Understanding the Economic Reality of Scarcity
“The first lesson of economics is scarcity: there is never enough of anything to satisfy everyone who wants it.” Thomas Sowell.
Scarcity is a universally acknowledged reality that goes beyond mere economic implications, affecting social interactions. Persistent shortages of resources contribute to social exclusion, even within groups facing chronic resource access limitations. Scarcity has both objective (minimum income standards) and relative dimensions (based on the individual’s group or self-identification before facing scarcity).
Scarcity and Social Exclusion in Mexico
In countries like Mexico, where a significant portion of households struggles to cover basic expenses, scarcity’s impact on socialization adds layers of complexity to the severe consequences of inequality.
Bidirectional Relationship Between Scarcity and Social Exclusion
The study “A longitudinal study on the association between financial scarcity and feelings of societal exclusión” by Noordewierdel et al. concludes that the relationship between scarcity and social exclusion is bidirectional and self-reinforcing.
- Limited Interaction Opportunities: Financial constraints reduce social interaction participation, limiting engagement in social activities, even those that could be accessed infrequently despite economic restrictions (e.g., visiting a park or cinema, depending on the base socioeconomic level).
- Negative Judgment Perception: Financial scarcity generates a feeling of being negatively judged by others, contributing to increased social isolation.
- Erosion of Social Support Networks: Prolonged scarcity weakens social networks, making it difficult to maintain relationships and eroding support systems, deepening feelings of abandonment, especially when economic support from close circles becomes scarce.
Implications for Decision-Making and Potential Solutions
In economies like Mexico’s, chronic resource scarcity leads to decisions that deepen financial precarity, such as resorting to informal lending mechanisms with costs hundreds of times higher than formal credits.
Procrastinating decisions with significant economic consequences, such as postponing appointments, further exacerbates financial struggles.
Experiences from other countries demonstrate actions that partially alleviate the most negative effects of social isolation linked to financial scarcity, particularly for low-income sectors.
- Microcredit Models: Certain microcredit models help address financial emergencies and, depending on their implementation model, have even higher recovery rates than credits targeted at higher-income sectors.
- Financial Education: A genuine, ongoing, and proven financial education approach supports individuals facing scarcity processes and fosters socialization spaces, reducing isolation.
- Informal Exchange Platforms: Informal platforms enable low-income sectors to exchange or barter skills and knowledge to address specific household needs during financial hardship.
The Importance of Strong Social Networks
Understanding and addressing this phenomenon extends beyond making people feel better. Studies show that families or individuals with robust social networks have greater financial resilience to face financial contingencies, preventing coyuntural scarcity from becoming permanent.
