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Most scientific and authentic definition is given by Prof. L Robbins in his book entitled ‘Nature and significance of economic science’ in 1931. Economics is a science which studies human behavior as a relationship between ends and scarce means which have alternative uses.
Prof. L Robbins definition is based on three basic characteristics of human life.
i. Human wants are unlimited
ii. Human resources are limited
iii. Resources have alternative uses.
i. Wants are unlimited: Human wants are unlimited. These wants are endless. If wants for basic needs for foods, clothes, and residence are satisfied then wants for comparatively lower necessary goods or wants for comforts and luxurious goods are desired. If want for a good is fulfilled then want for another good is arisen. Therefore, human wants are endless.
ii. Resources are limited: Although human wants are unlimited yet the resources for satisfying wants are limited. If resources for satisfying human were unlimited there was not the question of economic problem. The basic economic problem is the scarcity or limited resource.
iii. Alternative uses of resources: The means of satisfying human wants have alternative uses. A mean of satisfying human need can be used for several purposes. For example, a piece of land can be used either for producing rice or jute. Or it may be used for building or market.
In this situation, an individual uses that land depending on the significance of the type of his want. Therefore, a question arises regarding selection or preference. Therefore, in order to satisfy the unlimited wants through the uses of limited resource in such a way that most important want or need can be preferably solved. And thus highest level of satisfaction can be achieved. According to L. Robbins, ‘Economics deals with the human behavior regarding the alternative uses of scarce resources to satisfy unlimited human wants or objectives’. Therefore, L. Robbins termed Economics as the science of scarcity.