There is indeed no way to learn the value of money without feeling the power of its scarcity. More often than not, people fail to appreciate some simple but very vital aspects of life. If one gets what they want when they want it, the human mind tends to take it all for granted. On the contrary, lack makes one build gratitude and appreciation for the resources and privileges of life. What is more, it makes people realize they could do without somethings that they previously did not think they could. Once faced with a scarcity of resources and money, people have to make choices. It teaches one the difference between necessary and desirable .
There are two main arguments behind this phenomenon. The first perspective is the human physiological functions. Research has revealed that scarcity influences individuals’ evaluation positively and make people develop a constructive attitude towards the scarce object (Gupta, S. 2013). This implies that when money is limited in quantity, it becomes perceived so highly, and its desirability and attractiveness increases. Users will then prioritize their choices and utilize them more effectively. This psychological effect of scarcity is explained by the rule of scarcity, which argues that when something becomes limited, it becomes more appealing to the human mind (Gupta, S. 2013). Conversely, when it is readily available at people’s disposal such that they can afford anything they desire at whatever time, people become illusioned about the acquisition of money. Although they will still be attracted to it, they do not appreciate it and, as such, may end up misusing it.
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Another viewpoint of this phenomenon is economics. Economists argue that the value of money, like any other commodity, is determined by the forces of demand and supply (Conant, 1904). This proposition is supported by the quantitative theory, which asserts that "the value of money, other things being the same, varies inversely as its quantity, every increase of quantity lowering the value, and every diminution raising it, in a ratio exactly equivalent" (Conant, 1904, p.551). When an object becomes finite, demand for it grows, and its value increases dramatically. As long as there are bills to pay and necessities to take care of, the demand for money will always be there. Therefore, when money is limited in quantity, its demand will go higher. The resultant economic pressure pushes the value high as people put a premium on scarcity. On the other hand, abundance diminishes the uniqueness and lowers the value of money.
These principles, which are essential survival skills, shed some light on why “ wealthy" and "poor" children view material things differently as they grow into adulthood. A 2016 study revealed that social class markers influence children's behavior, judgment, and reasoning about things (Shutts et al., 2016). At the same time, an earlier study established that children from low-income families are more materialistic than their counterparts from more well-off families (Chaplin et al., 2014). According to its publisher, the study was informed by a UNICEF report concerning children’s welfare, which indicated that children from less wealthy families are more vulnerable to marketing promotional messages. These discoveries underscore the assertion that impoverished children attach a high premium to material things compared to their affluent peers. As they grow, the desire to acquire wealth drives the former to work very hard since, to them, achieving wealth provides both utilitarian and hedonic fulfillment (Gupta, S. 2013). It brings a satisfaction similar to winning a game in which one had very slim chances of victory.
Wealth disparities between individuals are prevalent in society and are the basis of social evaluation among adults and children. When money is scarce, it attracts high valuation, and people use it more effectively. Indeed, scarcity is a pervasive condition of human existence.
References
Chaplin, L. N., Hill, R. P., & John, D. R. (2014). Poverty and materialism: A look at impoverished versus affluent children. Journal of Public Policy & Marketing , 33 (1), 78-92. https://www.researchgate.net/publication/270648360_Poverty_and_Materialism_A_Look_at_Impoverished_Versus_Affluent_Children
Conant, C. A. (1904). What determines the value of money. The Quarterly Journal of Economics , 18 (4), 551. https://www.jstor.org/stable/pdf/1882416.pdf
Gupta, S. (2013). The psychological effects of perceived scarcity on consumers’ buying behavior.
Shutts, K., Brey, E. L., Dornbusch, L. A., Slywotzky, N., & Olson, K. R. (2016). Children use wealth cues to evaluate others. PLOS ONE , 11 (3), e0149360. https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0149360
