INSIGHTS
Ideas worth thinking about
ECONOMICS OF EVERYDAY LIFE
What economics can teach us about the choices we make, the value we assign, and the lives we build.
Elasticity: How Much Does Change Change You?
Some things change dramatically when circumstances change.
Others barely move.
Raise the price of something people can easily live without, and demand may fall sharply.
Raise the price of something people consider essential, and they may grumble, complain — and keep buying it anyway.
Economics has a word for how responsive behaviour is to a change in circumstances:
Elasticity.
And once you understand it, you start noticing it everywhere.
Not everything responds equally
In economics, elasticity measures how responsive one variable is to a change in another.
One of the most familiar examples is price elasticity of demand: how much the quantity people want to buy changes when the price changes.
If a small price increase causes a large drop in demand, demand is relatively elastic.
If the price changes significantly but demand changes very little, demand is relatively inelastic.
The interesting part isn’t simply that things change.
It’s how much they change in response.
And that is where the concept becomes useful beyond economics.
Because in life, we often assume that if we change something, the response will be proportional.
It isn’t always.
Why some things are more responsive than others
Think about something you buy regularly.
If the price of one brand of bottled water rises significantly, you may switch to another brand.
The alternatives are easy.
The difference matters.
The switching cost is low.
But imagine the price of an essential medication rises.
You may not have many alternatives.
The product may be difficult to replace.
The consequences of going without it may be far greater than the price increase.
The same change in price can therefore produce very different responses depending on the circumstances.
And that gives us a useful question:
What makes something responsive – or resistant – to change?
Availability of alternatives.
Necessity.
Switching costs.
Time.
Habit.
Perceived value.
The availability of information.
These factors influence how much behaviour changes when conditions change.
Human beings are not spreadsheets.
But we aren’t entirely unpredictable either.
The business lesson: value isn’t only about price
This matters enormously in business.
A common assumption is:
“If I lower the price, more people will buy.”
Sometimes they will.
Sometimes they won’t.
And sometimes lowering the price simply means you earn less from people who would have bought anyway.
Because demand isn’t determined by price alone.
People consider alternatives.
They consider quality.
They consider trust.
They consider convenience.
They consider reputation.
They consider the cost of switching.
They consider what the product or service means to them.
Which means that if you are building a business, the question isn’t always:
“How can I make this cheaper?”
It might be:
“What makes this valuable enough that price isn’t the only thing people are considering?”
That’s a very different business question.
And then there are people
Elasticity becomes even more interesting when we move away from markets.
Consider a workplace.
Two employees receive the same change in circumstances.
A new policy.
A tighter deadline.
A change in reporting structure.
A new incentive.
One adapts quickly.
Another resists.
A third appears unaffected.
Same change.
Different response.
That doesn’t necessarily mean one person is resilient and another isn’t.
Their circumstances may be different.
Their perceived value may be different.
Their experience may be different.
Their trust in the organisation may be different.
Their switching costs may be different.
Their interpretation of the change may be different.
So when leaders ask:
“Why aren’t they responding to this?”
perhaps the more useful question is:
“What determines how responsive they can afford to be?”
That’s a very different conversation.
The cost of switching matters
Think about a manager who introduces a new system and wonders why everyone isn’t enthusiastic.
From the manager’s perspective, the new system is obviously better.
Faster.
Cleaner.
More efficient.
But employees may be thinking about something else.
How long will it take me to learn?
What happens to the work I’ve already done?
Will I make mistakes while learning it?
Will this make my job easier or simply move the workload somewhere else?
Do I trust the reason for this change?
The organisation sees the benefit.
The employee experiences the transition cost.
And that cost affects responsiveness.
This is why change management isn’t simply about announcing that something is better.
People don’t respond to change based only on the destination. They also respond to the cost of getting there.
Some things are deliberately inelastic
There is another interesting lesson here.
Not everything should be highly responsive.
A person who changes their values every time circumstances change may appear adaptable.
But they may simply be unanchored.
A leader who changes priorities every time someone complains may appear responsive.
But the team may experience it as inconsistency.
A business that changes its entire positioning whenever the market shifts may appear agile.
But eventually, nobody knows what it stands for.
Adaptability is valuable.
But responsiveness without principles can become volatility.
Sometimes stability is the point.
Your values may need to be relatively inelastic even when your methods are flexible.
Your purpose may remain steady while your strategy changes.
Your standards may remain steady while your processes evolve.
That’s not resistance to change.
That’s knowing what should change and what shouldn’t.
What about you?
Elasticity also gives us an uncomfortable personal question:
How responsive are you to change?
Not simply whether you change.
But how much.
What does it take to change your mind?
What does it take to change your habits?
What does it take to change your priorities?
What does it take to make you leave something that no longer works?
Some of us are highly responsive to other people’s opinions but remarkably resistant to evidence.
Some respond immediately to pressure but slowly to opportunity.
Some change when circumstances become painful enough.
Others change while there is still room to choose.
And some things we shouldn’t change at all.
The trick is knowing which is which.
Elasticity isn’t about being flexible enough
We live in a culture that praises adaptability.
Be flexible.
Pivot.
Embrace change.
Move with the market.
Keep up.
All useful advice.
But elasticity gives us a more precise question:
Responsive to what? And by how much?
Because being highly responsive isn’t automatically good.
Imagine a leader whose decisions change dramatically with every complaint.
Or a business that changes direction every time a competitor launches something new.
Or a person whose priorities change whenever someone else disapproves.
That’s responsiveness without direction.
On the other hand, being completely unresponsive can be equally damaging.
The market changes.
People change.
Circumstances change.
Information changes.
What worked yesterday may stop working tomorrow.
The wisdom lies somewhere between rigidity and reaction.
So, what should move?
That is the more useful question elasticity leaves us with.
Not:
“How do I become more adaptable?”
But:
“What should change when circumstances change — and what should remain anchored?”
Your strategy may need to move.
Your values may not.
Your methods may change.
Your purpose may not.
Your price may change.
Your value proposition may need to become clearer.
Your role may change.
Your standards may remain.
And sometimes, the biggest mistake isn’t refusing to change.
It is changing the wrong thing.
Because not everything should respond equally to every change.
Some things need flexibility.
Some need stability.
And knowing the difference is part of making intentional choices.
Change is inevitable. Responsiveness is a choice. And wisdom lies in knowing what deserves to move.
– Insights by Norra Ismail
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