Today, you’re going to learn what happens when you take people’s cookies away, how changing a single phrase drove six times more sales, and why open outcry options turn your brain into mush.
This is the final episode in a six part miniseries on the Science of Success titled Weapons of Influence, based on the bestselling book Influence by Robert Cialdini. Each of these Weapons of Influence are deeply rooted and verified by experimental psychology research which you’re gonna get a ton of amazing examples of, if you’re just now tuning in to this episode definitely go back and listen to the series because there is some amazing content in there.
Last week we talked about why con artists wear lifts in their shoes, how a normal person can administer lethal shots on innocent research subject, why 95 percent of nurses are willing to give deadly doses of drug to their patients, and much more. If you haven’t checked that episode out yet, listen to it after you listen to this one.
I actually can’t believe that Weapons of Influence is already coming to an end. It’s been such a fun miniseries and I love the book influence by Robert Cialdini so, it’s been great for me to go back and really dig into somebody’s research examples and really learn about them, and it’s been awesome to share it with everybody on the podcast but, just because Weapons of Influence is ending…you know, we’ve got some amazing…really, really exciting contents an awesome interview some really deep dives and some cool subjects coming up in the next couple of weeks. Stay tuned and get excited but, this week we’re going to talk about the scarcity bias. Like many of the Weapons of Influence this is something that we intuitively know and understand. But, often don’t realize how powerful it is or how much it impacts our decisions at a subconscious level or throughout our daily lives.
Here’s is how Cialdini describes scarcity bias, note how he describes something psychological reactive theory, this is a key part of the scarcity bias and also something that Charlie Monger touches on by another name, he call it deprival super reaction syndrome. Anyway, here’s how Cialdini describes it “according to the scarcity principle, people assign more value to opportunities when they are less available, the use of this principle for profit can be seen in such complainants techniques that limited numbers and deadline tactics. Where in practitioners try to convince us that access to what they’re offering is restricted by amount or time.
The scarcity principle holds for two reasons, first, because things that are difficult to obtain are typically more valuable, the availability of item or experience can serve as a shortcut queue to its quality, second, as things become less available we lose freedoms.
According to psychological reactions theory we respond to the loss of freedoms by wanting to have them, along with the goods or services connected to them more than before.
The scarcity principle is most likely to hold true under two optimizing conditions: First, scarce items are heightened in value when they are newly scarce. That is, we value those things that have become recently restricted more than those that were restricted all along. Second, we are most attracted to scarce resources when we compete with others for them. Compliance practitioners’ reliance of scarcity articles as a weapon of influence is frequent, wide ranging, systematic and diverse. Whenever this is the case with a weapon of influence we can be assured that the principle involved has notable power in directing human actions.”
One of the most interest things that Cialdini mentions in that quote, is the fact that we want scarce things even more when we are competing with other people for those goods, and we’ll dig into a couple pieces of research that kind of showcase that but, lets dig into the research now and look at how the scarcity principle can impact your behavior.
Let’s start out with an experiment that showcases the scarcity principle at work on kids as early as age two. A study in Virginia had researchers take two toys and place them in a room divided by a Plexiglas barrier. For half the kids the barrier was one foot high posing no barriers to the child ability to access the toy. For the other half of the kids the barrier was high enough that they were obstructed from reaching the toy without going around it.
With the small one foot barrier children showed no preference for either toy. However as you would expect, once the barrier went up, children went for the obstructed toy three times faster than to the easily accessible toy, as the researchers said “the boys in this study demonstrated the classic terrible two’s response to a limitation of their freedom, outright defiance”.
I think the fascinating thing about the two year old Plexiglas experiment, is the fact that the behavior starts to manifest itself at such an early age, right? And this ties it again to the thing that we heard again and again, is that these biases are built into our minds, they’re ingrained into our bodies, in our brains by our a society, by evolution, by all kinds of different factors very, very deeply ingrained and that’s why they have such a powerful effect on shaping human behavior.
