Coincidence of needs

The coincidence of needs (also double coincidence of wishes etc.) is a term used in economics that explains barter transactions . Coincidence describes a mutual need that coincides at the same time in the same place and can lead to a trade . The discussion of the coincidence of needs therefore concerns the probability that diverse wishes and requirements will be met economically.

The term “double coincidence of needs” was coined by the English economist William Stanley Jevons (1875).

Practical implementation

When a bartender is “paid” with alcohol and groceries, he may receive goods that he cannot pass on as monthly rent for his apartment. Conversely, if the landlord hires the musician for a party and waives a monthly rent for it, then there is a double coincidence of wishes.

The exchange of goods places demands on the comparability of their values and their availability over time. Exchanging fresh strawberries for wheat is only possible if both are on the marketplace on one day, the product and quality are right and someone can actually swap wheat for strawberries. This can be possible in a manageable period of time or it can never take place. For money, they could be sold directly when the strawberries are ripe. The proceeds can later be used to buy wheat when it has been harvested. With a recognized means of payment, goods can therefore be “more liquid”, i.e. H. become liquid .

If property changes hands through inheritance, relocation, or taxes, it is likely that it will not fully meet the needs of the recipient. Without money and without recognized means of payment, these transactions suffer from the basic problem of bartering - they require a high coincidence of needs.

Price determination

The free exchange of products requires relative prices , which leads to 45 exchange rates for ten products. ${\displaystyle n}$ ${\displaystyle {\frac {n(n-1)}{2}}}$

The individual billing regarding quality, transport and storage generates considerable transaction costs , both in the procurement of information in advance and in the processing afterwards. These costs also arise in moneyless economies and can lead to severe restrictions.

criticism

David Graeber has in his book Debt: The First 5000 Years collected evidence for the thesis that the "coincidence of needs" is a myth . He analyzes the role of debt in history as well as the background to revolutions and social upheavals, and he criticizes various fundamental economic concepts.

literature

• WS Jevons : Money and the Mechanism of Exchange . Macmillan, London 1875, Chapter 1, paragraphs 5-6.
• Carl Menger : On the Origin of Money .
• Nobuhiro Kiyotaki , Randall Wright : On money as a medium of exchange . In: Journal of Political Economy , 97, 1989, pp. 927-54.

Individual evidence

1. ↑ Joseph M. Ostroy, Ross M. Starr: The transaction - role of money. In: Handbook of Monetary Economics . Elsevier, 1990