Module 3 – Needs and Wants

Learning Objectives:
At the end of this module, you must have:
▪ differentiated needs from wants;
▪ examined the theories of needs;
▪ established criteria for ranking needs according to the degree of importance; and
▪ relate wants to the problem of scarcity.

Essential Question
What is the difference between needs and wants? How are they related to scarcity?

Expected Task of this Module

Explore the news and articles and look for topics regarding the wants and needs of Filipinos. Analyze
the various perspectives on wants and needs and how these affected the news or report.

TRY THIS!
Wants Needs

Processing Questions:
1. What was your basis for identifying a good or a service as addressing needs or wants?
2. Which of these items do you prioritize?
3. What do you think will happen if wants are not addressed?

Find Out
Fill the columns below. First, fill the column “What I Know” and “What I Want to Know.” After reading the
module, fill the third column, “What I Have Learned.”

What I Know What I Want to Know What I have Learned

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Concept Map
Use the framework below as a study guide.

NEEDS AND WANTS

In the formal study Unlimited Can be analyzed

of economics using
therefore

Theories of
No difference
Needs
Worsen the
effects of scarcity

Crossing the Threshold

The concept of scarcity is based on the notion that people have unlimited needs and wants. All of us have
needs and wants. In the formal study of economics, no distinction is made between needs and wants. But
what is the difference between needs and wants? When you overhear someone gushing, “I so need this”
over a pair of shoes, does it automatically classify shoes as a need? Probably not.
In economics, needs are goods that are critical for survival. In contrast, wants are goods that one can live
without. In short wants are desires or extras that may bring comfort. As opposed to needs, not getting what
you want will not kill you.
For more information about Needs and Wants, Click the link below and review:
https://drive.google.com/open?id=1QsqwPGeKpvp6kNIMp3Gge9-NTaHUbkl5&authuser=0

THEORIES OF NEEDS
Abraham Maslow and Michael Todaro are among those who proposed theories related to the various needs
of individuals and society. Maslow focused on the individual level, including how individuals interact in
society. On the other hand, Todaro linked human needs to social development.

Maslow’s Hierarchy of Needs

Maslow’s hierarchy of needs is another way of explaining needs and wants. Maslow’s theory was first
introduced in 1943 in his book A Theory of Human Motivation but was not fully explained until 1954 in his
book Motivation and Personality. In Maslow’s theory, there are five stages:

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 Self-Actualization
Esteem
Belongingness and Love

Safety and Security

Physiological
Fig. 3.1 Maslow’s Hierarchy of Needs

According to Maslow, the most basic of human needs is physiological needs. This type of needs
corresponds to the biggest chunk of the pyramid. Physiological needs, or those necessary for the normal
functioning of the body, comprise the first level. It includes food, water, air, and sleep which are essential
for survival. A lot of businesses produce food and drinks because they are aware that people prioritize
physiological needs over other needs. Thus, a big portion of the household budget goes to physiological
needs.
Once the physiological needs are met, human beings have a need to feel secure. Safety needs, or those
that are necessary for safety and security and protect people from harm. These belong to the second level.
The third level is a social need or the need to feel love and a sense of belongingness. This need can be
satisfied by friendships and family. In terms of products and services, relationships can be nurtured by using
the Internet which facilitates communication or by availing of the services of a restaurant where friends can
catch up.
After the first three levels are satisfied, human beings can then focus on fulfilling the fourth level known as
esteem needs. Esteem includes the need to feel recognized and respected. A person who meets esteem
needs is seen as more confident.
Finally, at the top of the hierarchy is the need for self-actualization. Self-actualization is the stage when
human beings desire self-improvement and the need to accomplish something. This is when they develop
creativity and exert effort to achieve their full potential. When a person fails to do this, he might feel that
something is lacking. Because potentials vary across individuals, each has his/her own set of goals.
Satisfaction of this need can be as simple as taking photography classes or climbing Mt. Everest.
Except for self-actualization, the other four levels of needs are collectively known as deficit needs or D-
needs. This means that one feels content only after satisfying these four needs.

Abraham Harold Maslow (1908-1970) was an American psychologist born on April 1, 1908 to
Jewish parents and died in June 1970 at the age of 62. He is widely known for his theory on
human needs and self-actualization.
Self-actualizing people share the following qualities in Maslow’s point of view: truth, goodness,
beauty, wholeness, dichotomy, aliveness, uniqueness, perfection, necessity, completion,
justice, order, simplicity, richness, effortlessness, playfulness, and self-sufficiency.

