In recent months, we have witnessed an interesting phenomenon. Despite the downturn in the economy, many people are still earning a good living but almost everyone has drastically cut expenses. People are doing everything they can to avoid buying things, even when they have the money and even if making the purchase is a logical, cost-effective choice. There seems to be some sort of internal mechanism that stops them from spending. On a macro-level, a similar phenomenon is apparent as banks and companies stop making the investments needed for the world economy to function. Even credit-worthy loan applicants are being turned away. These choices, both individual and collective, don’t seem to make logical sense. And this has a lot of people wondering what’s going on..
A simple answer lies in how human beings are wired. Social scientists believe that we come with an innate predisposition to focus on different needs in turn, even if it results in choices that fly in the face of logic. These needs are organized in a hierarchy from the most basic to the most transcendent, and lower level needs, like the need for security, must be fulfilled before we can focus on any higher ones. Now how does this hierarchy of needs shed light on our current situation?
The first person to clearly map out the hierarchy of needs was the renowned American psychologist Abraham Maslow (1908 -1970). While working with monkeys, Maslow realized that some of their needs took precedence over others. If, for example, the monkeys were both hungry and thirsty, they would first seek out water before looking for food, because they could survive much longer without food than without water. However, they would ignore the water if he lowered the oxygen level in their cages: their need for oxygen trumped their need for water.
Maslow went on to develop a hierarchy of needs for humans, and this guided his important insight that people possess an inner template for growth. He saw human needs arranged like a ladder or a triangle, with the most basic needs at the bottom. Lower level needs must be met before a person can move to the next level of growth. And if the needs of a lower level stop being met for some reason, people temporarily regress to re-focus all their energies on fulfilling the more basic need. Here is Maslow’s hierarchy:
Physical needs The very bottom of the triangle consists of basic human needs that must be met in order to physically survive: air, water, food, sleep, and body homeostasis. This base supports every other human drive, and if we are deprived of it, quite simply, we die.
Stability and security needs When physiological needs are largely taken care of, an important second level of needs comes into play. At this point, we look for personal security and stability, so that our lives can be orderly and safe, with injustice and unpredictability kept under control. This level includes the need for a secure environment, safety for our families, financial security, health and well-being, a basic system of justice and a safety net against accidents and illness.
Love and belonging needs When physiological needs and safety concerns are taken care of, we begin to seek a sense of belonging and acceptance; we want to love and be loved. This need for love and belonging can be met by large social groups, such as clubs and sports teams, or by small social connections like family members, intimate partners, mentors and close friends.
Esteem needs The next level in our template for growth is a need to be respected, to have self-esteem and self-respect, and to respect others. This is where our activities, whether on the job, at home or in the community, allow us to gain recognition and to feel accepted and valued.
Self-actualization needs When we feel secure, loved, confident and respected by others, we can move to the final level of growth, which Maslow called self-actualization. At this point, we can focus on living creatively, with spontaneity and genuine morality. Other qualities that distinguish self-actualizers are an ability to solve problems, a lack of prejudice and an acceptance of facts. Albert Einstein, Eleanor Roosevelt and Frederick Douglass were some of Maslow’s example of self-actualized people.
One of Maslow’s most interesting insights is that the hierarchy reveals itself in societies as well as in individuals. When enough people experience a crisis in meeting their physical or safety needs, society as a whole develops an overwhelming focus on those areas, to the exclusion of higher needs. And this could explain what we are seeing today. Over the last few decades, most people in our society were able to meet their lower needs and thus could focus on relationships, careers, self-esteem and creativity. But suddenly, a rising number of people have lost their jobs. As stock values and home equity plummeted, a basic sense of financial security evaporated. As Maslow predicted, this anxiety overwhelmed even those who were in no real danger. Now, the economy is paralyzed as we all focus on taking the fewest possible risks, even if that means not lending money to a credit-worthy applicant or not buying something we need.
This loss of confidence was a problem that Franklin Roosevelt addressed in his first fireside chat of the Great Depression, when a massive run on the banks threatened a complete collapse of the financial system. After imposing a “bank holiday” on cash withdrawals, FDR spoke of an “element in the readjustment of our financial system more important than currency, more important than gold, and that is the confidence of the people themselves. Confidence and courage are the essentials of success in carrying out our plan. You people must have faith.” And the next day, thousands of Americans gathered up their courage and stood in line to re-deposit their money in the banks.While we may not yet know the best solution to our current economic crisis, it would help if we too gathered up our confidence and courage. Remember, we all have remarkable skills that we can use in many different ways to earn a living. Keeping that thought in mind will allow us to regain some equilibrium in our own hierarchy of needs.
QUOTE OF THE WEEK
“It is your problem, my friends, your problem no less than it is mine. Together we cannot fail.” Franklin Delano Roosevelt
© 2009 – 2011, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.