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Economic Needs and Wants: Definition & Concept

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  • 0:00 Needs and Wants Defined
  • 0:33 Economic View of Needs…
  • 1:17 Ethical Considerations
  • 2:27 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
Everybody needs certain things, and everybody wants certain things. In this lesson, you'll learn about needs and wants from an economic perspective and explore different ethical considerations.

Needs and Wants Defined

Needs are based on physiological, personal, or socio-economic requirements necessary for you to function and live. Transportation is a need for the modern, urban person because work, food, and other necessities of daily life are too far from where he lives.

Wants, on the other hand, are a means to fulfilling our needs. You may be able to bike to work, use public transportation, or drive your own vehicle. While any of the choices will work, you want a car to fulfill your need for transportation.

Economic View of Needs and Wants

The economic view of needs and wants utilizes the fictional concept of the economic man, who acts rationally to maximize his potential to consume goods and services that offer him the highest degree of utility or satisfaction. Our economic man's quest is limitless. While your needs may eventually be satisfied for a while, according to economic theory, wants never are.

For example, a one-bedroom apartment fulfills your needs and wants for housing, but once you get married, you want a townhouse. The want changes to a three-bedroom house when the first kid comes along. Then you decide you want a house with a few extra bedrooms, and a pool wouldn't be bad either, even though the original house fulfills your need for family housing.

Ethical Considerations

The economic perspective of needs and wants raises some ethical concerns. One concern is that consumers are subject to undue persuasion from a consumer culture that makes it difficult for them to determine their true needs and wants, rather than artificially manufactured needs and wants. A great example of a manufactured want is the pet rock, which served no utilitarian purpose.

Another concern is the idea of consumer lock-in, where our society requires individuals to obtain more and more income and consumption to meet fundamental needs. For example, once upon a time, people functioned perfectly fine without personal automobiles, computers, and cell phones, but now most people view these items as essential needs. All these 'needs' add up.

Finally, a major concern is an inequitable distribution of resources across the globe. Over-consumption can result in a significant amount of needs not being fulfilled, such as the poor in developing countries whose fundamental needs for food and shelter are often not met.

Lesson Summary

Let's review. Needs are things that you require to function and range from physical needs, such as food and water, to more socio-economic needs, such as cars and phones. Wants are the means by which you fulfill your needs.

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