combine objective economic conditions, such as income and wealth, with consumption to reflect on relative deprivation and socially defined poverty. Using the 2019 Norwegian Deprivation Survey, this research explores whether economic scarcity, measured by consumption, income and wealth, is associated with health in Norway. It also compares the coefficient sizes of the three measures, attempting to determine which of the economic components are more important for the health of the economically disadvantaged: income, wealth or consumption .

This study contributes to the existing literature on the relationship between economic conditions and health by including consumption in the analysis of health, alongside traditional measures of income and wealth. By comparing different measures of scarcity, the research provides a more comprehensive picture of the economically disadvantaged and their health in Norway.

2. Theories

2.1. economic scarcity.

Economists have defined scarcity as a long-term shortage of natural resources, which occurs when a need is not satisfied ( Christiansen, 1998 ; Norgaard, 1990 ). Economists often examine scarcity based on supply and demand analyses, emphasising individual rational choices. The term is much used in studies of economic growth, technological substitutions and labour and capital changes for extracting resources ( Barbier, 2013 ; Howe, 1979 ).

A broader sociological definition of scarcity may embrace multidimensional understandings of economic hardship –incorporating objective economic resources of income and wealth with available consumption resources in certain customs and social activities. By looking at income and wealth, scarcity may be examined among those at the minimum income level adequate for living or those lacking sufficient purchasing power for their daily needs. By focusing on social custom and activities, we can capture a wider range of social groups that are, not only economically disadvantaged, but also socially excluded.

This study defines economic scarcity as the perception that one has fewer economic resources than required, as based on the majority valuation in society. Both this perception and this valuation focus on those who ‘lack the resources to obtain the types of diet, participate in the activities, and have the living conditions and amenities which are customary, or at least widely encouraged or approved, in the societies to which they belong’ ( Townsend, 1979 , p. 31). They amplify a person's resource scarcity in comparison to a broader notion of living style and convey consumption types that express normative deprivation.

2.2. Scarcity and health

Research on economic scarcity and health has been dominated by three approaches, all of which incorporate socioeconomic status into the analysis. The neo-material approach stresses the impact of material access and economic resources on health and often measures an individual's objective economic position by education, occupation, absolute income and wealth ( Gravelle, 1998 ; Lynch et al., 2004 ; Rodgers, 2002 ). The social psychological approach underlines that people's subjective economic status plays an important role in health ( Lundberg, Åberg Yngwe, Kölegård Stjärne, Björk, & Fritzell, 2008 ; Subramanian & Kawachi, 2004 ; Wilkinson & Pickett, 2017 ). Such studies often use measures of relative income or inequality to analyse health. Accordingly, unequal societies face problems, such as low social status, poor social cohesion and harmful health behaviours ( Marmot & Wilkinson, 2001 ; Pickett & Wilkinson, 2015 ).

The relative deprivation approach can be distinguished from the first two by its focus on relatively disadvantaged social groups. Embodying elements of both income and expenditure, consumption is central for these studies. Scholars research affordability within various types of custom and social activities and often use deprivation indexes based on customary amenities and activities, selected according to lifestyles and social contexts (see, e.g., Saunders, Naidoo, & Griffiths, 2008 ; Townsend, 1979 ). Consumption requires an objective, material basis. This is especially important for a person's health when considering life necessities (food, clothes, living, etc.) and living conditions ( Case & Deaton, 2003 ; Meyer & Sullivan, 2003 ). Insufficient resources can produce a certain pattern of thoughts, behaviours and priorities called the ‘scarcity mindset’. It may affect decision-making processes by placing increased attention on the scarce resource but, at the same time, neglecting other information and reducing mental bandwidth ( Mullainathan & Shafir, 2013 ). Relative deprivation may also lead to mental illness due to feelings of shame and stress ( Chase & Walker, 2015 ; Gubrium, 2015 ; Wilkinson, 2006 ). For example, the emerging literature on poverty and shame has demonstrated a vicious circle of lowered self-esteem, reduced capacity and fewer possibilities to change one's economic situation ( Gubrium, 2015 ). Being deprived can lead to social exclusion and a sense of shame. It may also cause mental health problems. In turn, mental illness reduces a person's capability to participate in the labour market and social life, which reinforces material deprivation and social exclusion.

All three perspectives have a common denominator of resources, ‘by which people can control and consciously direct the conditions of life, and as such they are all likely to be of vital importance to health’ ( Lundberg et al., 2008 , p. 74). As it embeds deprivation, low levels of income/wealth and the inability to participate in consumer society, economic scarcity is, therefore, an important factor in people's health outcomes.

3. Previous literature and research hypotheses

3.1. income and health hypothesis.

In health inequality studies, income is often used to indicate social position and stratification. Income affects economic position and material conditions, which, combined, contribute to exclusion and poor health ( Lundberg et al., 2008 ; Subramanian & Kawachi, 2006 ). This relationship between income and health has been widely confirmed. Researchers have long noted a positive correlation between income and both physical and psychological health ( Feinstein, 1993 ; Kessler & Neighbors, 1986 ; Lynch et al., 2004 ; Marmot, 2002 ). Even for more egalitarian countries with higher degrees of income redistribution, mortality still declines rapidly among those with high income ( Kinge et al., 2019 ; Mortensen et al., 2016 ).

