Scarcity Definition — Lionel Robbins

Lionel Robbins, in his 1932 essay An Essay on the Nature and Significance of Economic Science, rejected both the wealth and welfare definitions as too narrow and proposed a far more general one:

"Economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses."

This single sentence packs in four elements that together define any economic problem:

1. Unlimited ends — human wants are numerous and never fully satisfied.
2. Scarce means — the resources (time, money, land, labour, capital) available to satisfy those wants are limited in supply.
3. Alternative uses — the same scarce means can be put to more than one use (land can grow paddy or cotton; a rupee can buy a book or a movie ticket).
4. Ends have different priorities — since all wants cannot be satisfied together, they must be ranked, and choices made about which to satisfy first.

Because every want cannot be met with the limited means available, choice becomes unavoidable — this is why Economics, under Robbins, is often called the "science of choice" or the science of economising. Robbins' achievement was giving Economics a universal, value-free, scientific character: his definition applies equally to a household budgeting its monthly income, a farmer deciding which crop to sow, or a state government — such as the Andhra Pradesh government — allocating its budget among health, education and irrigation.

Criticisms of the scarcity definition:

• Too general and abstract — by making Economics the study of any choice under scarcity, it loses the human, welfare-oriented face Marshall had given the subject. …