Coincidence of wants is the reason that money is so
important in an economic system. Or rather, I should say money is important because it
is rare to have a coincidence of wants.
Coincidence of
wants occurs when two people have goods or services that they want to trade with one
another. I have an answer you want, maybe you have a bunch of grapes that I want --
coincidence of needs.
But that makes it hard for an economy
to run. What if I have an answer and you have nothing I want? Or what if you want to
buy rice from someone and you have nothing they want? Then you have to find out what
they want and go try to trade for it.
So, it is hard to get
coincidence of wants for all the things we want to
have.
But when money is invented, we no longer need
coincidence of wants. We can trade money for anything.
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