Furthermore, the socioeconomic context can explain both mortality and economic inequality ( Elstad, 2011 ; Lundberg et al., 2008 ; O’Donnell, van Doorslaer, & van Ourti, 2013 ). Poorer health is associated with living alone, being unemployed, being a single parent, having a disability, experiencing reduced labour market participation and receiving financial support (social assistance) ( With, 2017 ). Studies also debate whether there is a causal relationship between income and health. For example, Mackenbach and de Jong (2018) discuss the possibilities of reverse causation and confounding variables when examining the relationship between income and health. They suggest that assessing causal effect requires both experimental and quasi-experimental studies.

Low income is, in itself, a risk factor for developing mental health problems. It reduces people's chances of labour market participation and limits their ability to maintain social contacts ( Langeland, Furuberg, & Lima, 2017 ). People with low income are also excluded from various social arenas because they cannot afford to participate in social activities, which further impairs their psychological wellbeing. This may aggravate health problems, and individuals can become trapped in a vulnerable situation.

Therefore, we expect lower income to be negatively associated with health: H1. Economic scarcity, measured by low income, correlates with health problems in Norway.

3.2. Wealth and health hypothesis

Wealth often has a stronger impact on health than low income because people can use wealth as a buffer when losing income. Researchers argue that health studies should include wealth as an important indicator for socioeconomic position ( Pollack et al., 2007 ). However, wealth is often difficult to measure because it is hard to assess individuals' or households' total financial resources over their lifetimes ( Pollack et al., 2007 ). Nevertheless, in wealth studies, the concept of wealth based on assets or property has become increasingly central ( Doling & Ronald, 2010 ; Mathä, Porpiglia, & Ziegelmeyer, 2017 ; O'mahony & Overton, 2015 ). Homeownership, reflecting material living standards and cumulative household wealth, is often used as an indicator of socioeconomic circumstances and has been recognised as one of the most important forms of family wealth ( Kurz and Blossfeld, 2004 ; Shapiro, 2006 ; Öst, 2012 ). In the US, homeownership has become the most important contributor to household wealth ( Eggleston & Munk, 2015 ). Non-ownership strongly correlates with economic marginalisation; few renting households can afford homeownership without falling into poverty ( Bourassa, 1996 ; Dewilde & Raeymaeckers, 2008 ).

Homeownership increases intergenerational wealth transfer and becomes more important for people's life satisfaction and health ( Elsinga, 2008 ; Hohm, 1983 ; Mathä et al., 2017 ; Nettleton & Burrows, 1998 ). Renters in Finland have been shown to have higher mortality than owners, after controlling for income, occupation and education ( Laaksonen, Martikainen, Nihtilä, Rahkonen, & Lahelma, 2008 ). In the UK, housing tenure significantly relates to self-reported health (SRH), general health status, anxiety, depression and limited longstanding illness ( Ellaway, Macdonald, & Kearns, 2016 ; Munford, Fichera, & Sutton, 2017 ). This is because homeownership can give people a sense of control, autonomy and physical and emotional security ( Chapman, 2013 ; Elsinga, 2008 ). It also allows people to improve their housing conditions, such as temperature and humidity, which are health-related.

However, people living with economic hardship often cannot afford to own their homes. While the market value of housing wealth represents about two-thirds of Norwegian household financial wealth ( Grindaker, 2018 ; Statistics Norway, 2017 ), less than half of low-income households in Norway own their own homes, and the proportion of homeowners among low-income groups and welfare recipients has declined in recent years ( Revold, 2019 ).

This leads to our second hypothesis: H2. Economic scarcity of wealth, measured by non-ownership, is associated with health problems in Norway.

3.3. Consumption and health hypothesis

Levels of expenditure and consumption do not always reflect a person's level of income or wealth. According to the Deaton Paradox, a reduction in income does not cause a corresponding reduction in consumption ( Deaton, 1992 ). Consumption involves several dimensions. First, it has a material aspect . The economic situation is related to the level of utility and consumption of commodities. Consumption takes expenditure into account, and considers the cost to a household of reaching a certain level of utility at prevailing prices ( Kus, Nolan, & Whelan, 2016 ; Ravallion, 1998 ). This is particularly relevant when studying the most economically disadvantaged groups, where material deprivation often has a direct, negative effect on health ( Ravallion, 2016 ).

Second, consumption has social aspects , which are manifested in cultural values, norms and inclusion/exclusion ( Croghan, Griffin, Hunter, & Phoenix, 2006 ). Research shows that children and adolescents in low-income families participate less in important social events and arenas, such as kindergarten, before- and after-school programmes and leisure activities ( Fløtten, Hansen, Grødem, Grønningsæter, & Nielse, 2011 ). In this way, consumption may be particularly important for individuals’ psychological health.

