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Scarcity Drives Value: A Business Principle Behind the Creation of Free Rewards

​Scarcity drives value. This is a time-honored maxim in business and it could, and in my opinion, should, achieve a similar status for parents raising children. 

I was recently interviewed by Momaha.com about ways to motivate children to pursue free summertime activities rather than those that are costly. The simple answer is to make the “free” activities less available. When activities are less available, their value to children increases. This does not mean that brussels sprouts will become children’s most preferred food if we substantially reduce their availability. But it does mean that the value children place on things they do like will increase.

There are other easier and much more obvious examples where parents could apply the principle of scarcity to determine value. For example, parents are often puzzled about how to best reward their children without surrendering time and money to commercial enterprises to do so. They need worry no further. They can create powerful rewards out of freely available “material” abundantly present at home. 

For example, for younger children, bedtime is a limit on their personal freedom that they virtually always want extended. To create a large batch of free rewards, parents merely need to establish an early and firm bedtime that is an hour or so earlier than the latest one the parents could actually accept.  Then the time between the established bedtime and the later bedtime becomes batches of minutes (e.g., 15-minute units) parents can use as rewards.  

For older children, curfew is the personal freedom limit they always want extended. To create a batch of powerful rewards for free, parents merely need to set an early and firm curfew, one that is an hour or two earlier than the latest one parents could actually accept. Like in the bedtime example, the time between the established curfew and the later one produces batches of minutes (e.g., 30-minute units) parents can use as rewards.  

In both situations, children will work to obtain these units. And parents can use them efficiently because they cost nothing, do not clutter the house, and don’t go out of style.  

More generally, parents can use this same strategy by surveying their child’s daily landscape for goods, services, and privileges that are freely available, and then make them less available, thereby increasing their value and enlarging their potential role as motivating rewards for their children. 

Sometimes in running a home well, parents find that using well-established business principles can pay big dividends.

This content was created by Boys Town expert Pat Friman. To learn more about him, visit his expert page here.

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