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 Maslow’s five-tier model has been expanded into seven- (or eight-) level hierarchy during the 1970s to include cognitive and
aesthetic needs and transcendence needs. Cognitive and aesthetic needs come prior to self-actualization. Transcendence
needs to follow after self-actualization needs which makes them the highest level of need. To read more on the expanded
version of Maslow’s Hierarchy of Needs visit/click https://www.simplypsychology.org/maslow.html

Todaro’s Theory
Michael P. Todaro, American economist, focused on the link between development and human needs.
According to him, the concept of development encompasses all changes made by society in order to move
from an unpleasant to a more pleasant condition.
Following American human development theorist, Denis Goulet, Todaro identified three basic characteristics
of a developed society. These characteristics are related to basic needs that individuals and society desire
to achieve.
The first characteristic, sustenance, is the capability to address basic needs. People have to meet their
basic needs in order for them to live. One of the fundamental roles of the government is to give sufficient
instruments for its citizens to have food, shelter, and medical care. If these are not met, the society is
considered to be in absolute underdevelopment.
The second characteristic is self-esteem, or a high regard of oneself. Everyone desires to live with dignity.
An individual with abundant economic resources is highly regarded in his community. This is one reason
why societies strive to achieve economic progress.
The third is freedom from servitude. It is the freedom from ignorance and freedom to choose. One
important objective of progress is to free individuals from the whims of nature, ignorance, dogmatic beliefs,
and servitude. All in all, economic development leads to more choices for individuals and society.

Our Needs and Wants

Due to the scarcity of resources, not all wants can be addressed. To get our wants and needs, we must be
rational in making our choices (alternative goods or services that are available to consumers). Rational
behavior entails getting maximum satisfaction from spending for our needs and wants.
Sometimes, our wants may seem like necessities. A cellphone, for example, has become an indispensable
device in our daily lives that practically, most of us have at least one. However, cellphones are still luxuries;
they make our lives easier but we can still live without them. There are times when we are conspicuous in
our consumption when we buy the latest models for computers, videogames, mobile phones, or other
gadgets. Despite this, wants are important in economics, since wants have overtaken the role of needs in
creating, a dynamic economy. While our needs impel us to purchase, these needs are few compared our
numerous wants. Moreover, advertisements for these wants make us want them even more. If we sum up
all the needs and wants of everyone in the society, the result would be demand, which is a force behind the
market.

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Factors that Change Our Needs and Wants

Our needs and wants change across time. Several factors affect the changes in our human needs. These
play vital roles in changing our needs and wants.

1. Education. The needs of men differ according to educational attainment. Those who achieve higher
education have different needs than those who are not able to finish schooling.

2. Income. Giving emphasis to our primary needs vary based on the income of the individual. Poor families
are satisfied with small and simple houses while the rich families can afford beautiful and pompous houses.
The value and kinds of food, clothing, and all material things reflect the big difference between the rich and
poor, and the gap in their income.

3. Age. As a person grows older, his/her needs and wants change. As children, we were satisfied in drinking
milk, eating cereals, and using diapers. When we reach the teenage periods, we start to enjoy wearing
fashionable dresses. Some people don't like cereals and milk but they prefer junk food and soft drinks. We
play computer games, become engrossed in doing e-mail, chatting, using social networking and video
streaming sites and all the latest trends in information and communication technology. We use smart
phones, music players, cell phones and other electronic gadgets. And as we grow old, our preferences for
food, clothing, and recreational activities also change.

4. Tastes and Preference. Teenagers have different needs and wants compared to adult. The food they
like to eat, clothes they like to wear, and TV programs they like to watch are not the same as what older
people prefer. Even people of different countries vary in their food preference. Filipinos like fish sauce and
bagoong, while Japanese like soy sauce and Chinese like oyster sauce, Indians love spices as part of their
eating habit. Americans prefer eating sandwiches than rice, while Italians enjoy eating pasta and pizza.

5. Profession. A car is not a need of a janitor, clerk, or laborer but to a businessman, executive, or manager,
it may be a need. To the rich and able people, it may be considered a want. The food preference and lifestyle
of an executive which is considered a want is not the same as what ordinary people need to eat and enjoy.
In other words, the social status of man in the society changes his/her needs and wants. Sometimes, there
are things that are considered wants by some people but to other, they become needs.

Needs as Basis of Economic Progress and Development

There are three human needs that the government should address and do something about to make the
people enjoy: material things, freedom, and dignity in life.

