The following points highlight the nine factors determining the classification of human wants.
The factors are: 1. Income and Economic Condition of the Consumer 2. Tastes and Nature 3. Habit of a Man 4. Occupation of a Man 5. Social Status 6. By Standard of Living 7. Natural Condition and Climate of the Country 8. Time 9. Price of the Community.
Factor # 1. Income and Economic Condition of the Consumer:
Income and financial position of the consumer affects the classification of wants. For example—Television set is necessary for a rich-man, for a middle class, it is comfort and for a poor-man it will be luxury.
Factor # 2. Tastes and Nature:
The tastes and nature of man also determines the classification of wants. For example—A man who is fond of doing photography; for him it is necessity and for those who has no interest in photography, it will be luxury.
Factor # 3. Habit of a Man:
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Habit of a man also affects and determines the classification of wants. For example—A man who is in habit of taking cigarette, for him it is necessary and for that who has not picked up this habit, for him it is a commodity of luxury.
Factor # 4. Occupation of a Man:
Occupation also determines the classification of wants. For example—Car is necessary for a doctor in big city because he can visit his patients conveniently but for a professor it can be called comforts but for a farmer it will be a thing of luxury.
Factor # 5. Social Status:
Social status also affects and determines the classification of wants. For example—For Governor of a State Palatial building with compound is necessary but for an ordinary man it will be a thing of luxury.
Factor # 6. By Standard of Living:
Standard of living of a man determines the classification of wants. For example—Air condition room and a television set is considered necessary for a man having high standard of living but this will be a thing of luxury for a man having low standard of living.
Factor # 7. Natural Condition and Climate of the Country:
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The natural condition and climate of a country also affects and determines the classification of wants. A particular goods may not be essential for India but it may be necessary for England. For example—Woolen overcoat is necessary for England but it will be luxury for India specially at Bangalore and Pune.
Factor # 8. Time:
Time also determines the classification of wants. For example—Fifty years back tea and coffee were things of luxury but now for majority of people it has become a thing of necessity.
Factor # 9. Price of the Community:
High price goods are considered as goods of luxury while low price goods become a thing of necessaries. For example—Ordinary clothes are necessity while costly clothes may be luxury.