Wednesday, January 27, 2016

Money Crashers: Difference Between Needs & Wants

About three years back, I posted some musings on the line between necessities and luxuries. I noted that what was a necessity for one person might be a luxury for another; for instance, high-speed Internet, free-range meats were necessities for me, while air conditioning and a smartphone were luxuries.

This post gave me the idea of writing about the same subject on Money Crashers, where I could explore it in a little more depth and from a less personal viewpoint. Here are a few of the facts I discovered during my research.
  • Gallup tracks Americans' access to 13 "basic necessities," including clean water, access to fresh fruits and vegetables, a safe neighborhood, and affordable health care. Currently, nearly 1 in 5 Americans is living without at least one item on the list.
  • Every few years, Pew asks Americans which of several different technologies they consider necessities, and which they view as luxuries. The numbers have changed noticeably over time; most notably, many items that moved from the luxury to the necessity column in 2006 dropped back to luxury status during the latest recession.
  • Economists define "luxury goods" as products that people are much more likely to buy when their income rises. One classic example is a flat-screen TV, which only 5% of respondents rated as a necessity in the last Pew poll.
  • A 2014 paper in the Journal of Consumer Psychology found that performing tasks that gave people a feeling of accomplishment made them feel more interested in buying luxury brands. Appealing to their feelings of snobbery didn't trigger a similar interest. Yet when people saw others wearing luxury brands, they tended to view the wearer not as an accomplished person, but as a snob - suggesting that people who give in to the impulse to buy luxury goods are actually sending a message exactly opposite to what they're feeling.
And these are just the highlights. To get the whole story, check out the article here:
Difference Between Needs & Wants (Luxuries) and How to Draw the Line

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