The next study takes a looks at how we perceive items that are banned, limited and restricted from us, and this result has been repeated across several other and different banned items with the same results. But, in this particular study it was in Dave County, Florida. The government imposed a ban prohibiting “the use and possession of laundry and cleaning products that could contain phosphates.” Cialdini described how the residents of Dave County reacted in two parts. “First, in what seems a Florida tradition, many Miamians turn to smuggling. Sometimes with neighbors and friends and large ‘soap caravans’, they drove to nearby counties to load up on phosphates detergents, hoarding quickly developed and in the rush of obsession that frequently characterizes hoarders, families boasted of having a twenty year supplies of phosphate cleaners.”
That behavior looks pretty ridiculous and shows the lengths that people go once they perceive something scarce but, that’s only really scratching the surface of the underlying subconscious shift the people had towards the phosphates cleaners products after the ban is to me the most striking finding. This passage also helps to explain the concept of psychosocial reactive’s that we talked about at the top and how it underpins the scarcity principle. “The second reaction to the law was more subtle and more general than the deliberate defiance of the smugglers or hoarders. Spurred by the tendency to want but no longer have, the majority of the Miami consumers came to see phosphate cleaners as better products than before, compared to Tampa residents who were not affected by the Dave County ordinance, the citizens of Miami rated phosphate detergents gentler, more effective in cold water, better whiteners and fresheners and more powerful on stains.
After passage of the law they have even come to believe that the phosphate detergents poured more easily. This sort of response is typical of individuals who have lost an established freedom and recognizing that it is typical, is crucial to understanding how psychological reactions and the principles of scarcity work.
When something becomes less available our freedom to have it is limited, and we experience and increase desire for it, we rarely recognize however that psychological reactance has cause us to want the item more, all we know is that we want it. To make sense of the heighten desire for the item we begin to assign it possible qualities”.
This is an extremely important finding and a very, very relevant distinction that Cialdini makes in that piece of research, psychological reactance theory…the fact that we have the freedom of having that detergent that was taken away, that’s what a subconscious level makes us want it even more but, what happens is we start inventing this conscious justification for it, we started inventing this imagine that changes of the trades and the characteristics of that item that we want and this is all taking place at a subconscious level and consciously this justifications make a ton of sense and we believe that, “oh, yeah, phosphates cleaners they’re better in cold water, they’re fresheners and whiteners, they’re better and even pours more easily.” All these things sort of bubble to the conscious mind and believe them, that those are the reasons why we are mad that they took away the phosphate cleaners but, the real reason, the real thing that worked here is the scarcity principle, it’s the fact that it was taken away, creates the subconscious desire to have it back, that visceral two year old response of “you can’t take away my toys” and we consciously develop all kinds of fake justifications for why we actually wanted it.
Something that really want to be tuned to really understand, because this happens all of the time, our subconscious makes a decision often because of the psychological bias, often because we’ve been influenced by one of these Weapons of Influence and consciously we make up with a completely different justification for why we made that decision or why we happen to like this thing more than others, why it happens to buy this thing more frequently than another thing.
The next study that we’re gonna look at takes place in a more commercial context: How do buyers respond when what they want suddenly becomes scarce. I like to call this “where’s the beef?” This experiment showed how this subtle turn of phrase and the way that information was presented in this content as exclusive information about an impending scarcity, drove more than six times the amount of sales for buyers. Robert Cialdini explains here, “The company’s customers, buyers for supermarkets and other retail food outlets were called on the phone as usual by a sales person and asked for a purchase in one of three ways. One set of customers heard a standards sales presentations before being asked for their orders.
Another set of customers heard the standard sales presentation plus information that the supplier of the imported beef was likely to be scarce in the upcoming months. A third group received the standard sales presentation and the information about the scarce supply of beef. However, they also learned the scarce supply news was not generally available information. It had come, they were told, to certain exclusive contacts that the company had. That’s the customers who received this last sales presentation learned that not only was the availability of the product limited, so too was the news concerning, the scarcity double-whammy”.
