Financial scarcity relative to others increases ethical economic behavior

Economic inequality is a significant global issue, impeding efforts to address poverty. Research has shown that direct experiences of inequality can foster a zero-sum mindset and highlight perceptions of economic scarcity. Scarcity, in turn, impacts decision-making processes, leading to risky, short-term decisions that perpetuate poverty cycles. Scholars have explored how experiences of resource scarcity, such as hunger or financial poverty, affect ethical economic behavior, yielding diverse findings. This paper contributes by investigating the impact of relative financial scarcity on ethical behavior through two laboratory studies. Results show that acute financial scarcity relative to an individual's reference point does not increase unethical behavior, while financial scarcity relative to others decreases such tendencies. The research questions the unified framework of scarcity effects on behavior, challenges negative stereotypes of the poor, and emphasizes the importance of considering contextual and relative factors in understanding ethical decision-making in economic contexts.