October 29, 2020

Luxury: A necessity?

Necessity, as per oxford dictionary is something we must have and can’t manage without. Food, clothes and shelter (roti, kapda aur makaan) is treated as necessity from ages but there has been a complete revolution about how people see things these days and the definition of the necessity is being altered as per the human comfort. Of course we all know that luxuries are diamonds, Mercedes and other valuable things we desire but are way too expensive for us, is that it? Does luxury means everything we can’t have? No. There is just a fine line between necessity and luxury and sometimes it’s not even clear whether the particular item is a luxury or need? Is the newspaper a necessity because it keeps us well informed or is it a luxury because we can anytime surf free news off the internet? What about cellphones, laptops and air-pods, are these goods the necessities above food?

The economists have in time used different methods to draw this line between the necessity and luxury but it tends to move as the world changes. Say for India, even with the sky rocketed price of gold, it is still more of a necessity than a luxury. As per the survey conducted, overall 87% of households in India owned some amount of gold when we know that a 2/3rd of population (about 68.8%) lives in poverty. In the book Poor Economics, Abhijit Banerjee shared the personal interviews of the people in the remote areas of morocco who didn’t have much to eat but evidently have a television, DVD player and a dish antenna in their homes. On asking they laughed and said “oh! But television is more important than food.” The main reason for this as per the author is that life in remote areas is extremely boring and depressed, television and DVD players act as a source of entertainment and often help them go through with all the sufferings. This reason also explains why poor spend so much in the weddings because these are the moments that bring excitement in their lives. In India, even an extreme poor spends 14% of his budget on the weddings alone

Luxuries are becoming modern day’s necessities and the need for pleasures in life is the main reason for the low spending on food. With so cheap consumer goods, low talk time cost and television signals even to the remotest area, people are spending way too much money on them instead on food, health and education. Rather to change their lifestyle through some extra work, they have accepted their destiny and made it tolerable with these cheap luxuries. The fact is, there is no universal line between the necessities and luxury; it is flexible depending upon the age group, income group and the motive of the person. Evidently, 95% of the younger generation believed that cell phones are necessity where only 30% adults agree to it. It also depends on your social circle, if all your friends has Mercedes than you’re more likely to think of it as a necessity compared to if no one has.

Spending on luxury is not completely a dumb idea; we all have desires and a complete right to fulfill it. What a rational person must do is look at its living conditions and cut off his luxuries as required. One should always remember the balanced money formula by Elizabeth warren in the book All Your Worth: The Ultimate Lifetime Money Plan – that a person should spend no more than 50% of his income on must-haves (necessities) and no more than 30% on wants (luxury) while keeping the rest of 20% as savings.

15 thoughts on “Luxury: A necessity?

  1. I can’t think of the right words, but there are plenty of goods and services that fall beyond needs and short of luxury. Interesting how people see these terms. We are less likely to describe what we buy as luxuries, because then we would feel ashamed.

    1. Indeed, there are many things we knowing or unknowingly use are luxuries shaped as necessity in real life like ask a millennial what mobile phones are and there’s no way they describe them as a luxury.

  2. These are interesting ideas. One huge change in my lifetime is that access to the internet is considered by many to be a basic human right, not a luxury. And this requires access to a computer (could be a public or a family device) or a mobile phone. Which gives everyone a vital tool for communication and information. Can’t run a business or hold a job without one, whereas the Mercedes… Is optional 🙂 ,

    1. Indeed they are. Humans have classified things as luxuries and necessities as per their own convenience and it will be really fascinating to see how computers will just be a need for one and the dream for others

  3. Thanks so much for liking my blog about the disappearing word “fewer.” Now, this blog of yours re Eliz. Warren, whom I love, is very sensible, very logical, very … serious! Here’s my not-so-serious reply. Hope you like it!

    Elizabeth Warren’s Formula

    Spend 50 percent on the things that you need
    and 30 on what you desire.
    Leave 20 percent for those needs and those wants
    to which you will likely aspire.

    But how do you know that the 20 percent
    will be right for for the you you’ll become?
    You might rise to the top of a very big heap
    or remain far below, like a bum …

    so your 20 percent might buy white fish for lunch
    or a cot in a Taj Mahal!
    So here’s my alternative formula:
    (no offense to Ms. Warren, the pol.),

    Spend 100% on your needs and your wants
    every year, ’til you reach forty-five.
    Study Buddhism then, and retire for free
    to an ashram, where you’ll surely thrive …

    with neither a need nor a want, if you stay
    in the present, where nothing can harm you!
    You could do a lot worse than one robe and one bowl
    and a lotus flower garden to charm you.

    1. First of all, thankyou for the appreciation above. I read through your idea and I’m very fascinated with the idea of living in the present and not care what future wants will be but there’s a very very less possibility that this is a rational choice. Even if we use 100% of the income to satisfy wants today, we cannot forget that human wants are never ending. Say, you want an iPhone to put up with the standard and you bought it instantly with your income. What if the updated version launches? I’m sure you’ll definitely want that too and then, in the end you can be very possible trapped in your own wants treating it above your necessities.

      The idea of Elizabeth Warren’s formula is treat your necessary urgently, restrict your wants by spending lesser on them and save the rest of the 20% for the future which is uncertain. It’s important for us to realise that wants and desires, as much as they bring happiness when fulfilled, they too bring the urge for more desires. This can be a trap!

      But, apart from all of this, I’m really pleased that we engage in such an informative conversation. It’s good to discuss things.
      Thankyou ellen
      Have a nice day!

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