So, you probably see what’s gonna happen next, right? Cialdini continues, “The results of the experiment quickly became apparent when the company sales people begin to urge the owner to buy more beef because there wasn’t enough in the inventory to keep up with all the orders they we’re receiving. Compared to the customers who only got the standards sales appeal, those who were also told about the future scarcity of beef bought more than twice as much. The real boost in sales, however, occurred among the customers who heard the impending scarcity and the exclusive information. They purchased six times the amount that the customers who had received the standard sales pitch did. Apparently the effect of the news about the impending scarcity was it self-scarce made especially persuasive.” I love the phrase scarcity double-whammy. This experiment is such a simple and powerful demonstration of broad reaching and it impact of scarcity principle can really be.
When the information about the impending scarcity was given to the customers, they doubled their beef. That alone is a fascinated finding, right? You double your sales just by leveraging the scarcity tactic. But, as soon as that information itself somehow become scarce they had six times more sales. That one really made me pause and think. It’s amazing how much scarcity can drive human behavior, just the scarcity itself more than double itself but, the fact that the scarcity was scarce information in its own…six times more it’s incredible.
This next experiment is one of my favorites and we’re gonna look it at three different parts, and I call it the cookie experiment. The first part of the experiment was simple enough. People were shown a jar of cookies. It either had ten cookies in it or it had two cookies in it, and they were asked to rate the cookies across a number of factors. Unsurprisingly, when there were only two cookies in the jar they were rated “as more desirable to eat in the future, more attractive as a consumers item, more costly than the identical cookies in abundant supply” then the experiment has mixed things up a bit, they kept the part of the experiment there were people in the jar that had two cookies in it but, the people with the jar of ten cookies had the jar taken away then replaced with the jar than only had two cookies.
The goal of this particular twist was to measure how people reacted to a change in scarcity, instead of just a constant scarcity condition, Cialdini explains, “In the cookie experiment the answer is plain, the drop from abundance to scarcity produced a decidedly more positive reaction to the cookies than did constant scarcity, the idea that newly experienced scarcity is the more powerful kind applies to situations well beyond the balance of the situations study. For example, social scientists had determine the such scarcity explain is that primary cause by a political and thermal unbalance.” The researchers weren’t done having fun with cookies yet. They wanted to dig even deeper and so they looked at how suggest what react to cookies scarcity created from different sources. Cialdini elaborates here: “Certain participants were told that some of their cookies had to be given away other raiders in order to supply the demand for cookies in the study. Another set of participants was told that the number of their cookies had to be reduced because the researcher had simply made a mistake and simply given them the wrong jar initially.
The result showed that those whose cookies became scare through the process of social demand like the cookies significantly more than then those whose cookies become scarce by mistake. In fact, the cookies became less available through social demand were rated the most desirable of any in the study. This finding highlights the importance of competition in the pursuit to limited resources not only do we want the same item more when it is scarce, we wanted most when we are in competition for it. This is a key distinction and one that underpins an important learning about scarcity, we want things more when we’re in competition for them, not just when they’re scarce.”
Here’s the last fascinating bit from this series of cookie experiment, who would have thought you could learn so much from cookie jars, the one thing that held constantly through the research at no point did the subjects say the cookies tasted any better. They only rated them higher, more attractive and they say that they would pay a higher price for them. Cialdini concludes, “Therein lies an important insight the joy is not in the experiencing of a scarce commodity but, in the possessing of it”.
