How Important is Money in the Wizarding World?

Question

With all the other economic questions being asked about the wizarding world that Harry Potter lives in, it's gotten me to wonder about this.

While Harry is wealthy, and the Weasleys are apparently not wealthy at all, I can't help but to wonder just how important money is in the wizarding world. If someone can cast as spell and create a structure, or have a tent that's easily moved around, but still has spacious living quarters in it (no tardis jokes, please), how much does a wizard or witch need money?

I know they need it for items that can't be created without skill, like wands, and for some magical ingredients, but it seems like one could easily create food and other necessities of life through transformation spells.

And, related to that, what would be the cost of living in the wizarding world?
I would think the ease of travel from one place to another would keep the cost of living close to the same throughout the wizarding world. But has anyone actually compared the cost of living for wizards and witches with the cost of living for muggles?

I know that's two questions (how important is money and what's the cost of living), but the two seem intertwined. Has JKR said anything about this or has anyone written anything about either one?

Answer 1

You said "but it seems like one cold easily create food and other necessities of life through transformation spells". In case of food, that is definitely NOT true:

"Your mother can't produce food out of thin air," said Hermione. "no one can. Food is the first of the five Principal Exceptions to Gamp's Law of Elemental Transfigura --" "Oh, speak English, can't you?" Ron said. (DH pg. 292/240)

Later, in Chapter 29, Neville explains how they discovered the passage from the Room of Requirement to The Hogs Head, and Ron remembers the earlier scene:

... Aberforth. He's been providing us with food, because for some reason, that's the one thing the room doesn't really do." "Yeah, well, food's one of the five exceptions to Gamp's Law of Elemental Transfiguration," said Ron to general astonishment.(DH pg. 578/465)

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Also, from Gamp's_Law_of_Elemental_Transfiguration Wikia, the following are deduced (but not directly referenced in canon as exemptions)

• Clothing: Even wizards of great skill — Remus Lupin and Molly Weasley included— cannot seem to conjure up new robes and are instead stuck with old, patched ones, ones that are too short, or ones that are hopelessly out of style. If clothing were not one of the exceptions, Lupin would have long ago conjured a new wardrobe, and Ron would have avoided his dress-robe embarrassment at the Yule Ball.

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As far as shelter - I don't see any useful reason for it to not be magically creatable in canon. I think this is more of a case of Rowling being completely woefully ignorant of basic Economics (as evidenced by her non-HP writings) than anything else.

Although, it's possible that you can't transfigure something as big/complicated as a house without some MAJOR transfiguration talent.

Answer 2

How Important is Money in the Wizarding World?

Not as important as in the non-wizarding world. The Weasley's get by with ~7 kids (I lose count of who is still at home), and don't have oodles of cash. Whilst their clothes are slightly ragged they can be altered and so on, the house should fall down, but some patchy magic holds it up. They get by. I get the impression that for a similar non-wizarding family would struggle. In essence, your only expense is Food and Clothing (and you can make do on the later case), also there is, to my knowledge no such thing as a mortgage in the wizarding world....

Answer 3

The answers provided are very helpful in respect to general living; I should leave it at that, but I would like to add that money has other uses than just essential living needs:

Power

The Malfoy's are an extremely wealthy family, and Lucius did not seem to shy away from using his wealth to his advantage:

“What private business have they got together anyway?”

“Gold, I expect,” said Mr. Weasley angrily. “Malfoy’s been giving generously to all sorts of things for years. . . . Gets him in with the right people . . . then he can ask favors . . . delay laws he doesn’t want passed . . . Oh, he’s very well connected, Lucius Malfoy. . . .”

-Harry Potter and the Order of the Phoenix (the Woes of Mrs. Weasley)

Business

The Weasley twins were able to start their own Wizarding Joke shop (Weasley's Wizarding Wheezes) after they were given a lump sum of money from Harry, as well as selling a lot of their supplies to students and other mail-order clients.

Answer 4

The question, and the answers so far, seem to be assuming that a spell can be cast by anyone who has learned it properly, and the result will be the same no matter the caster.

I don't think this is a sound assumption.

We see throughout the books that some students are "better" at casting spells than others—this may be quickness of learning but also quickness of effect (especially with Transfiguration), power and/or extent of effect (Charms), and so on. And there is Herbology, which requires careful planning and much hands-on work to ensure the things you want to grow actually grow properly—to say nothing of the dangers of re-potting mandrakes.

Now it is true that, for the most part, we see these discrepancies in ability in students. Graduates of Hogwarts are generally shown to be proficient in a multitude of spells. But there are still specialties! Flitwick, of course, is a master Charmer. Ollivander is skilled in wandlore. Dumbledore, McGonagall, and Voldemort are all described as being powerful and inventive in the art of Transfiguration. And various characters are "more powerful" than other characters; see Peter Pettigrew.

So while someone may, in theory, be able to to brew their own potion, it might be much easier—and safer—for them to acquire one made by a master. Just because you know how to harvest and pickle eyes-of-newt doesn't mean you want to spend four days doing it each year. It doesn't do much good to know that there exists a spell to cause the inside of a tent to be larger than the outside, if the execution of that spell is beyond your abilities.

To put it in other words, the mere existence of spells that can magically perform tasks, mundane or otherwise, is not a guarantee that every witch or wizard has the capability to perform them. And if there are differences in abilities, an economy can arise to allow for the exchange of labor.

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I've been reading Kim Harrison's "The Hollows" series, which uses this mechanic. A witch may choose to keep their own garden and mix their own charms, or they may decide that their time is better spent purchasing them pre-made—with the trade-off being that charms made available for purchase by the general public are very expensive, on account of the regulatory process which guarantees efficacy and safety.