Third, people may increase their indebtedness to maintain or improve their standards of living. Many who struggle with their financial situation must borrow to pay for their daily expenses ( Kempson & Poppe, 2018 ). International research has linked insolvency problems to physical disability and chronic health conditions, obesity and health-related behaviours, such as smoking and drinking ( Clayton, Liñares-Zegarra, & Wilson, 2015 ; Drentea & Lavrakas, 2000 ). In Sweden, scholars have observed a strong connection between insolvency and mental health problems, such as depression, anxiety and general mental illness ( Holmgren, Sundström, Levinsson, & Ahlström, 2019 ). In both Sweden and Finland, the rate of suicide attempts among the over-indebted is more than five times higher than that in the overall population ( Ahlström, Edström, & Savemark, 2014 ; Hintikka et al., 1998 ).

Therefore, the consumption-related aspects of economic scarcity might negatively influence health. This leads to the third hypothesis: H3. Economic scarcity, measured by consumption indicators of deprivation, exclusion and insolvency problems, is strongly and negatively correlated with health.

3.4. Comparing income, wealth and consumption

Although the relationship between income, wealth and health is fairly solid (see, e.g., Deaton, 2008 ; Easterlin, Angelescu McVey, Switek, Sawangfa, & Zweig, 2011 ), scholars have shown that the effects of income on illness become non-significant in people with severe economic problems, such as those who are over-indebted ( Drentea & Reynolds, 2012 ). Furthermore, disposable income does not differ between those in debt and those not in debt, and psychological factors are more important determinants of economic vulnerability ( Livingstone & Lunt, 1992 ). Similarly, when exploring the reasons for mental disorders among poor people, the correlation between lower income and mental illnesses is often mediated by consumer debt ( Jenkins et al., 2008 ).

Consumption-based economic hardship may have a stronger association with health than do income and wealth. First, it is irrelevant to examine income levels for the poorest, especially when considering the unemployed. Second, income and wealth may play a less important role in health among countries that provide more generous welfare support, such as minimum wages, unemployment benefits and universal healthcare coverage. Third, being excluded may be more strongly associated with psychological health. One example concerns the custom of drinking tea in Britain ( Townsend, 1979 ). Tea has little nutritional value but is psychologically necessary in Britain due to social customs. It contributes to a person's recognition and maintenance of social relationships. Therefore, it is important to separate physical needs from social and psychological needs. This leads to our fourth hypothesis: H4. The coefficient size of consumption on health is larger than that of income and homeownership.

4. Data and methods

4.1. data and variable.

This study uses the latest Deprivation Survey from Consumption Research Norway. The data were collected in July 2019, and respondents were selected from the Kantar Gallup Panel, which consists of individuals over 15 years of age, randomly recruited from the Norwegian population. Invitations to participate in the survey were sent to participants via an e-mail containing a link to the online survey. 2312 individuals responded to the survey, representing a 48% response rate. The dropout rate did not differ significantly for those among other Gallup surveys, which have an average dropout rate of 50%.

The survey consisted of questions that map consumption-related deprivation, household insolvency problems, SRH and information about particular life-events in the household, such as loss of a partner, divorce, sudden illness, etc. Households' and individuals’ socioeconomic backgrounds were also included and were based on the panel information from Gallup. The sample for data analysis was made up of 2045 individuals aged 18–89.

The dependent variable in this study is self-reported health (SRH). SRH is one of the most widely used indicators for measuring health. Although it may not be suitable for comparative studies of aggregate health between countries, it is still valid for a within-country comparison ( Haddock et al., 2006 ; Kuhn, Rahman, & Menken, 2006 ; Subramanian, Huijts, & Avendano, 2010 ). Scholars have found that SRH strongly correlates with objective health status, and the prevalence of all diseases is associated with poorer SRH ( Franks, Gold, & Fiscella, 2003 ; Wu et al., 2013 ). Therefore, the reliability of SRH is as good as, or even better than, that of more specific health questions ( Lundberg & Manderbacka, 1996 ).

SRH is often rated on a five-point scale ranging from poor to excellent health ( Hays, Sherbourne, & Mazel, 1993 ). Some researchers have also measured health on a scale from 0 to 100 ( Gholami, Jahromi, Zarei, & Dehghan, 2013 ; Meng, Xie, & Zhang, 2014 ) or from 0 to 10 ( Vlot-van Anrooij, Tobi, Hilgenkamp, Leusink, & Naaldenberg, 2018 ). In the Deprivation Survey, respondents were asked: ‘How would you rate your health today?’ The scale ranged from 0 to 10, where 0 denoted the poorest health and 10 denoted the best health.

The main intervention or treatment in this study is economic scarcity, measured by 1) consumption, 2) income and 3) homeownership.

To measure economic scarcity based on consumption, three indicators were developed: material deprivation, social exclusion and insolvency problems. The conceptualisations of material deprivation and social exclusion were adapted from Wong, Saunders, Ping Wong, Chan, and Chua (2012) , who defines deprivation and exclusion by mapping items of consumption. A list of 24 material items and 16 social activities was drawn up based on the Norwegian Reference Budget for Consumer Expenditures. Three follow-up questions were asked: 1) ‘Is the following item/activity essential for everyone in Norway?‘; 2) ‘Do you have/do it?‘; and 3) ‘If not, is this because you cannot afford it?’

