Reaction Paper on “On the Relativity of the Concepts of Needs, Wants, Scarcity and Opportunity Cost”

An article from International Journal of Social Economics (Volume 23 No. 7, 1996) entitled “On the relativity of the concepts of needs, wants, scarcity and opportunity cost” written by Ernest Raiklin and Bülent Uyar explains how the failure in properly distinguishing between “wants” and “needs” causes “scarcity” and “opportunity cost” arise. The article begins with the concepts of scarcity that is the cornerstone of the economic as a discipline without giving a clear understanding of what scarcity itself in the field of economic so that it confused those readers who haven’t learned about this yet. But, as I have learned what scarcity is in the class, I strongly agree with the quote which states that scarcity exists simply because it is human nature for people to want more than they have. In my opinion, the way the authors discussed the differences between needs and wants is clear enough, likewise, the concepts of scarcity and opportunity cost are demonstrated well.

The authors explained the concept of needs and wants in a very good way by giving the examples which make it easier to understand the differences between needs and wants. I could not have said it any better. In addition, everyone should not deny what is written by the authors in describing the biological component of needs because it is absolutely right that human needs of food, medicine, clothing, and shelter must be satisfied so that they can survive their lives. It is also interesting when the authors elucidated how socio-cultural component make the differences on the need of each society. I also concur with all of the factors included in the statement because people have experienced, are experiencing, and will experience the condition of being in the different form of society, different countries, and different times. For the second factor, one real-life example from me as a Bataknese is that "Ulos" become a necessity for all Bataknese family while it is not needed by another tribes. Another example I can give is as an Indonesian, most of us need rice for breakfast, while the westerner can simply have a breakfast with a bread. Also, I must say that the explanation of wants exactly the same sentiments that I was thinking of because it is difficult for many people to decide what they actually need and what they want. As what I have learned, the standard of living can be depended on the country’s productivity where the people in the country which has higher productivity tend to have more needs than people who live in a lower productivity country. This condition can perfectly be illustrated by the quote “one man’s consumption becomes his neighbor’s wish”.

Due to the difficulty for human to decide what they actually needs and what they want, I agree with the concepts of scarcity explained on the article. Human nature can’t be trully satisfied and human always have a desire to buy or to own things not because they need it, but because they like to show it as a pride. As self-evident as these statements appear to be, this behavior is actually the reason why scarcity exists.

I am also in agreement with the concepts of opportunity cost. Actually, opportunity cost is not real (implicit cost). It is not reflected in cash outflow, but the value of the best alternative foregone. However, as I have learned in the class, opportunity cost arise because not all human wants can be satisfied. People can’t get everything  they want because they have unlimited wants while God provides limited resources. So, it means that we should make our own choice, facing our relative scarcity, and considering the opportunity cost.