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8 Examples of Necessity Goods

 , December 20, 2017
Necessity goods are the last things that customers stop buying when their income declines. Conversely, an individual devotes a lower percentage of their spending to necessity goods as income rises. The following are illustrative examples of a necessity good.


Staple foods and beverages such as bread and coffee.


Utilities such as power and water.


Communications such as internet and mobile phone connectivity.


Housing costs such as rent. For example, a middle income individual might spend 50% of their after tax earnings on rent. As their income rises, this percentage will tend to decline.


Basic forms of transportation such as public transportation or a bicycle.


Medical costs such as prescription drugs.


Education may represent an large investment for middle income earners that declines as a percentage of spending as they earn more.


Services such as day-care.


Demand for necessity goods often doesn't decline much during a recession. In theory, demand for necessities can increase in a recession as customers drop luxuries for more basic substitutes.
Necessity goods are excluded from taxation in many nations. In this context, definitions of what is an isn't a necessity can be quite complex.
Overview: Necessity Goods
Definition (1)
A good that demonstrates nominal increases in demand as income rises that represents a smaller percentage of total spend.
Definition (2)
The last goods that people stop buying when income declines.
Related Concepts


This is the complete list of articles we have written about goods.
Brown Goods
Capital Goods
Club Goods
Common Goods
Common Resources
Complementary Goods
Consumer Durables
Consumer Discretionary
Consumer Goods
Consumer Staples
Digital Goods
Consumer Products
Durable Goods
Economic Goods
Experience Goods
Final Goods
Fashion Goods
Goods & Services
Finished Goods
Inferior Good
Intangible Goods
Information Good
Luxury Goods
Merit Good
Knowledge Product
Public Goods
Search Good
Social Goods
Natural Resources
Soft Goods
Necessity Goods
Substitute Good
Perfect Substitute
Superior Goods
Unsought Goods
Sporting Goods
Veblen Goods
White Goods
Virtual Goods
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