The kind, quality, and quantity of material things needed by the people in the developed countries differ that
of the underdeveloped countries. One good example is the United States and other first-world countries
where eating beef and expensive fruits, living in big houses, driving their own cars, wearing beautiful and
elegant clothes and jewelry, and using modern and sophisticated appliances are just common and ordinary
parts of life, while in poor countries like ours, only a few people can afford to have the kind of material things
and lifestyle the people in the well-developed countries have. Lucky are those who can buy and drive their
own car, have big houses fully furnished with modern appliances and can eat delicious and nutritious food
anytime they want to, but majority of the people suffer from poverty and deprivation of decent services from
the government.

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Abundance in material things is not enough for people to attain happiness and contentment in life. It cannot
be used also as basis of progress in a society. Each individual needs freedom. Aside from material things,
freedom is the next thing we want to enjoy. The advantage of a developed country is that freedom can be
easily given to the member of the society. Freedom gives us the chance to enjoy the things around us. We
have the freedom to decide what we want to do. It gives us inspiration and opportunities. Sometimes, it
compensates for our needs for material things.

The type of freedom that every individual experience is determined by the form of government. The
economic system of one's country affects the freedom of its people. There are countries which follow the
planned economy and control the goods and services of their country, so the freedom to choose the products
for personal use is limited. In relation to this, the scarcity of natural resources can also cause the limitation
and control of individuals' freedom to choose.

Do This
Look for news and articles about the wants and needs of Filipinos from newspapers, the internet, and other media.
Associate this with the concepts discussed in this module. Use the following as a guide:
1. Who wrote the news or article? Where was it published?
2. Does the report imply a difference between needs and wants?
3. How does the view of the author on the difference between needs and wants affect his or her report?
4. How do you think would the report contribute to the knowledge of readers about the concept of wants and
needs?
5. If necessary, rewrite the news in such a way that the difference between the two concepts becomes clearer.

RUBRIC FOR GRADING THE RESEARCH

Criteria Description Points Points Earned
Content The chosen report is appropriate for the given theme 7
Reference Used a reliable reference for the research 5
Organization Was able to substantially answer the guide questions 5
Examination Was able to give a good portrayal of the events in the report 8
TOTAL 25

TOWARD THE NEXT MODULE

In this module, you learned that in formal economics, no distinction was made between needs and wants. We differentiated needs
from wants because each has its own way of affecting the decision of consumers. You also learned about the theories of needs
that provide a broad view of human motivation.
The next module elaborates on the concept of allocation. It also discusses the different economic systems.

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EVALUATING THE LEARNING PROCESS
Recall the tasks that you have performed in this module. Were you able to do the tasks properly? What did you find difficult and
why? What have you learned? Fill the following checklist with your answers.

YES NO WHAT I HAVE DONE

Reading and Text, I have read…
Comprehension a. I understand the content of the texts
that I have read.
b. There were words that I could not
understand.
c. I can make my own summary
Accomplishment On activities the teacher instructed…
Tasks a. I needed the assistance of my
classmates, teacher, and parents.
b. Finishing the tasks was hard for me.
c. I learned how to use the internet
appropriately.
d. I was able to use my knowledge and
skills while doing the assigned tasks.
e. I cooperated with my classmates
during group-work.
Reflection Therefore, I can say that…
a. I have to change my study habits.
b. I am good at understanding texts that
I have read.
c. I need additional knowledge in using
technology.
d. I have skills and capabilities that I
have to improve
e. I am a fast learner when I cooperate
with my fellow students.

EVALUATING WHAT WAS LEARNED

Assessing How You Have Learned

Skills I learned I learned I learned a Comments
a lot enough little “I have learned that…”
Able to differentiate needs and wants
Able to examine the theories of needs
Able to establish criteria for ranking needs
according to the degree of importance
Able to relate wants to the problem of
scarcity

References:
Balitao, Bernard R, et. al. 2015. Philippine Economy and Development. VIBAL Group Inc. Quezon City.
Boado, Sherry Amour. 2019. Economics in Focus 9. DIWA Learning Systems Inc. Makati City.
Imperial, Consuelo M., et. al. 2017. Turning Points Economics, REX Book Store, Sampaloc, Manila.
Remiter, Jesus Jr. B. 2014. Economics: Managing Resources, Securing the Future. Sibs Publishing House, Inc. Quezon City.
Contents of this material are based from the references listed above. NO COPYRIGHT INFRINGEMENT INTENDED, FOR EDUCATIONAL
PURPOSES ONLY.
Contents of this material are based from the references listed above. NO COPYRIGHT INFRINGEMENT INTENDED, FOR EDUCATIONAL
PURPOSES ONLY.