Needs vs Wants- A Room of Their Own

We live in a very privileged world  today. Ask the average western psychologist and he'll try to convince you that without the latest gadgets and gizmos, you will irreparably damage your child's sense of security. Moreover, you'll be charged with bruising your child's fragile sense of self should you dare not give him a domain (namely a bedroom) of his own.

Now, I won't be dismissing claims of child rearing experts; 'twould be a bit presumptuous of me, being as I have only been in the mother role for 3 years and have but 2 small children...
Yet, I am hesitant to believe such a claim, as people have traditionally lived in much smaller homes than the current Westerner and didn't have major psychological issues because of that.

Families have lived for eons in little one room huts, with a complete lack of privacy. Even beds were often shared between kids. The newfangled notion that each child must have their own bedroom in order to be emotionally healthy is very recent; anything humanity has subsided so long without can hardly be considered a need.

I know a family that fits 7 children (and she is expecting her 8th) into a three bedroom apartment, with room for plenty more. Her kids are all well adjusted, well behaved, emotionally healthy children. That seems like proof to me that you can have many children in a small place without compromising their well-being. In fact, in my community, I know of a few families that bought one bedroom apartments when first married and have remained in the same apartment even once their families grew.
Its doable.
Separate rooms for each child is a want.
Even having two bedrooms, one for the parents, one for the kids is a want. I've heard of families with 12 children living in a one bedroom apartment.

I guess this is my roundabout way of letting you know that I'm moving. From my two bedroom apartment with a yard to a one and a half bedroom with no yard. We've been having issues with our landlord (who gave us problems fixing our hot water, so we learned the hard way that hot water isn't a need) and the rent (even though we're living in a cheap area) is eating up too large a chunk of our budget. We found a place that will save us a few hundred dollars a month, and you betcha, I'll stretch those few hundred as far as I can!
In our current 2 bedroom apartment, we don't really use the second bedroom aside for as a storage room; Lee gets lonely at night and prefers to sleep on the couch in the living room or in the master bedroom.
Said I, its silly to pay a few hundred extra every month for a room that isn't even in use; we're moving to a home without that second bedroom. (That "half a room" is a tiny little room, we'll probably use it as an office as well as storage.)

With this move of ours, Lee won't have a room to call his  own anymore. I don't see that as a loss, as he never even uses the room. Are we going to scar him for life? Will he be ridiculed for sleeping in the living room or in the big family bed?
Well, I guess that's part of the benefit of living where I do; no one has money, and what I'm doing is not so rare. But even living in a place where this isn't widely done, I still would have no qualms moving to a place without a set bedroom for Lee. Because he doesn't even want a room; doing what makes your child feel more secure is more important, in my opinion, than following conventional wisdom.
Because I keep Lee at home (and plan on doing so in the future because I'm a future homeschooler), I'm not so concerned that he'll be mocked by classmates over his bedroom situation (or lack thereof).

Yes, it may not be so easy to entertain because Lee sleeps in the living room. However, entertaining guests at night is not of utmost importance to me. I care most about having a financially secure family and if down sizing and getting rid of an unused bedroom is the way to do that, then I'm happy to have that option.
That second bedroom is not a need.

Do you think a kid needs his own room, or at least a bed to call his own to be emotionally secure?
Have you ever down sized when other people thought you were nuts? Do you think we've made decision we'll regret?

I may end up having posts that are a tad shorter while I pack up my apartment. I'll try to keep up the same quality and length of posts, but I may get busier as moving day arrives. :-D