Distinguish between Needs and Wants
Generally speaking when it comes to acquiring or owning something we would use the terms ”want” and “needs” interchangeably. Besides in many cases you perceive them both to imply the same meaning. However, these two terminologies are very different from one and another and through this blog we will try to help you to distinguish between the two.
What is meant by “need” in economics?
In economics, the term ”need” is usually referred to, as something that is extremely necessary for a person to survive. Thus if a need is not met, it could lead to the onset of disease, the inability to function effectively and efficiently in society. In fact, without them, it could even cause death.
The two categories of needs
According to the tax consultants in Toronto, “Needs” can be categorized into two groups. There are the objective or physical needs, and the subjective needs. Objective needs are those that are met through tangible things, or those things which can be measured. The examples of such basic things include food, water and shelter. Heat in case of people living in extremely cold conditions and electricity could be included in this category. On the other hand, subjective needs are those that are often seen to ensure our mental health. Examples of these include self-esteem, a sense of security and approval. Ian Gough a political professor enumerated 11 distinct needs. According to him, these needs must be met by each and every human being for them to survive and also to function well in society. Apart from this, there is Maslow’s hierarchy of needs has categorized needs into 5 categories which range from physiological, safety, belonging, esteem and finally self-actualization.
“Wants” in terms of economics
A “want” on the other hand is something which you desire for. This may be either immediately or in the future. Unlike needs, wants are those which differ from one person to another. For example, one person may want to own a car, while another person may want to travel to an exotic country. Each person has his or her own list of wants, depending on that person’s list of priorities. Furthermore, wants can change over a period of time.
This is in contrast to needs, which remain constant throughout the lifetime of the person. In other words, needs are those which are not essential for life. However, in spite of this, a person may consider being of immense importance.
The following table would help you to understand the differences better:
| Need | Want | |
| Definition | Needs are those things which you require to survive and live adequately | Wants are desires. These may not be essential for your survival but still important to you. |
| Key term | Necessity | Desire |
| For Life | Essential | Non-essential |
| Common examples | Food, housing, clothing | Buying expensive clothes, Eating out at a fancy expensive restaurant or travelling to exotic destinations |
| Situational example | A person is feeling thirsty and needs to drink water | A person is feeling thirsty and wants to sip cold drinks |
In conclusion, we hope that we have been able to provide you with a basic idea about the differences between needs and wants. To know more about financial matters please visit our website.