It turns out that we like having our cake more than eating it as long as is scarce enough. I found the cookies experiment interesting I think there’s so many different takeaways from it but, you know I’m really amazed that this research were be able to pull out just from using a few jars of cookies and measuring human behavior impacts the way people perceive that but, two things that I really think it’s important for you to draw out from the cookie experiment one, obviously is the idea of people wanted it more when they were competing with other people for the cookies, that’s what made it them wanted it most, and when you think about this tie that back to the idea to the biologically limits of the mind which we talked about in an earlier podcast there’s very much kind of a visceral real sort of revolutionary feel to that, right? The idea that in wild…in the times before society existed people were competing for resources and if somebody else has…you know, more resources than you, you wanted even more, you’re more fueled to go get it. And, I think the other thing that is fascinating that a not point do they actually rate the cookies any better the enjoyment of the cookies themselves was unchanged but, the scarcity bias materially impacted their desire for the cookies.
I think that’s the part that is really, really critical, the cookies didn’t taste any better but, the possession of the cookies just because they were scarce is what made people want them so much, is what the people really cared the most about.
Lastly, I wanted just include a quote about open outcry auctions, right? Open outcry auctions, are a great example of not only scarcity but also, many of the other Weapons of Influence and how they come together to social proof, etc...I’ll give you this quote from Charlie Monger were he kinds of talks about how multiple biases can compound together in what he calls a lollapalooza effect to basically multiply the power and the influence of all of these different biases. “Finally the open outcry auction. While the open an outcry auction is just made to turn the brain into mush, you got social proof the other guy is betting, you get reciprocation tendency, you get deprival super reactions syndrome and this thing is going away. I mean, it’s just absolutely it’s designed to manipulate people into idiotic behavior” and Charlie Monger get…he’s the billionaire business partner of Warren Buffet, and he and Buffet are both famous for saying that they avoid open outcry auctions like the plague but, open outcry auctions is just an interest example because they really demonstrate how all of this biases don’t just exist in a vacuum and that’s something as wrapping up weapon of influence series, that’s something I really want you to take home and think about is the fact that we’ve seen a number of instances and cases where the biases kind of blend together and interact and there’s instances were liking and social proof tied together, and there’s instances where authority and social proof, or authority and liking tied together, or scarcity and authority tied together there’s…in the real world things are never as neat and as simple as they are when we’re just talking about an individual bias.
In the real world all of this stuff is interplayed and intervolved and mixing together and is a lot more cognitive biases that we’re doing future episodes on, we are going to drill down and talk about that as well. This happen to be some of the biggest and most powerful ones but, in real life its much messier and the reality is that all this stuff can compound is not just edited when these things can merged together its multiplicative, its… it really stacks up and it can really get absolute result, and the crazy outcomes, and the more biases you have kind of stacking together, the more you get ridiculous human behavior and I mean…we’ve seen throughout this series a number of crazy, wacky…you know, absurd research findings of just simple little turns of phrase, or tweaks, or all kind of minors changes that can result in changes can make huge impacts.
If you hadn’t gone back and listened to some of the other episodes after you wrap this up, you should really check the whole series, because it all ties together and it is all so important but, as we kind of finish this series the things that I want you to think about is the fact that in the real world all this stuff is mingled together and that makes it even harder to compound some of these biases but also, gives you the opportunity to really deep down and understand all these individually, and then how they work together so that you can formulate away to really be able to be aware of this biases, to combat them so they don’t impact into your decision making in the negative fashion.
So, what’ve we learn about the scarcity bias? I think we’ve learn quite a bit and this quote from Cialdini sums it up nicely. One of the challenges in dealing with the scarcity bias is as a 2005 study showed, it’s a very physical bias. “Part of the problem is that our typical reaction to scarcity hinders our ability to think. When we watch as something we want become less available, a physical agitation sets in, especially in those cases involving direct competition. The blood comes up, the focus narrows, the emotions rise as this visceral current advances the cognitive rational side retreats, in the rush of arousal it is difficult to become and studied in our approach.”
