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LEADING ECONOMIC INDICATOR: One of eleven economic statistics that tend to move up or down a few months before the expansions and contractions of the business cycle. These leading indicators are -- manufacturers new orders, an index of vendor performance, orders for plant and equipment, Standard & Poor's 500 index of stock prices, new building permits, durable goods manufacturers unfilled orders, the money supply, change in materials prices, average workweek in manufacturing, changes in business and consumer credit, a consumer confidence index, and initial claims for unemployment insurance. Leading indicators indicate what the aggregate economy is likely to do, business-cycle-wise, 3 to 12 months down the road. When leading indicators rise today, then the rest of the economy is likely to rise in the coming year. And when leading indicators decline, then the economy is likely to decline in 3 to 12 months.
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                           NEEDS STANDARD: An income distribution standard in which income is divided among members of society based on how much production each person requires to maintain a given living standard. This is one of three basic income distribution standards that answers the For Whom? question of allocation. The other two are the contributive standard and the equality standard. The needs standard allocates income based on how much each person needs to purchase a given quantity of goods and services. A manual laborer, for example, who exerts more physical effort, receives more income to buy more food than an office worker who burns fewer calories during the day.A Communist ManifestoThe needs standard was a fundamental part of the utopian communistic system envisioned by Karl Marx. He contended that the standard of distribution should be "from each according to their abilities, to each according to their needs." Real world communistic/socialistic economic systems operated in the Soviet Union and China through the middle of the 20th Century attempted in principle, if not in actual practice, to distribute income based on the needs standard.The U. S. Welfare SystemThe needs standard also plays a part of market-oriented capitalistic systems, like that in the United States. The U.S. welfare system, for example, primarily employs the needs standard when determining the poverty line and subsequent welfare payments.The poverty line is the amount of income that a family needs to purchase the essential necessities of life. The line is based on family size, location, and characteristics of the head of the household. For example, the line is higher for larger families that live in cities than for smaller families living in rural areas. Welfare payments to the poor take into consideration the poverty line. Leaving No One BehindThe primary selling point of the needs standard is that it prevents members of society from going without necessary goods and services simply because they lack productive resources. In fact, every society throughout human history has used some sort of needs standard to provide for members who are unable to provide for themselves. Newborn babies, small children, elderly, invalids, disabled, and other nonproducers, through no fault of their own, receive little or no income from the sale of productive resources. However, their lack of productive income does not mean that they lack needs. As such, a needs standard is often implemented to provide for these members of society.Who Needs What?One key problem with the needs standard is the determination of needs, both in theory and in practice.- In Theory: Needs are generally considered the physiological requirements to continue existence, including such basic items food, water, and oxygen. A comparable term, wants, is then considered to be psychological desires that make a person better off, such as an evening spent at the theater, an aesthetically pleasing home decoration, or a relaxing vacation on the ski slopes of Colorado. These are enjoyable, but not necessary.
There is, however, considerable debate over whether so-called wants are also really needs. A stressed out worker, for example, might need a relaxing vacation to prevent illness. Aesthetically pleasing environments might be needed to improve worker productivity. A middle-aged man might need a red sports car to maintain his sanity during a mid-life crisis. - In Practice: Theoretical debate aside, the actual practice of identifying relative needs is extremely difficult. Does a large man actually need to consume more calories than a smaller woman? What if the woman has a higher metabolic rate and the man is overweight? How much living space does a person need? Is a one-room, 200 square foot studio apartment large enough? What if the person suffers from claustrophobia? Is a larger living space needed? Do extroverts, who need to interact more with other people, have different entertainment needs than introverts, who need less contact with others?
So many needs, so few answers.
No Incentives for EfficiencyThe biggest problem with the needs standard is that it eliminates the incentives to excel or make use of natural skills, abilities, and talents. If people receive income based on what they need rather than want they do, there is no incentive to do anything. That is, people have no reason to work harder, produce more, or develop innovations. This is a just the thing that leads to a stagnate, inefficient, unproductive economy. While most economies are bound do a little distribution of income based on the needs standard, taking it to the extreme is bound to be bad.Suppose, for example, that Winston Smythe Kennsington III is pondering the possibility of starting a new business based on a new wireless communications technology. If he has the prospects of receiving oodles of profit from this venture, which he would use to purchase a number of unnecessary luxury goods, he might be motivated to undertake the risk of a large financial investment. However, if the only reward he will receive is the income he needs to stay alive, then why bother? Of course, if he does not bother, then society loses out on a potentially useful product.
Recommended Citation:NEEDS STANDARD, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: July 5, 2025].
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Today, you are likely to spend a great deal of time at the confiscated property police auction trying to buy either a remote controlled sports car with an air spoiler or semi-gloss photo paper that works with your neighbor's printer. Be on the lookout for empty parking spaces that appear to be near the entrance to a store.
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Approximately three-fourths of the U.S. paper currency in circular contains traces of cocaine.
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"Plans are only good intentions unless they immediately degenerate into hard work." -- Peter Drucker, management consultant
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