Calculating the human condition
Listener: 10 January, 2009
Keywords: History of Ideas, Methodology & Philosophy;
Social scientists use American psychologist Abraham Maslow’s “hierarchy of needs” as a way of characterising the human condition.
Affection & Belonging
Often represented as a pyramid, this condition has physiological needs such as food, water and shelter at its base. A central role of an economy is to provide these basic needs.
The next layer up are safety needs, although we don’t think a lot about them until, say, there is a crime or accident in our neighbourhood. Meeting these needs usually requires resources – jails and safety equipment, for instance – but economics is not at the centre of these issues. Criminology is quite a separate discipline.
Perhaps economics has even less to say about the middle need in the hierarchy of five – love, affection and belonging, as people seek to overcome feelings of loneliness and alienation. This involves both giving and receiving. Although Christmas presents may be a part of this, successful ones are an expression of something deeper.
The second-to-top step in the hierarchy – when the first three classes of needs are (near to being) met – is the need for esteem, which covers self-esteem and the esteem a person gets from others. Humans have a need for a stable, firmly based, high level of self-respect and public respect. Until those are fulfilled, the person feels inferior, weak, helpless and worthless. When these needs are satisfied, the person feels self-confident and valuable in the world.
At the top of the pyramid is the need for self-actualisation, the realisation of one’s potentialities. The psychologists’ debate on this concept is fraught with complications, and an economist would be unwise to join in. However, I think the remark that “it is not always clear what a person wants when there is a need for self-actualisation” is insightful.
The hierarchy may contribute to understanding a puzzle about economic growth – particularly the central problem of why growth does not increase happiness. -Economic growth appears to provide sufficient goods and services to meet the physiological needs, at least among rich countries (although we should never forget the billion-plus population in Africa and Asia that have not reached this level). The majority of New Zealanders must have passed the threshold some decades ago. But there is no evidence we are happier – although because of increased longevity we may be happy longer.
We seem to pay more attention to law and order. Indeed good economic media stories can be relegated to below reports on crimes. Yet serious economics remains at the centre of political debates. It is just that we go into elections as woefully uninformed as our politicians and journalists.
The answer to the puzzle may be in the need for esteem. We often rank people by their wealth, so an individual can obtain greater public esteem by earning and owning more, and – crucially – flaunting it. In response, we attribute to them a wisdom that wasn’t evident before they became famous. Many celebrities talk perfect tosh about the economy, but we listen with respect.
Is it my memory, or is conspicuous consumption – the lavish spending on goods and services acquired mainly for showing off – more common today than, say, before 1984? Certainly, the very rich existed then, but they were mainly anonymous, as were their generous public donations.
Earning public esteem by conspicuous consumption (even if it is with borrowed money) drives increasing consumption without increasing average happiness, because the public rankings remain the same. Thus the desire for economic growth does little to raise actual welfare (while depleting fixed resources and degrading the environment). That teachers- are paid less than bankers does not mean they are less socially valuable.
The answer may be in “self-actualisation”, with its implication that each of us have a different potential to realise. To accept this is to abandon a public ranking based only on crude economic values, and to look for a more subtle understanding of the human condition, which Maslow’s hierarchy of needs helps us understand.