The Economic Principle of Satiation

The economic principle of satiation can be defined as how the quantity of something that someone possesses will affect what they are willing to give up to get another. Put in very simple terms this means that if you already had one hundred shoes, then you would not be willing to give up too much to get another pair of shoes. Whereas if you had no pairs of shoes you would be more than willing to give up a lot in order to get your first pair of shoes.

This term applies to almost every different topic because not many people need hundreds of duplicates of the same thing. Shoes are a great example to work with because you generally need at least one pair of shoes. Whereas anywhere in the western society you will probably have to own more than one shirt due to cleanliness concerns. How many shirts would you be willing to trade for a pair of shoes? Economically this question depends on a few things. If you had one shirt, but one hundred shoes you would probably be satiated with shoes and would not be willing to trade your one shirt for another pair of shoes. If you were to have one hundred shirts and two pairs of shoes you would be satiated with shirts and would probably be willing to trade at least five shirts for another pair of shoes.

Using bartering as an example is only a method of getting your feet wet in the field of economical analysis. Economic analysis becomes far more useful when you start to look at money as a shirt or shoe. This is because that is actually all that a shirt or a shoe is in an economical sense. Just as in the shirt/shoe example, if you had a lot of money and no shoes you would certainly pay a higher sum for your first pair of shoes than you would if you already had one hundred pairs of shoes, but very little money. This is because you have become satiated with money, and it is of little value relative to the value that the shoes would provide you.