The Psychology of Scarcity and How it Impacts Clients in Economic Empowerment Programs
- by Buoyancy Works
- |
- - 5 min read
For practitioners working in economic empowerment—including employment programs—the psychology of scarcity offers crucial insights into the behaviors and challenges of individuals facing poverty. Scarcity, both financial and social, extends beyond material limitations and impacts how people process information, make decisions, and engage with support systems. These cognitive constraints challenge our ability to help individuals move forward in their journey toward economic empowerment.
Understanding these constraints allows us to design more effective programs that directly address client needs. For instance, research shows that providing fewer, focused options at decision points—such as in job searches or financial planning—reduces cognitive overload and helps individuals make better choices (Kalil, Mayer, and Shah, 2023). Programs that simplify decision-making and prioritize clear, actionable steps can foster better client engagement and long-term success.
In This Article:

1. Scarcity and Its Cognitive Toll on Clients
Scarcity is not just about financial hardship; many individuals also face social scarcity—loneliness and isolation—which further compounds their mental load. Research shows that scarcity narrows focus to immediate concerns, making it difficult for individuals to absorb information or engage in long-term planning. For example, Kalil, Mayer, and Shah (2023) found that people dealing with financial and social scarcity are more likely to overlook important information, even if it is directly relevant to their well-being.
Actionable Approach: To overcome this, simplify the presentation of information by reducing unintentional frictions—obstacles that make it harder for clients to act. Examples include overloading clients with too many choices, complex forms, or long decision-making processes.
Solution: Limit options to one or two clear choices based on the client’s immediate needs. Research by Shah, Mullainathan, and Shafir (2019) shows that reducing choices helps those under financial stress make decisions faster and more effectively. Presenting only the most essential and immediate next steps can help clients focus on what matters most without becoming overwhelmed.
Example: When setting up a job search plan, instead of asking clients to choose between multiple job boards or career pathways, direct them to one or two relevant options based on their skills and goals. This reduces the cognitive load of decision-making and allows clients to engage more effectively.
2. Enhancing Decision-Making Through Simplified Interventions
Clients facing scarcity are often overwhelmed by too many decisions. Blocker (2022) refers to this as a “cognitive drought,” where mental resources are too depleted to effectively manage complex choices. When people are constantly stressed by financial or social challenges, the ability to make thoughtful, long-term decisions is diminished.
Actionable Approach: Focus on streamlining choices and reducing unnecessary options. Instead of overloading clients with multiple financial literacy or job search tools, prioritize one or two key interventions that meet their immediate needs. You can follow up with more choices once they’ve completed the initial step, which reduces the chance of decision paralysis.
Solution: Offer one financial planning tool to clients initially, rather than giving them multiple options to choose from. This approach helps clients focus on completing one step before moving to the next, aligning with research on the importance of reducing choice overload for individuals under cognitive strain.
Example: If a client is struggling with debt, guide them to a single budgeting tool rather than presenting several different financial management resources. By removing the burden of choice, you help them make quicker, more confident decisions.
3. Structured Goal Setting for Economic Empowerment
Scarcity often forces individuals into a short-term mindset, making it difficult for them to plan for the future. Research by Mullainathan and Shafir (2013) shows that when clients are focused on immediate survival needs, they are less likely to engage in long-term planning. Structured goal setting is essential for breaking through this barrier, but it must be implemented in a way that fits the client’s current mental bandwidth.
Actionable Approach: Break down long-term goals into small, actionable steps. Instead of presenting large, abstract objectives like “find a job” or “achieve financial stability,” set short-term, specific goals such as “submit two job applications this week” or “set aside $10 from each paycheck.”
Solution: Each small step should be followed by clear feedback or reinforcement. Studies show that clients are more likely to continue engaging when they see immediate, achievable results. This also helps build momentum and confidence, allowing clients to gradually regain the cognitive bandwidth needed for future planning.
Example: If a client’s ultimate goal is to become financially independent, start by asking them to focus on creating a weekly budget or applying for a short-term certification program. By completing small steps, they are more likely to stay engaged and make steady progress.

4. Addressing Social Scarcity and Isolation
Financial scarcity is often accompanied by social scarcity, including isolation and a lack of support networks. Loneliness can exacerbate the stress and challenges associated with poverty, making it even harder for individuals to engage with economic empowerment programs. People who feel socially isolated are less likely to reach out for help or remain engaged in long-term planning.
Actionable Approach: Encourage social connection through peer support or regular contact with coaches. Incorporating group activities or mentorship programs can foster community, while regular, scheduled check-ins provide a consistent support system.
Solution: Research suggests that peer support and mentor programs help reduce feelings of isolation and encourage sustained engagement. Consider pairing clients with accountability partners or mentors to strengthen their connection to the program.
Example: If your program includes group workshops, build in time for peer interactions and encourage clients to form accountability partnerships. For those who prefer one-on-one support, ensure regular, scheduled check-ins with their coach to keep them engaged and connected.
How Buoyancy Helps Empower Clients and Coaches
The Buoyancy platform plays a key role in addressing both the financial and social aspects of scarcity by providing tools that make it easier for clients to manage their next steps, reduce decision fatigue, and stay connected with their coaches:
- The Coach Chat feature provides real-time or asynchronous communication, helping clients feel connected and supported, even when they’re working remotely or on their own. This reduces the feelings of isolation that often accompany social scarcity.
- The My Plan Module helps clients and coaches organize and track tasks, ensuring that clients only see the most relevant and urgent steps at any given time. This feature simplifies decision-making by providing clear, prioritized actions, which are followed up with timely reminders or nudges to keep clients on track.
- The platform’s intuitive interface helps break larger goals into smaller, more achievable steps, enabling clients to take steady action without becoming overwhelmed. Coaches can monitor progress and offer real-time feedback, reinforcing positive behavior and building client confidence.
By addressing both the cognitive and social dimensions of scarcity, Buoyancy empowers clients to stay engaged, connected, and motivated on their path toward economic empowerment.

Conclusion: Leveraging Scarcity Insights for Greater Impact
Scarcity, both financial and social, significantly impacts individuals’ ability to engage with economic empowerment programs. The mental toll of juggling immediate survival concerns limits their ability to absorb new information, make complex decisions, and think long-term. As practitioners, our goal should be to remove as many of these barriers as possible by simplifying interventions, streamlining decisions, and providing actionable, short-term goals.
By focusing on small, manageable steps and fostering social connection, we can help clients gradually regain the cognitive bandwidth needed to succeed. Designing programs that acknowledge and address the reality of scarcity is critical to helping individuals overcome the barriers they face and achieve sustainable, long-term empowerment.
References
- Blocker, C. (2022). Rethinking Scarcity and Poverty: Building Bridges for Shared Insight and Impact. Journal of Consumer Psychology. https://doi.org/10.1002/jcpy.1263
- Kalil, A., Mayer, S., & Shah, R. (2023). Scarcity and Inattention. Becker Friedman Institute for Economics Working Paper No. 2022-76. https://doi.org/10.2139/ssrn.4138637
- Mullainathan, S., & Shafir, E. (2013). Scarcity: Why Having Too Little Means So Much. Times Books.
- Shah, A. K., Shafir, E., & Mullainathan, S. (2015). Scarcity frames value. Psychological Science, 26(4), 402–412. https://doi.org/10.1177/0956797614563958
- Wu, S. J., Cheek, N. N., & Shafir, E. (2022). Scarcity Undermines Pleasurable Thinking. UCLA Anderson School of Management & Princeton University. https://anderson-review.ucla.edu/wp-content/uploads/2021/06/Mindfulness_Scarcity-.pdf