A Scarcity Mindset Reduces Salary Goals through Lowering Employment Self-Efficacy

Abstract

Beyond the substantial economic consequences of scarcity, a scarcity mindset – the mere belief that resources are scarce – has been found to negatively impact cognitive functioning and decision making. In this paper, we build on these insights by theorizing a novel motivational pathway through which scarcity impacts organizational life, specifically job seekers. Drawing from research on the psychology of scarcity, along with theories of self-efficacy and goal setting, we hypothesize that a scarcity mindset reduces employment self-efficacy, which in turn leads job seekers to set lower salary goals. We find support for our theoretical model across four studies, using diverse operationalizations of a scarcity mindset. Study 1 manipulated a scarcity mindset in a context outside of job search (i.e., general resource scarcity) and found an effect on salary goals. Study 2 manipulated a scarcity mindset within a job-relevant context (i.e., job availability) and showed that participants in the scarcity mindset condition made significantly lower (around $3,500 on average) salary counteroffers in a fictitious job negotiation. Study 3 provided further replication and found that employment self-efficacy mediated this effect. Finally, Study 4 revealed that in a sample of job seekers in the US, a scarcity mindset (arising from the experience of scarcity in childhood) was negatively related to salary goals, again mediated by employment self-efficacy. Overall, we find substantial evidence for a psychological effect of scarcity on job seekers and encourage future research to further investigate the organizational effects of scarcity and develop “wise interventions” to counteract this deleterious mindset.