Scarcity and Choices

Hey there. You clicked on this article, so I assume you want to read it. That’s a choice you made. Yours, not mine. While it seems simple and insignificant, it is explained by something that is seen always and everywhere - scarcity.

Scarcity is the most important concept in economics. Wait, what about money though? Isn’t the economy about money? We will get to it later in this article, but to know why we deal with money in the first place, we have to understand scarcity. Scarcity is the idea that there is not enough of anything, and that humans always want more and more of something. That’s the reason you decided to read this article. Whether it is knowledge you want to get, excitement, or familiarity with Finance OneforOne, you want more and more of that thing, which is why you are still reading this - to get what you intended from your choice.

How is this economics though? How does this connect to what you know about the economy (money, for example)? Think about this: There is not enough money in the economy, so you (and/or your parents) have to work for it. Would you work for money if you could have it without effort? We have to work for money because the stuff we buy costs money. They cost money because they are limited too. There is a price attached to everything we do, and most of it depends on how scarce (hence valuable) that thing is.

After all this, one question remains: Why should you care? Because this affects every aspect of your life, and by realizing this, you can make more rational choices. Take time, for example. Time is a resource (something which we use to do other things). So you use time to do stuff. Right now, you are using it to read an educational blog post, but you use it for a lot of other relevant stuff: going out with your friends, doing homework, playing sports, etc. Here is where scarcity comes in. You can’t do all of these in, say, an hour of free time. You for-sure want to, but practically can’t. So what do you do? Make the best choice based on its benefits (advantages) and costs (disadvantages). Which choice of the three options listed - going out, doing homework, and playing sports - gives you the most benefit and the least cost? Well, that’s up to you to decide, but remember that you are giving something (in this case two things) up to do what you choose. These options you give up are called trade-offs. Most of the trade-offs you make will be subconscious (such as still reading this article on something you do every day), so don’t be stressed.

The next time you pick between two shows or two activities, you know no matter what option you choose, it is because you thought that nothing else at that present moment was a better option.