As a part of a human life cycle, people consume in order to live. Consumer behavior is one of the main topics in economics. It is an important field of study because consumers are part of the economy and it plays a huge role in contributing to a country’s economic growth. In the recent years, it is observed that few studies have been made in the “demand side of economic activities” compared to the supply side (Nelson and Consoli, 2010). However, it is equally important to know the consumption behavior of consumers especially for policy-makers. The unlimited needs, wants, choice and preferences of individuals are the things that they consume. Although some of these things can be acquired free of charge, most of it still requires the consumer to pay for it. Today, everyone has a source of income, one way or another. These incomes are used to spend for their consumptions. Incomes serve as their motivation to work because they know that having higher income would mean that ...view middle of the document...
al, 2004). Is that really the case? The researcher disagrees with this and these are the following reasons.
First of all, human scale development should be an alternative measurement in determining future development (Max-Neef, 1991).
“Such development is focused and based on the satisfaction of fundamental human needs, on the generation of growing levels of self-reliance, and on the construction of organic articulations of people widi nature and technology, of global processes with local activity, of the personal with the social, of planning with autonomy, and of civil society with the state, where 'articulation' is taken to mean the construction of coherent and consistent relations of balanced interdependence among given elements.” (Max-Neef, 1991)
According to him, basic needs, self-reliance and organic articulations must be maintained at a certain level in order to come up with the human scale development. Not only is human need a pillar in determining human scale development, it is also a basis in determining poverty. This leads to the researcher’s second point.
Poverty is defined as “ the condition of having insufficient income to provide one’s basic needs” (Institute for Research on Poverty, 1985). A household would be classified under poverty if it cannot provide itself with basic necessities. However, poverty is linked with economic growth. It is one of the determinants whether or not a country has a good or strong economy. Thus, determining the budget of a household on basic needs expenditure is “an elementary indicator of economic well-being” and it remains an interest for “policy makers and social researchers” (Duly, 2003). In short, this is an issue that economists have to deal with.
Although there isn’t a clear definition of what basic necessities and its compositions are, the Maslow Hierarchy of Need theory provided such definition of basic needs. According to Maslow’s Need Theory, people ought to satisfy their physiological needs above all things else (Maslow, 1987). These physiological needs, which are also the basic needs, are air, food, drink, shelter, warmth, sex and sleep. Since not all of these are provided freely, it is important to examine how these variables affect income and vice versa.