Scarcity mindset is the cognitive and emotional response to feeling that there is not enough.
Psychologists Mullainathan and Shafir (2013) define scarcity as “having less than you feel you need” and propose the following theoretical framework of scarcity theory applied to poverty and economic decision making. In this framework, poverty affects economic decisions and behaviors via three routes stemming from two core psychological mechanisms (tunneling and cognitive load). First, poverty causes an attentional focus that enhances resource efficiency and facilitates memory-encoding, and an attentional neglect that leads to forgetful, neglectful, and overborrowing behaviors (arrows 1 and 2). This is referred to as tunneling. Second, poverty-induced focus causes trade-off thinking (3) which creates a more stable frame of value and consistent consumption decisions (4). Third, poverty reduces mental bandwidth (cognitive capacity and executive control) (5) and subsequently increases temporal discounting and risk aversion (6). Scarcity theory assumes that cognitive load underlies the negative effect of poverty on cognitive capacity and executive control.
Source: Poverty and economic decision making: a review of scarcity theory
Scarcity mindset often reflects intergenerational experiences
It’s difficult to pinpoint an exact percentage of the world’s population that has lived through poverty within two to three generations, as poverty rates fluctuate over time and across regions. However, it’s estimated that around 3.5 billion people, or 44% of the global population, currently live on less than $6.85 per day, which is considered the poverty line for upper middle-income countries.
Historically, poverty has been a persistent issue, and many people have experienced it at some point in their lives. The World Bank reports that about 8.5% of the global population lives in extreme poverty on less than $2.15 per day
The scars of childhood poverty often linger far beyond the years of financial hardship. Studies show that the experiences of scarcity and struggle in formative years can shape an individual’s mindset, decision-making, and emotional well-being, regardless of their eventual financial success. Even those who achieve wealth later in life may carry subconscious fears of loss or feelings of inadequacy stemming from their early environment.
These experiences influence how individuals perceive opportunity and risk, often perpetuating a focus on survival rather than growth.
Scarcity mindset is often rooted in cultural values, cognitive biases, and systemic factors
Societal norms and values shape our responses to financial constraints. For instance, subjective poverty—feeling one has less than needed—can be deeply influenced by cultural standards and social comparisons. Cultural attitudes toward competitiveness, achievement, time, resource management, and consumption play a role in decision-making under scarcity. The stigma surrounding poverty, the way poverty is perceived and judged within a culture also significantly impacts the mental and emotional strain faced by those experiencing financial hardship. In some cultures, poverty is seen as a personal failure or a lack of effort, while in others, it may be viewed as a societal challenge. These cultural attitudes shape both how individuals in poverty view themselves and how they are treated by others.
If you would like to gain a better understanding of how your cultural background might be contributing to your scarcity mindset, reach out for a one-on-one consultation, as this is a highly individual matter.
Why Addressing Scarcity Mindset Matters
Recognizing and addressing scarcity mindset is vital for fostering both individual growth and collective success.
At the individual level, scarcity mindset manifests as a sense of perpetual insufficiency—whether it’s time, resources, or opportunities. Professionals with this mindset may become hyper-focused on immediate tasks, neglecting strategic goals or broader career development. This narrow focus can hinder creativity and problem-solving, as individuals feel constrained by perceived limitations. Scarcity-driven thoughts can also lead to risk aversion, where fear of failure or inadequacy prevents individuals from taking bold steps or proposing innovative ideas. Over time, these patterns erode confidence, engagement, and the ability to fully contribute to a team, organization, or community.
In group and team settings, the impact of scarcity mindset becomes even more pronounced. A collective focus on “not enough” can create an environment of unhealthy competition rather than collaboration. Teams may struggle to trust one another, hoard information, or prioritize short-term wins over long-term success.
Scarcity mindset also undermines psychological safety within teams. When individuals feel they must constantly prove their worth or compete for recognition, open communication and collaboration suffer. Diverse perspectives may go unheard, and opportunities to learn from one another’s strengths are often missed. Over time, this diminishes the innovative potential of the group, as trust and cohesion are replaced by fear and self-preservation.
What is more profitable – competition or collaboration?