If less than 50% of the respondents regarded an item as essential, the item is considered unimportant and was excluded from further operations. Respondents were defined as being relatively deprived if they could not afford two or more material items and relatively excluded if they did not have access to two or more social activities because they could afford them. See Bakkeli and Borgeraas (2019) and Appendix 1 for detailed information about items included in the survey and about the criteria used to identify the deprivation/exclusion thresholds. Insolvency problems were identified by the question: ‘In the past 12 months, how often did your household have trouble paying rent or your mortgage on the final due date?’ Those who chose the options ‘always’, ‘often’ or ‘sometimes’ were defined as having insolvency problems.

The survey contained information about both households' and individuals' gross income . The income variables were drawn from Gallup's background variables, which were reported by the respondents and recorded in Norwegian kroner (NOK) in discrete income intervals. To make the indicators comparable, the researchers also used dummy variables for income. The treatment group, defined as relatively poor, had a household income below NOK 400,000 (or an individual income below NOK 300,000 for a robustness check) and made up approximately 10% of the sample.

Homeownership , which was also used to approximate wealth, distinguished between owners and renters based on ownership of their current homes. The treatment group comprised those who rented their homes.

Other covariates included age (18–84), gender (female = 1), household size (1–5), education , work situation , and type of household . See Table 1 for descriptive statistics.

Descriptive statistics.

4.2. Methods

The study used propensity score matching methods to estimate the association between economic scarcity (the intervention or treatment) and SRH. In the social sciences, it is generally impossible to randomly assign units to the treatment condition or the control condition. Such data may suffer from selection bias, since people who receive the treatment may have different characteristics from those in the control condition ( Morgan & Winship, 2007 ).

In our case, the sample of economically disadvantaged and non-disadvantaged people differed, not only with respect to economic resources, but also with respect to other circumstances that could influence health. The treatment and control groups were, therefore, imbalanced; they were differently composed according to their economic situations and various other relevant characteristics.

By employing the matching method, we reduce this imbalance by constructing a matched control sample corresponding as closely as possible to the sample of economically disadvantaged people with respect to all relevant covariates. Ideally, this would result in two very similar samples, with the only difference being that people in the treatment group were economically disadvantaged, while those in the control group were not. Therefore, matching can to a large degree eliminate the confounding effect ( Morgan & Winship, 2007 ; Rosenbaum & Rubin, 1985 ). However, the problem of unobserved heterogeneity is universal to propensity scores, and there was uncertainty about the level at which the selection bias was eliminated from the estimation of the treatment effect. As it ensured equal distribution of the measured variables for the control and treatment groups, the matching method did not capture all unmeasured confounders. Therefore, although the method is useful for observational data, we need to be cautious when making a causal conclusion ( Elstad & Pedersen, 2012 ; Morgan & Winship, 2007 ; Rubin, 2001 ).

The analytical procedure was rather straightforward. First, we selected covariates to estimate propensity scores for the treatment variables. Five different samples were constructed based on the five indicators/treatments: 1) deprivation, 2) exclusion, 3) insolvency, 4) relatively poor and 5) homeownership.

The propensity score was also the probability of treatment assignment, conditional on observed covariates: e i = Pr ( D i = 1 | X i ) . To estimate propensity scores, logit models were used:

where D i represented the treatment variables, and each of the treatments was predicted by a different set of k covariates, X 1 , … X k .

Next, we assessed the common support for the propensity scores, carefully tested the balance of the covariate distribution and examined selection bias by approaching standardised biases and bias reduction. Standardised differences were assessed by calculating the mean difference in the covariate between the treatment conditions:

where m ‾ t and m ‾ c were the sample means of covariates for all cases in the treatment and control groups, respectively, and s t and s t were the standard deviations (SDs) for the treatment and control groups, respectively.

Each of the five indicators had a separate, matching sample constructed by a different set of covariates. By examining the balance for each variable included in the matching samples, that the control and treatment groups were equally distributed across all the measured matching variables. Balance was achieved by performing t-tests to compare the groups and determine whether, and to what extent, biases were reduced. For each of the covariates selected to construct the matching samples, we ensure that the means of the treatment and control groups did not differ significantly and that the bias was less than 5%. The covariates included in each of the sample constructions are given in Appendix 2 ( Table A2 a).

Different estimation techniques for predicting the association between diverse indicators on self-reported health.

Note. Coefficients that are not statistically significant at the 0.05-level are marked in bold.

When the matched samples were proven to be balanced, we employed matching methods to estimate the average treatment effects among the treatment group. Nearest neighbour matching was used to match each case in treatment group i with a case in control group j based on the closest absolute distance between their propensity scores: d ( i , j ) = | l x i − l x j | . Other matching methods included Kernel, stratification and caliper matching. The caliper bandwidth for different treatments was estimated by b = . 25 × s p ( x ) , where s p ( x ) was the SD of the matching variable x . For all matching estimations, the standard errors were obtained by bootstrapping 1000 repetitions.

