Definition of Goods

Chapter 3: Scarcity and Competition

To explain behaviors with a theory, the theory must install constraints to those behaviors — this is a basic principle. The methods of economic explanation are the same as those of any other empirical science: on one hand, we have some general postulates, axioms or laws; on the other hand, we install test conditions or circumstances that constrain behaviors. With both of them, we can imply under certain conditions how people would behave; and when the conditions vary, the behaviors change as well. To be refutable, the implication must be definite — if not definite, how can it be "wrong" or refuted? When someone has these constraints well mastered, the applications of them would be at his will, and the implications can be stunningly accurate.

In Chapter 2 we talked about two postulates: (1) any behavior of a individual is by his choice, and the choice is predictable; (2) under constraints every individual always maximizes his self-interest. Other than these, we have some other constraining postulates and will analyze them in Chapter 4 and 5. At this point we need interrupt the topic, as scarcity and competition, two indispensable concepts in economics, require explanation first.

Chapter 3, Section 1: Definition of Goods

The word "goods" has many meanings. In addition to be interpreted as product or commodity, it can represent service, friendship, reputation, air, cleanness, serenity, lover, love, and etc as well. Everything better some than none, no matter tangible or not, is a good — "better some than none" is the economics definition of goods. From each individual's point of view, biological children, breeze from a river, or bright moon in mountains, are all "better some than none"; beautiful face, credible reputation, pleasant voice, sweet memory, ability of thinking, etc., are all goods.

Goods have two categories: one is economic goods; and the other is free

goods. In all the goods that are defined as better some than none, a major part are better more than less. "Better more than less" is how economic goods are defined. In such a definition, "better" shall be objective. Suppose we split 250 grams of gold into two shares, one 100 grams and the other 150 grams, and let people choose, if the 150 gram share is chosen, gold is then an economic good. The chosen share of a comparison always means better, and it doesn't matter whether the share is really beneficial or not. Therefore, here "better" has nothing to do with subjective or value judgment.

Better more than less are economic goods and they are countless in this world. Gold and silver, grapes and wine, abalones and shark fins, fruits and vegetables, clothings, foods, houses and cars, tours and rests, family love, etc., are all economic goods, as each meets better more than less.

Among all goods, a minor part are better some than none but not better more than less, as the supply of them exceeds demand, and any addition makes no use. Goods like this are not plenty, among them air is the most frequently cited one. In areas where air is freshing, the supply of air is unlimited, and nobody would strive for more than needed. Although air is necessary for man, it's only better some than none and not better more than less. Air is therefore a free good instead of a economic good. But when an area is crowded and the air there is stale, the need of more fresh air becomes realistic. Under this circumstance, fresh air is no longer a free good, it's now an economic good.