So, there’s really a couple takeaways about scarcity that I wanna make sure you understand. There’s two primary reasons that the scarcity bias is so powerful. The first is because things that are difficult to obtain are typically more valuable and so, at a subconscious level, it’s kind of like a mental shortcut, you know, is something like scarce is typically valuable. “Okay, this thing’s scarce so it must be valuable.” But, that’s not always the case right? That’s why we see these crazy outcomes. But, that’s one of the underpinnings one of the reasons why the bias operates. The second is that as things become less than accessible we lose freedom and that ties back at the idea that psychological reactance theory, it goes back to that example of the two year olds, when we have our freedom taken away, or the detergent examples is an amazing kind of studying how that takes place and when we get those freedoms taken away, that’s when that really physical emotion and scarcity bias takes place and there’s two conditions that really set the stage for the scarcity bias to be the most powerful.
The first is that scarce items are heighten their value when is newly scarce, that leads back to the cookie jar experiment when something is recently becomes scarce, we want it even more and we rated and think it about as more favorable, more desirable, and the second thing is that when we’re in competition with other people for that particular resource that makes us even more prone to want whatever that is, want whatever we can’t have because somebody else’s have, when somebody else is competing for it. So both of those factors are two conditionings that if either or both are present, they really amp up and magnified impact of scarcity bias. And both the detergent example and the cookie jar experiment showcase how powerful those can be.
And, I think the other thing that I really want you taking away from this is, thinking back to the detergent experiment, when people had the detergent taken away they rated it as more favorable, better cleaning, you know, all of these things when in reality the reason that they wanted it was because it had been taken away but, they consciously invented all this justifications for why they wanted it. That’s a very insidious, very dangerous behavior, one that you should take great care to try and be aware of and really understand what’s the real reason that I feel a certain way, that are thinking sort of thing and is the reason that I’m telling myself a justification that I made up instead of an actual reason.
So, how do we defend against scarcity bias? I’ll start with the quote from Cialdini. “Should we find ourselves beset by scarcity pressures in a compliance situation then our best response would occur into a two-stage sequence. As soon as we feel the tide of emotional arousal that flows from scarcity influences we should use that rise and arousal as a signal to stop short. Panicky feverish reactions have no place in wise compliance decisions. We need to calm ourselves and regain our rational perspectives. Once that is done, we can move to the second stage by asking ourselves why we want the item under consideration. If the answer is that we want it primarily for the purpose of owning it, then we should use its ability to help wage how much we would to expend for it. However, if the answer is that we want it primarily for its function that is we want something good to drive, drink or eat then we must remember that the item under consideration would function equally well while scarce or plentiful. Quite simply, we need to recall that the scarce cookies didn’t tasted any better.”
And, I think one of the most important parts of what Cialdini says is the importance of maintaining a calm, rational perspective, and I’ve talked…I’ve referenced Charlie Monger times and I made future podcasts suggest about him and he’s such a fascinating individual and incredibly successful businessmen, but also so wise about psychology and how it impacts human decision making. But, if you look at him, but you look at Warren Buffet, the reason they’ve been so successful is…and they’ll say this many times is, partially because of the huge focus on rationality and really try to be as objective as possible. And in one of the earlier podcasts episodes of the Science of Success, we talked about the ideas of accepting reality and the reality of perception, and the sooner you have a totally objective, rational acceptance of the way reality is, the faster you can recognize things like the scarcity bias the faster that you can recognize any of these Weapons of Influence from kind of seeping into your thoughts and impacting your decision making.
We’ve seen countless examples of how powerful, how insidious, how dangerous these biases can be and the best way to combat it is to cultivate that rationality, is to cultivate that awareness, is to cultivate the ability to both see and understand your own thoughts and we think back again to the detergent example, to see…you know, why do I really like this thing, what’s really driving my behavior? Am I deluding myself into thinking one thing when the reality is something different?
That’s it for this episode of scarcity and that’s it for the Weapons of Influence miniseries, it’s been an absolute blast to do this miniseries but, I’m also super excited about some upcoming episodes that we have. So, stay tuned, because it’s going to be awesome.