Additional robustness checks included the inverse probability of treatment weighting with regression adjustment (IPTWRA) combined with Wooldridge's double-robust estimators. This was done to estimate the average treatment effect across the treatment group. We also checked estimations by combining a regression model with weighting using the propensity scores.

Appendix 2 shows the sample distribution of propensity scores before and after matching. For each of the five indicators, overlapping between the treatment and control groups is evident after matching ( Fig. A.2a ). When looking at the standardised differences in key baseline characteristics for the unmatched and matched datasets, the biases are clearly reduced ( Fig. A.2b ). This was consistent with the statistics of Rubin's B, which measured the absolute standardised differences of the means for the linear index of the propensity score between the treated and matched control groups. Rubin (2001) suggests that a sample is sufficiently balanced when this value is lower than 0.25. For all five measures of economic scarcity in our study, the Rubin's B was below 0.25, indicating balanced differences in covariates ( Table A2 b).

Table 2 shows the results based on different matching methods. The columns represent different estimation techniques to predict the associations between the five indicators and health. For example, using nearest neighbour matching, the health score was reduced by 0.78 on a scale from 0 to 10 when comparing the deprived with the non-deprived. The coefficient size was a little larger when using Kernel matching (−0.99), stratification matching (−0.90) and IPTWRA estimation (−0.90), but the estimators did not vary much from each other. The estimations for exclusion varied from −0.72 to −0.84, indicating a trend similar to that found using deprivation measurement. For people with insolvency problems, the difference was particularly large; their health was more than one score lower than those who did not have insolvency problems.

Health differences between lower and higher income groups were also statistically significant. The health of people with relatively low income was 0.43 scores lower than that of higher income groups using nearest neighbour matching. When employing caliper matching, the predicted health differences between lower and higher income groups were notably larger than when using other estimation methods. In this case, SRH was one score lower for people with lower income.

It is worth noting that we have checked the robustness of the income indicator by using different cut-off points between the relatively low- and high-income groups. The same procedure was also performed using individual income instead of household income. The results were very similar, both in terms of significance levels and coefficient sizes (not shown).

Finally, using Kernel matching, stratification matching and IPTWRA, home renters were estimated to have about 0.44 points poorer health than homeowners on a scale from 0 to 10. However, when estimated using nearest neighbour matching and caliper matching, health did not differ significantly between owners and renters. Therefore, it cannot be concluded that there was a robust association between homeownership and health scores.

A more direct way of interpreting the result was to convert the estimations into percentage changes compared to average health. For example, when considering the deprived, the excluded, the insolvent, the poorer and home renters, their respective health scores were 10.72, 11.56, 18.81, 5.95 and 3.04% lower than average health, based on the nearest neighbour matching estimations. The bottom row in Table 2 shows z-scores for Wooldridge's double-robust estimators. These were calculated to make the estimators comparable across indicators. Coefficient sizes fell as follows: insolvency problems (-7.0), deprivation (-5.3), exclusion (-3.7), low income (-2.6) and non-owners (-2.1). Consumption-based indicators clearly had stronger associations with health than did income and ownership.

A common practice is to include socioeconomic background as a control variable when examining the relationship between health and scarcity on matched samples. We conducted ordinary least squares (OLS) regression with robust standard errors, using samples before and after propensity score matching ( Fig. 1 ). For detailed information, see Appendix 3 , Table A.3 . The size of the coefficient was smaller in matched samples, since matching captured selection bias and reduced the confounding effect. As expected, several variables became non-significant due to the reduced sample size after matching. However, even when controlled for numerous important socioeconomic background variables, the association between health and deprivation, exclusion and insolvency was still strong and significant (see Models 2, 4 and 6). They predicted .55, .55 and 1.05 lower health scores, respectively, when comparing the disadvantaged with the non-disadvantaged. The coefficient size of insolvency was almost twice as large (0.238 SD) as the sizes of deprivation (0.129 SD) and exclusion (0.131 SD).

OLS regression on self-reported health, before and after matching. Note. 1. Reference for education: primary and lower secondary school (10-year schooling).

2. Reference for work: full-time employed.

3. Reference for income: income ≥ NOK 1,400,000.

The relationship between lower income and homeownership on health were not statistically significant in Models 8 and 10. The results remained robust when using different cut-off points for household income or replacing household income with individual income (not shown). However, these insignificant results may have been due to the small sample size after matching.

In addition, health did not differ significantly among various income covariates, controlled for consumption indicators. In some pieces of extant literature, income is viewed as an intermediate variable between consumption and health (e.g., Lundberg et al., 2008 ). Therefore, to detect the coefficient size between consumption and health, we have also included income intervals as control variables in the weighted models – finding that the coefficients of economic scarcity did not change much with or without controls for income categories (see Appendix 4 , Table A.4 ). Again, this might have been due to a combination of the reduced sample size after propensity score matching, as well as numerous predicators.