The profitability of competition versus collaboration depends on the context, goals, and dynamics involved. Competition drives innovation, efficiency, and individual performance, often thriving in markets where differentiation is key. However, it often leads to burnout and a short-term focus. Collaboration, on the other hand, leverages diverse strengths, builds trust, and enables sustainable growth through shared knowledge and resources.
Here is an example that provides evidence of greater profitability when you adopt an “abundance mindset” and move away from scarcity thinking. Baker McKenzie’s approach highlights how encouraging collaboration—like connecting clients to colleagues with complementary expertise—can drive results. Since adopting a collaborative model, the firm increased revenue by over 40%, proving that when we shift from scarcity to abundance and work together, we all benefit. This shift is critical not just for businesses, but also for building healthier, more resilient communities.
Team and organizational perspective
Cultivating an abundance mindset requires creating environments that prioritize trust, collaboration, and inclusivity. Leaders play a crucial role in modeling this shift by encouraging risk-taking, celebrating successes, and fostering psychological safety. By recognizing and challenging scarcity-driven behaviors, teams can shift from a culture of competition to one of collective empowerment, where resources, ideas, and support are shared to achieve common goals.
Ultimately, addressing scarcity mindset is about unlocking potential—both at the individual and team level. It enables professionals to approach challenges with confidence, teams to function with trust and synergy, and organizations to thrive by embracing innovation and inclusivity. This transformation isn’t just beneficial; it’s essential for creating resilient, future-ready workplaces where everyone has the opportunity to succeed.
So, what can you do?
- Recognize and acknowledge scarcity thinking through cultural reflection. Scarcity thinking often stems from deeply ingrained cultural and societal narratives, passed down through generations. Reflect on the values and beliefs you’ve inherited—whether they emphasize “not enough” or “always striving for more”—and consider how they shape your current mindset. For example, were you taught to fear instability or to equate success with overachievement? By identifying these influences, you can begin to separate inherited biases from your personal truth, allowing you to make choices that serve your present and future rather than remaining bound by the past.
- Challenge and reframe scarcity-based thoughts with cultural awareness. Many scarcity-based beliefs are tied to cultural narratives that prioritize competition or survival, especially in immigrant or marginalized communities where resource limitations might have been a reality. Acknowledge these roots while reimagining them in the context of your current environment. For instance, replace “I have to do it all alone” with “Collaboration strengthens me,” recognizing that many cultures value community support and shared success. This reframing allows you to honor your cultural heritage while embracing a mindset of sufficiency in the present.
- Practice gratitude with an understanding of your journey. Gratitude takes on deeper meaning when it is informed by reflection on your cultural and personal history. Consider the sacrifices and resilience of those who came before you, as well as your own journey of growth. Gratitude isn’t just about celebrating where you are—it’s about honoring the path that brought you here. Reflect on how your cultural roots have shaped your perspective, and use this understanding to cultivate an appreciation for both the opportunities and the challenges that have defined your present.
- Engage mindfully with media through a lens of cultural critique. Media messaging often reflects dominant cultural norms, many of which may conflict with or marginalize aspects of your identity or history. Take time to reflect on how cultural narratives in media have shaped your understanding of worth and success. Ask yourself: Are these messages aligned with my values and lived experiences? By curating media that respects your unique perspective and challenges harmful stereotypes, you can reclaim control over the stories that influence your mindset.
- Surround yourself with culturally aware and growth-oriented influences. Reflect on the role that community has played in your life, past and present. Did your cultural background emphasize collective effort, or was individualism more prominent? Seek connections that support your growth while honoring the positive aspects of your heritage. In North America’s diverse landscape, finding people who share or respect your cultural values can help you integrate the best of both worlds—creating a support system that uplifts and inspires
- Celebrate the success of others while reflecting on shared journeys. In many cultures, the achievements of one person are seen as a testament to the strength of the community. Reflect on how your cultural background has shaped your view of success. Instead of perceiving others’ progress as a threat, recognize their accomplishments as a shared victory or evidence of what’s possible. Use this reflection to build a mindset of abundance, asking, “How can I learn from their journey?” or “What does their success reveal about opportunities available to me?”
Reflect on the cultural biases and experiences of your past and by incorporating these findings into your current practices, you can foster a mindset that bridges the wisdom of your heritage with the opportunities of your present. This balanced perspective not only encourages personal growth but also deepens your connection to both your cultural roots and the diverse world around you.