Understand Human Wants and It’s Characteristics

In day to day language desire and want mean the same thing. But in economics, they have different meanings. Wants are the basis for human behaviour to buy and consume goods. All the desires and aspirations and motives of humans are known as human wants in economics.

Characteristics of Human Wants

Wants are unlimited

Human wants are countless in number and various in kinds. When one want is satisfied another want crops up. Human wants, multiply with the growth of civilization and development.

Wants become habits

Wants become habits; for example, when a man starts reading a newspaper in the morning, it becomes a habit. The same is the case with drinking tea or chewing pans.

Wants are Satiable

Though we cannot satisfy all our wants, at the same time we can satisfy particular wants at a given time. When one feels hungry, he takes food and that want is satisfied.

Wants are Alternative

There are alternative ways to satisfy a particular want eg. Idly, dosa or chappati.

Wants are Competitive

All our wants are not equally important. So, there is competition among wants. Hence, we have to choose more urgent wants than less urgent wants.

Wants are Complementary

Sometimes, the satisfaction of a particular want requires the use of more than one commodity. Example: Car and Petrol, Ink and Pen.

Wants are Recurring

Some wants occur again and again. For example, if we feel hungry, we take food and satisfy our want. But after some time, we again feel hungry and want food.

Deduction and Induction Methods of Economics

Like any other science, Economics also has its laws or generalisations. These laws, govern the activities in the various divisions of Economics such as Consumption, Production, Exchange anDeduction and Induction Methods of Economicsd Distribution. The logical process of arriving at a law or generalization in science is called its method.

Economics uses two methods: Deduction and Induction. Economists today say both these methods are complementary. Alfred  Marshall has rightly remarked: “Inductive and Deductive methods are both needed for scientific thought, as the right and left foot are both needed for walking”.

Deductive Method of Economic Analysis

The deductive method is also named an analytical or abstract method. It consists of deriving conclusions from general truths; it takes few general principles and applies them to draw conclusions. The classical and neoclassical school of economists notably, Ricardo, Senior, J S Mill, Malthus, Marshall, Pigou, applied the deductive method in their economic investigations.

Steps of Deductive Method

Step 1: The analyst must have a clear and precise idea of the problem to be inquired into.
Step 2: The analyst clearly defines the technical terms used in the analysis. Further, assumptions of the theory are to be precise.
Step 3: Deduce the hypothesis from the assumptions taken.
Step 4: Hypotheses should be verified through direct observation of events in the real world and through statistical methods. (eg) There exists an inverse relationship between price and demand of a good.

Inductive Method of Economic Analysis

The inductive method, also called the empirical method, is adopted by the “Historical School of Economists”. It involves the process of reasoning from particular facts to a general principle. Economic generalizations are derived in this method, on the basis of

  • Experimentations
  • Observations
  • Statistical methods

Steps of Inductive Method

Step 1: Data are collected about a certain economic phenomenon. These
are systematically arranged and the general conclusions are drawn from
them.
Step 2: By observing the data, conclusions are easily drawn.
Step 3: Generalization of the data and then Hypothesis Formulation
Step 4: Verification of the hypothesis (eg. Engel’s law)

According to Engel’s Law “The proportion of total expenditure incurred on food items declines as total expenditure [which is proxy for income] goes on increasing.”