Folks, welcome to our new season in 2024. The holidays have passed, and we are ready to get back on track and deliver new theories that will cover behavioral science and economic concepts, we will always add in empirical evidence of relevant companies and of course there will be more than a few humorous anecdotes…well, they are at least humorous for me.
We’ve got twenty new podcast episodes on tap for you this season with topics including Trust Your Rigger, Degree of Difficulty, Don’t Misjudge Oracles and something about Matthew McConaghy selling Lincolns.
I am excited to start a new year so let’s get the machine moving.
Welcome to Swimming in the Flood; a podcast where we develop the resilient leader’s mindset by navigating difficult currents in business. My name is Trent Theroux.
How often do you deal with scarcity? During the pandemic there was a run-on toilet paper. People were hoarding toilet paper because…well, we discussed this in Episode 29 titled Take What You Need. You can go back and take a quick listen. You may remember the price of toilet paper soared on the black market because people were afraid of running out.
Scarcity is an economic concept. Scarcity defines the gap between our seemingly infinite wants and the limited resources available. Whether it’s time, money, or tangible goods, scarcity is the driving force behind many of our daily decisions. But here’s the paradox: the more scarce something is, the more we tend to desire it.
Humans have a peculiar relationship with scarcity. The fear of missing out, the urgency to seize opportunities, and the intrinsic value attached to rare commodities often guide our choices. Scarcity not only influences the economic landscape but also plays a significant role in shaping our personal lives.
Here is my close friend Elaine Benes, from Seinfeld, to help us understand a little bit about scarcity.
In an episode of Seinfeld, Elaine uses a contraceptive sponge that gets taken off the market. She scours pharmacies in the neighborhood to stock a large supply, but it is finite. So, she must “reevaluate her whole screening process.” Every time she dates a new man, which happens very frequently, she has to consider a new issue: Is he “spongeworthy”?
When Elaine uses up a sponge, she is giving up the option to have it available when an even better man comes along. Therefore using the sponge amounts to exercising a real option to wait, and spongeworthiness is an option value, according to Avinash Dixit in his paper An Option Value Problem from Seinfeld.
In non-mathematical terms, if there was an infinite supply of sponges, Elaine wouldn’t need to be picky. However, with each sponge she uses, the quality of the man she uses it on needs to be better. Play this out. What happens to Elaine when she gets down to her last sponge? Right, it needs to be the perfect man…and as we all know, there is no such thing.
Heck, here’s what happens when George asks Elaine for a sponge.
So, how can we manage challenges in our lives when the stresses of scarcity are added to the mix.
I am now going to give you my unscientific, non-peer reviewed, resilient leader theory on scarcity. Are you ready? Got your pencils out? Here’s it is. Conserve Your Candy. You heard it. Conserve Your Candy. The theory is simple. Here’s how it works.Top of Form
When I was a child, my mother would create my costumes and send me out to trick or treat in the neighborhood. A few times, I was a pirate. She would light a match against a cork and rub the cork against my face to create scars. Pretty scary for a six-year-old. When I was 10, my mother fastened an enormous piece of clear plastic in a ball around my body and stuffed the plastic with a couple of dozen small colorful balloons. She made me into a bag of jellybeans. You can imagine the physical and verbal abuse the new kid in town got from wobbling around the streets dressed as colorful candy. Needless to say, most of my balloons were popped before I made it back home.
Like all children, I ran back home after my last stop because I wanted to count the candy I had. I would segregate the candy into piles to count each. Then, I would resegregate the candy into piles of what was good and what was not. Finally, I would organize the candy by which I liked least to most. There may have been a few snide words about the houses that passed out Necco Wafers or candy corn or smarties or the worst of all…black licorice. What monster thought black licorice would appeal to a ten-year-old’s palette.
Candy was not allowed in the house. To be fair, candy was allowed for Christmas and Easter. But we never bought candy. And it’s not like I had Augustus Gloop’s desire for chocolate and dove into Wonka’s chocolate river.
Halloween was different. Halloween was the one time a year where I had some control over the distribution of candy. And that’s exactly what I did. Control the candy. Like most normal kids, I made the conscious decision to eat the best candy…last. That’s right. I was that kid. I saved the best for last while I choked down the black licorice (with a glass of milk). My thoughts then were that I always had great candy to look forward to. Heck, it was two months until Christmas. I needed to make it last. So, I didn’t eat my Reese’s Peanut Butter Cups or my Butterfingers. No, I broke my teeth biting through the Smarties a couple days into November. I conserved my candy. I tried to solve my scarcity problems through deprivation.
We can discuss another scarce asset. An asset we all have, although some have a little more than others. The scarce asset is time remaining in our lives. In his book titled Four Thousand Weeks – Time Management for Mortals, Oliver Burkman discusses the pressures of how people have trained themselves to use their precious time. My first thought about the title set me back. Four Thousand Weeks – roughly eighty years. It’s a simple, back of the envelope method for measuring life…and with basic subtraction…the amount of life remaining. By this measurement, I’m down to twelve hundred weeks. 1,200 weeks remaining assuming that all goes right. It doesn’t feel like much.
How can I Conserve my Candy under this constraint? I won’t be saving the Butterfingers until I’m 79 and 10 months old I can tell you that. The Halloween model doesn’t fit right. Instead, the 4,000 weeks concept is closer to Elaine’s spongeworthy model – each use of a sponge brings me closer to the end of the supply. Scarcity exists now and as such I should make decisions based on that scarcity.
Folks, thank you for listening to Swimming in the Flood. Resilient leaders face challenging currents, and it is tough navigating, but with one tack or another we can get there together.