Other important covariates, shown in Fig. 1 , were people who are unemployed or receive unemployment or other welfare benefits. These groups had significantly poorer health in all matched samples based on the five indicators.

6. Discussion

Using the latest Deprivation Survey from Norway, we estimated the correlation between economic scarcity and SRH based on five different indicators. We found a significant association between health and all consumption-based indicators, and this relationship was strongest when measuring economic scarcity using the consumption indicator of insolvency. This supported H3 and H4 . The income indicator was significantly associated with health (using most of the matching techniques), but the coefficients became insignificant when controlling for socioeconomic background. Homeownership also did not have a robust association with health scores.

This study has confirmed the importance of incorporating consumption into health studies. Consumption involves a substantial material aspect in terms of living conditions, as well as a social component involving customs, norms and participation. Consumption also contains a more direct component of subjective feelings, and causes feelings of shame, lower self-confidence, stress, anxiety and mental and physical health problems ( Gubrium, 2014 ; Hiilamo, 2018 ). While individual feelings correlate with psychological wellbeing, previous studies have also established a firm connection between health and social comparison, relative deprivation and shame ( Buunk, Gibbons, Buunk, Gibbons, & Buunk, 2013 ; Tennen, Mckee, & Affleck, 2000 ; Yngwe, Fritzell, Lundberg, Diderichsen, & Burström, 2003 ). Therefore, using consumption-based indicators, economic scarcity is shown to be negatively connected to health.

We chose to use SRH instead of pathological or clinical measures of health. When an individual reports his or her own health, subjective considerations play a more important role than, for example, medical certificates. It would be interesting to test the relationship between economic scarcity and health based on different health indicators in future studies. Furthermore, although SRH highly correlates with objective health measurements, an individual's self-evaluation of his or her health may also correlate with his or her social background. For example, with the same SRH, respondents with higher education have healthier levels of biomarkers than lower educated groups ( Dowd & Zajacova, 2010 ). Therefore, using subjective health measurements may underestimate health inequalities. However, in this research, the respondents were matched by educational attainment. By comparing people with similar education, matching potentially reduced such biases.

Moreover, the relationship between health and economic scarcity may be reciprocal ( Lundberg et al., 2008 ; Mullainathan & Shafir, 2013 ). Although we constructed samples that showed a good match between treatment and control groups, it is difficult to determine causal directions based on a cross-sectional dataset. Therefore, this analysis could only draw conclusions about certain correlations between health and economic scarcity but cannot conclude on causality. Scholars have already shown uncertainties connected to the causal relationship between health and socioeconomic positions. A range of biological, psychological and social factors might act as important mediators, moderators and/or confounders, which may play important roles in the association between health and socioeconomic factors ( Mackenbach, 2019 ; Mackenbach & de Jong, 2018 ).

The matching method only ensures that the control and treatment groups are equally distributed across the measured matching variables. However, it cannot remove all unobserved heterogeneities; there may still be important confounders that are not considered. In the present case, one example is medical history or poor socioeconomic conditions during childhood. In addition, both SRH and the consumption-based indicators were subjective. Therefore, people with low socioeconomic status may have also suffered from being influenced by inclinations to negatively assess a range of life circumstances. Such covariates could have affected both the matching variables and health. Future studies may look closer at the cause and effect of economic disadvantage in relation to health.

This research found a significant correlation between income and health, but the strength of the correlation weakened when performing OLS regression using the propensity score matching sample. This could have resulted from the matching having removed the confounding effect of income. However, as mentioned above, another reason might be the small sample size. In addition, low education and lack of work can also cause low income. When including education and employment as control variables, the effect of income may be suppressed. This added uncertainties to our attempt to draw conclusions about the non-significant relationship between income and health.

This study has also found that homeownership did not play a significant role in health, possibly because homeownership can capture regional and structural factors, such as unemployment rates, regional social policies and demographic aspects. These variables were not included in the survey. Future studies could, therefore, incorporate contextual variables when calculating propensity scores. Moreover, the significance of house tenure could be context-specific. A comparative study among ten European countries has found that homeownership was associated with better health in the UK and the Netherlands but not in other countries ( Dalstra, Kunst, Mackenbach, & EU Working Group on Socioeconomic Inequalities in Health, 2006 ). This suggests that the importance of housing must be considered more carefully in different countries with different housing policies. In Norway, the debt and mortgage burden is rising. The median house price-to-income ratio was 3.5 in Norway in 2014. In larger cities, the median house price is more than four times greater than income ( Anundsen & Mæhlum, 2017 ). About 57% of homeowners have a loan-to-value ratio above 85%, and one in five have debt more than five times greater than their income ( Anundsen & Mæhlum, 2017 ). Therefore, homeownership may no longer be a safety net but, rather, a risk factor for individuals and their families.

Although homeownership is one of the most important aspects of wealth, wealth is often more than just ownership. Unfortunately, we did not have access to other variables that could be used to construct a more comprehensive indicator for wealth. Such an indicator may be necessary for more in-depth studies of the wealth–health relationship.

