On the relativity of the concepts of needs, wants, scarcity and opportunity cost

Abstract

The concept of scarcity is the cornerstone of economics as a discipline. After all, "Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different groups" (Samuelson and Nordhaus, 1989, p. 5). What is more, the economics profession is rather particular in distinguishing absolute from relative scarcity, and quick in emphasizing that it is relative scarcity which defines economics. Most of the current economic theory is derived from the law of (relative) scarcity which "states that goods are scarce because there are not enough resources to produce all the goods that people want to consume" (Samuelson and Nordhaus, 1989, p. 26). Furthermore, scarcity "exists simply because it is human nature for people to want more than they have" (Ruffin and Gregory, 1993, p. 3).As self-evident as these statements appear to be, further consideration of the underlying precepts reveals that the self-evidence is in part based on deliberate simplification by economists of certain (philosophical, behavioural, ethical and psychological) issues surrounding the concepts of needs and wants. This simplification is due to the economists' tendency to "reduce" problems to their "essence", as a starting point in economic analysis. The following statement illustrates rather well how economists view and treat the concepts of "needs" and "wants": economics must reckon with consumer wants and needs whether they are genuine or contrived. Shakespeare's King Lear said, "Reason not the need" -and economists do not; rather they analyze how limited goods get rationed among whatever wants a society generates (Samuelson and Nordhaus, 1989, p. 26).

Robbins and Malthus on Scarcity, Abundance, and Sufficiency

“…Moreover, this study has also shown that the definitions of absolute and relative scarcity do not necessarily hinge upon the distinction between needs and desires (Baumgartner et al. 2006; Raiklin and Uyar 1996).…”

“…These are, however, implicitly used in the literature and thus need to be further studied. Where this distinction is used explicitly, it mainly corresponds to the difference between human needs and desires (Baumgartner et al 2006; Raiklin and Uyar 1996). This article will argue that this correspondence is not a necessary condition to define these two views.…”

Overcoming Scarcities Through Innovation: What Do Technologists Do When Faced With Constraints?

“…Increasingly, critics of mainstream economic thought 1 have expressed alarm that this formulation may not adequately cover the phenomenon of scarcity (Bretschger, 2005;Baumgärtner et al, 2006;Daoud, 2011Daoud, , 2007Raiklin and Uyar, 1996;Sahu and Nayak, 1994). These scholars argue that mainstream economics limits itself to the study of phenomenon of "relative" scarcity, which already presupposes that "scarce" goods can be substituted for other goods or that more of the scarce good can be produced by reallocating resources differently (Baumgärtner et al, 2006).…”

The Normative Foundations of Scarcity

“…Raiklin and Uyar (1996) argue that eliminating the needs/wants distinction "has meant also that the moral and social implications of such comparisons and discussions could be kept out of economic theory and analysis. "…”