# Scarcity mindset’s positive association with using alternative financial services

## TL;DR

People with a scarcity mindset are more likely to use alternative financial services, regardless of their income level.

## Contribution

This study shows that scarcity mindset is a novel predictor of alternative financial services use, independent of income and other known factors.

## Key findings

- A stronger scarcity mindset is significantly linked to higher use of alternative financial services.
- The association holds even after controlling for socio-demographic factors and income.
- Scarcity mindset predicts alternative financial services use across all income groups.

## Abstract

The scarcity mindset, where people do not have what they feel that they need, can help consumers address the area of scarcity, but on the other hand can lead to neglect and mistakes elsewhere. This study tests whether a scarcity mindset is associated with the use of alternative financial services, whether the association is stable above and beyond established predictors of the use of alternative financial services, and whether it differs by household income. Data come from the 2021 FINRA National Financial Capability Study’s State-by-State survey wave, N = 24,349. Results of binary logistic regression analyses show that, controlling for established predictors of alternative financial services use and socio-demographic characteristics, a stronger scarcity mindset is significantly positively related to alternative financial services use. These findings hold for the pre-COVID-19 2018 data with regard to income groups, and although high-income respondent are lesser users of alternative financial services, the scarcity mindset transcends income status and emerges as a significant predictor of alternative financial services use for study participants regardless of household income. Study implications point to the need to assess the role of the scarcity mindset for newer alternative financial services products, including fintech applications. (192/300).