7. Conclusion

This study has revealed notable health differences between people with and without consumption-based economic scarcity, measured by material deprivation, social exclusion and insolvency problems. The correlation was strong and distinguishable. In addition to income and wealth, scarcity in this study integrated consumption as a central element of economic disadvantage. At a relatively low economic level, people do not have access to a wide representation of consumer goods, are unable to fully participate in social activities and do not share the representative style of living others possess. The economically disadvantaged are excluded from common social spheres, which may negatively correlate with their health.

Appendix 1. Norwegian Deprivation Survey

The list of items related to material deprivation and social exclusion is presented in the table below:

Items related to deprivation and exclusion

The deprivation and exclusion thresholds, as defined by Bakkeli and Borgeraas (2019) , are based on percentage numbers of items people lack because they cannot afford them. The deprivation index is conditioned on the majority opinion of what is ‘essential’. If at least 50% of the respondents regarded an item as essential, the item was considered important. In this way, three material items and one social item were considered unimportant and were filtered from further analysis.

A relatively high percentage of people had access to all items, amounting to almost 70% of the population. Therefore, the vast majority of the population did not experience deprivation. However, about 30% could not afford one or more item, and 18.44% could not afford two or more items. Again, when considering items related to social activities, most people (approximately 70% of the population) had access to all social items. Furthermore, 32% of the population could not afford one or more item, and 18.73% could not afford two or more items.

The Deprivation Survey has defined the mean deprivation index based on the numbers of items lacking due to affordability, operating in the same fashion as Saunders and Wong's (2010) study. When plotting the deprivation index alongside income distribution, the crossover thresholds between the deprivation index and household income levels lay at around two items for both material deprivation and social exclusion. When material and social indicators were merged, the lowest income groups missed out completely on four items (see Figure A1 ). It is worth mentioning that Income Category 2 corresponds to a household income level of NOK 200,000–399,999. This category was selected because it contained the officially poverty line.

In this study, we adopted a threshold of two items because we tchose to separate material and social indicators.

Mean deprivation and exclusion indices by annual household income ( Bakkeli & Borgeraas, 2019 ).

Appendix 2. Constructing matching samples

Covariates used to construct matching samples

Reduction in standardised biases.

Distribution of propensity scores before and after matching for the five indicators.

Standardised biases before and after matching.

Appendix 3. OLS-regressions on self-reported health

OLS-regressions on self-reported health, before and after propensity score weighting

Note. *p < .05, **p < .01, ***p < .001.

Model 1 and 2: Samples before and after PSM weighting based on deprivation. Model 3 and 4: Samples before and after PSM weighting based on exclusion. Model 5 and 6: Samples before and after PSM weighting based on insolvency. Model 7 and 8: Samples before and after PSM weighting based on low income. Model 9 and 10: Samples before and after PSM weighting based on non-ownership.

Appendix 4. OLS-models without income controls

OLS-models without income controls, samples are weighted by propensity scores

Note. †p < .10, *p < .05, **p < .01, ***p < .001.

Appendix 5. Correlation matrix between indicators for economic scarcity

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Desalination: What is it and how can it help tackle water scarcity?

A natural resources crisis like water scarcity is listed in the World Economic Forum’s 2024 Global Risks Report, as one of the top-10 threats facing the world in the next decade. Image:  Unsplash/Nathan Dumlao

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Stay up to date:, food and water.

This article was originally published on 12 March 2024 and updated on 15 April 2024

• Desalination increases access to safe, clean drinking water, but the process is energy-intensive and costly.
• Innovations are harnessing wave power and other forms of energy capture to reduce reliance on fossil fuels and curb emissions from desalination.
• A natural resources crisis is one of the leading global long-term threats, according to the World Economic Forum’s 2024 Global Risks Report.

Billions of people turn on a tap and expect clean drinking water to flow out, but this is not the reality for billions of others.

Rapid population growth, urbanization and increased global water consumption by agriculture, industry and energy have left a growing number of countries facing the threat of water scarcity.

One solution to meet the growing demand for freshwater is desalination, which involves removing the salt from seawater to produce drinking water. While this process alone can’t prevent a global water crisis, it can play a vital role in providing more people around the world with access to clean, safe drinking water.

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25 countries face extremely high water stress, study finds, this new desalination system is inspired by the ocean and powered by the sun, how technology and entrepreneurship can quench our parched world, a future water crisis.

Water scarcity occurs when water demand outstrips available supply during a specific period – when water infrastructure is inadequate or institutions fail to balance people’s needs.

In 2022, 2.2 billion people lacked safely managed drinking water , including more than 700 million people living without a basic water service, according to the United Nations.

By 2030, there could be a 40% global shortfall in freshwater resources, which combined with world population growth that’s set to increase from 8 billion today to 9.7 billion by 2050 , would leave the world facing an extreme water crisis.

Sub-Saharan Africa is expected to see the biggest change in water demand, with a projected 163% increase by mid-century, World Resources Institute data shows. This is four times the expected rate of change in Latin America, the second-highest region.

