Wealth and Human Wants

Wealthy consists of all potentially exchangeable means of satisfying human wants (J.M. Keynes).

Characteristics of Wealth

1. Wealth should Possess Utility: Wealth must be cap0able of satisfying human wants.

2. Wealth must be Scarce: Scarcity is the binding factor for exchange. Economic goods are exchangeable. Since wealth represents economic goods, it must be scarce.

3. Wealth Must Transferable: Transferability implies changing the ownership of a good from one to another. It is nothing but exchangeability.

4. Wealth Must be External to Person: This quality of wealth enables exchange.

Types of Wealth: These are:

1. Individual Wealth: Individual wealth consists of all tangible and intangible possessions of the individuals, besides loans due to them. Land, buildings, vehicles, shares, bonds, deposits, commodities for sale, cash, etc., are tangible possessions. Goodwill of a business, copyrights, patents (non-material external goods), etc., are intangible possessions. From the total value of all these possessions, loans owed to others are to be deducted to arrive at the individual wealth.

2. Social wealth: It is wealth, which is collectively used by all the people in a nation. Hence it is also termed collective wealth or communal wealth. Common properties of the community like roads, railways, public parks, libraries, Government hospitals, Government colleges. Etc., represent the social wealth.

3. National Wealth: National wealth is an aggregate of all individuals’ wealth and the collective wealth of the country. To this amount, the loans due to people and loans due to the Government from foreign countries should be added. From this amount so arrived at the debts that the people and the Government owed to foreign countries should be deducted. Economists like Marshall feel the inclusion of free gifts of nature like mountains, rivers, etc., in national wealth.

4. Cosmopolitan Wealth: Here the wealth belongs to the world but not to one country. Rivers, oceans, forests, etc., extending over the nations are examples of cosmopolitan wealth. It is the sum total of wealth of all nations.

5. Negative Wealth: Negative wealth is the exclusive debts owed by individuals and the nation.

Human Wants

“Man is a bundle of desires”. His wants are infinite in variety and number. Some of his wants are organic and natural. He must have some food to live, some clothing to cover his body, and some sort of shelter to protect himself against the inclement weather, and also against his enemies. Without these things, man’s life would be impossible.

Characteristics of Human Wants

1. Wants are Unlimited: Wants are continuously cropping up in the minds of humans. If one want is satisfied, immediately another want emerges. They go on multiplying. There is no end to human desires, hence unlimited.

2. Wants Recur: If one want is satisfied at a point in time, the same want again repeats in the future. It can be satisfied for that moment only and it is again ready to be fulfilled. Wants like hunger, recreation, etc., need to be satisfied time and again because of their recurrence.

3. A given Want is Satiable: Though human wants are unlimited, a given want at a particular point in time is completely satisfied. For example, for a man who is thirsty, adequate potable water completely satisfies his thirst.

4. Wants are Complimentary: Goods are required in pairs or groups to satisfy human wants. For example, bread and butter, tractor and driver, fertilizer and irrigation water, pen and paper, etc., can serve as complementary goods to satisfy human wants.

5. Wants are Competitive: Wants are unlimited but mean to satisfy them is limited. Wants compete among themselves and hence given preference. This compels the consumer to choose the most urgent wants keeping in view of the limited income.

6. Wants have Alternative means: There is more than one way of satisfying a certain want. A given want can be satisfied with alternative goods. If a man is thirsty, he can be satisfied with water or cool drink or coconut water or cool drink or coconut water, etc.

Classifications of Wants

Wants are broadly divided into three categories:

1. Necessaries

Necessaries are those wants that must be satisfied. The goods which are used to satisfy the basic needs of humans are called necessaries. They are further classified into necessaries of existence, necessaries of efficiency, and conventional necessaries.

a) Necessaries of Existence: These are the necessities that are essential for living. Human existence is not possible without fulfilling the necessities of existence. Examples: Food, water, clothes, shelter; etc.

b) Necessaries of Efficiency: These are not as essential as those of necessaries of existence, but at the same time essential in improving the efficiency of an individual. Examples: Nutritious diet, table, and chair to a student, classrooms with good ventilation, etc.

c) Conventional Necessaries: These are the necessaries, which arise out of customs or habits. The customs prevailing in a society influence the individuals to follow them. Examples: Customs like a celebration of functions and habits like smoking, drinking, gambling, etc.

2. Comforts

Comforts are those which fall between necessaries and luxuries. Man is not satisfied with fulfilling necessaries only. The comforts also increase efficiency. Examples: Cushion chairs in a classroom, revolving chairs in the saloons, fans in house/office, etc.

3. Luxuries

Luxuries are those which satisfy the superfluous wants of individuals. These are neither essential for life nor increase efficiency. Luxuries represent the wasteful expenditure of the individuals. Luxuries are further classified into harmless luxuries, harmful luxuries, and defense luxuries. Harmless luxuries are those, the expenditure on which will not cause any harm to the individuals. For example, well-furnished bungalows, expensive food habits, etc., fall under harmless luxuries. Harmful luxuries on the other hand are injurious to the health of the users. Examples: Alcohol, smoking, etc. Defense luxuries are those which protect the users during a period of crisis. Expenditure on gold ornaments, jewelry, etc. though appears to be luxurious, at the same time it would help the individuals during the periods of crisis.