Friday, May 19, 2006

Wants...or Needs...or?

There was a time in economic education when we took time to explain to our students the difference between wants and needs. One usually tended to get hung up on a variety of goods that the students considered needs, and that most adults would clearly identify wants. I used to try to minimize the confusion by telling students (and teachers) that needs were usually general, wants tended to be more specific, as in "I need food, but I want steak." "I need shoes, but I want Nike."

In reading a copy of Thomas Malthus' Essay on the Principle of Population along with commentaries, I ran across an extract from Two Lectures on Population by Nassau W. Senior. He does a good job of differentiating between what he termed necessary, decency and luxury.

"By necessaries then, I express those things the use of which is requisite to keep a given individual in the health and strength essential to his going through his habitual occupations. By decencies, those things which a given individual must use in order to preserve his existing rank in society. Everything else of which a given individual makes use; or, in other words, all that portion of his consumption which is not essential to his health and strength, or to the preservation of his existing rank in society, I term luxury."

While it isn't exactly "wants and needs", I think it does a pretty good job of explaining the difference. In my mind needs is the equivalent of necessity, while decency and luxury seem to embrace the old idea of wants fairly well. Do you differentiate? Does Senior's description help?

Posted by TSchilling at May 19, 2006 4:30 PM

I usually take after Hume. Needs are intrinsic to the mind, body, and spirit, while wants are extrinsic that we decide are capable of fulfilling these needs. Need is sustenance, wants are the foods selected to provide it. Need is companionship, wants are the friends and lovers we choose to provide it. Need is connection, wants are religion and social organizations we deign to produce it.

Posted by: Lord at May 22, 2006 9:32 AM

Hume's version has the advantage of simplicity (two categories as opposed to Senior's three, and the categories are the same as we usually teach--wants and needs).

Either way (Hume or Senior), I think there is value in helping students learn to differentiate. It helps them carry the economic underpinnings to their personal economic experience. IMHO, if one can see that the object being purchased is "merely" a want, and recognize that it probably isn't a need, it sometimes makes it easier to do without, or at least postpone purchase.

Posted by: Tim at May 22, 2006 3:05 PM

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