Almost two-thirds of the planet’s surface is covered with water, and our oceans hold 96.5% of all water on Earth . However, its salt content makes this water unsuitable for humans to drink. This is where desalination comes in.

Types of desalination

There are a number of different methods of desalination, but most work either by a process of reverse osmosis or multistage flash to remove the salt from seawater .

Reverse osmosis is the more efficient of these two methods. The process uses a special membrane acting as a filter, which blocks and removes salt from seawater as it passes through. Here, powerful pumps generate enough pressure to ensure pure water is extracted.

Multistage flash desalination doesn't use a filter. Instead, saltwater is exposed to steam heat and pressure variations, which causes a portion of the water to evaporate – or "flash" – into water vapour or freshwater, leaving behind salty brine as a by-product.

Water security – both sustainable supply and clean quality – is a critical aspect in ensuring healthy communities. Yet, our world’s water resources are being compromised.

Today, 80% of our wastewater flows untreated back into the environment, while 780 million people still do not have access to an improved water source. By 2030, we may face a 40% global gap between water supply and demand.

The World Economic Forum’s Water Possible Platform is supporting innovative ideas to address the global water challenge.

The Forum supports innovative multi-stakeholder partnerships including the 2030 Water Resources Group , which helps close the gap between global water demand and supply by 2030 and has since helped facilitate $1Billion of investments into water.

Other emerging partnerships include the 50L Home Coalition , which aims to solve the urban water crisis , tackling both water security and climate change; and the Mobilizing Hand Hygiene for All Initiative , formed in response to close the 40% gap of the global population not having access to handwashing services during COVID-19.

Want to join our mission to address the global water challenge? Read more in our impact story .

Both desalination processes create brine containing high salt levels, which can pose a threat to marine ecosystems when released back into natural bodies of water. The output of both methods is clean drinking water. But, in addition to removing salt, the desalination process also removes organic or biological chemical compounds so the water produced doesn’t transmit diarrhoea or other diseases.

Wave-powered innovation

While reverse osmosis plants are more efficient than multistage flash plants, large-scale desalination plants require a lot of energy and maintenance, and are expensive to build and operate.

A number of innovative desalination systems are being developed to try and reduce the energy required to operate them and related emissions.

Oneka, a wave-powered desalination technology, is one such innovation . Floating buoys tethered to the ocean floor use wave power to drive a pump that forces seawater through filters and reverse osmosis membranes. The fresh water is then piped ashore again powered solely by the natural motion of waves, explains Canadian desalination company Oneka Technologies.

The system has several advantages over large-scale shore-based desalination plants that are mostly powered by combusting fossil fuels, but it does require high waves to work.

The small floating units require 90% less coastal land compared with a typical desalination plant, for example, the company says. Relying on emissions-free wave power rather than electricity demands less energy and generates fewer emissions than traditional desalination plants.

" Desalination facilities are conventionally powered by fossil fuels ," Susan Hunt, Chief Innovation Officer at Oneka Technologies, told the BBC. "But the world has certainly reached a pivot point. We want to move away from fossil fuel-powered desalination."

Dragan Tutic, Founder and CEO of Oneka Technologies, added that "our mission is to make the oceans an affordable and sustainable source of water."

Solar – low-cost water purification

Solar power has been used to convert saltwater into fresh drinking water , by researchers from King's College in London in collaboration with MIT and the Helmholtz Institute of Renewable Energy Systems.

A set of specialized membranes channel salt ions into a stream of brine, leaving fresh drinkable water. The system adjusts to variable sunlight without compromising the volume of drinking water produced. The process is 20% cheaper than traditional desalination methods, which could boost efforts to provide drinking water in developing countries, the researchers say.

Dutch start-up Desolenator – supported by Uplink, the innovation platform of the World Economic Forum – is also using solar power for its low-cost water-as-a-service model for communities and businesses .

The technology avoids the use of membranes or harmful chemicals, the company says, and customers can choose specific water types to meet their needs: ultra-pure water, pure potable water or customized re-mineralized water.

Each modular plant can produce up to 250,000 litres of freshwater daily, helping boost water security in water-scarce regions.

" We operate with 100% solar power, no harmful chemicals, and now we're building zero liquid discharge, which will make us the first fully circular solar desalination technology in the world," said Desolenator co-founder Alexei Levene.

"We take our waste brine and turn it into salt, so nothing goes back into the environment. It's a distributed technology that we can deploy and it's going to be the most sustainable desalination approach that there is," he said.

Averting a natural resources crisis

A natural resources crisis like water scarcity is listed in the World Economic Forum’s Global Risks Report 2024 , as one of the top 10 threats facing the world in the next decade.

Currently, desalination plants are used in regions like the Middle East, which has a hot climate alongside a buoyant and technologically able economy. But the energy-intensive nature and high costs of conventional desalination plants act as barriers to widespread take-up, the report says.

However, innovations that reduce the energy needed to operate desalination plants and reduce greenhouse emissions from their operations could change the situation and increase access to fresh drinking water for communities facing water challenges.

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