You’ve probably heard of Abraham Maslow’s hierarchy of needs. Its pyramid shape is a fundamental building block in Sociology 101, and as a result it gets quoted in a ton of articles about people, psychology and how those two things interact when people spend money.
It doesn’t mean it’s an accurate reflection of how people really spend money, however, and that’s a bit of a shame, because the proper version is a lot more stable than most people’s approach.
As a quick refresher, Maslow’s pyramid has five layers that represent different levels of human needs, and he theorised that we could only move up a level once we had satisfied the one we are on: yes, like any basic computer game.
The base is physiological need; eat, wash, sleep and that kind of stuff. Once that’s taken care of, we all need security and safety, and after that, we need a bit of loving, companionship and community. All good so far. No arguments here. Once we’re in that community, though, Maslow said we need to establish our place within it, a level he called esteem or status. We might want to be at the top of the community, or at least command some respect within it and be able to display that. And his last stage is self-actualisation, being all that we can be, beyond concerns about status or what other people think. Got to love that too, right?
And I do. Or at least I would, if it reflected the way people actually behave.
My first big problem with Maslow’s pyramid, and how it reflects the world, is that it doesn’t. With a “put my finger in the air and guess the direction of the wind” kind of estimate, I reckon that more than half our world economy is devoted to the pursuit of status and esteem. It might well be nearer two thirds.
Faster houses, bigger cars, better holidays, smarter clothes, more stuff when I want it, just because I want it, like a new handbag, the latest pair of running shoes, a fancy watch, the most recent phone that’s been launched when your old one works just fine, or whatever it is you buy to make yourself feel better when you’re probably feeling ok, but finally the marketing has worked: the list goes on and on and on and on. Not much of what we’re doing here on the planet is taking care of our physiological needs, is it? Nearly all of us has enough clothes and shoes, and most of us eat nice enough food.
There are people that don’t: sadly, not much of the economy is focused on them.
Instead, most of the money that most people spend is spent on things that improve their status, either in the eyes of others, although quite often only in their own imagination. Whether it is “premiumisation” or “business class” or “luxury goods”, status makes the world go around.
What that means, of course, is that our pyramid is already seriously messed up. If more than half of our building blocks are going into the top half of the diagram, it’s not so much a pyramid as a bit of a “Jenga” nightmare. Let’s hope no one pulls anything out of those bottom layers…
Oh dear. They already did.
One of the elements tucked away inside Maslow’s concept of security and safety, the second layer of the pyramid, is financial security. That should be huge, shouldn’t it? That should be where we spend our time and effort and energy. We are supposed to have completed that before we moved on to loving and community, let alone status!
Instead we’ve got a top-heavy structure, and one of the key foundations has been pulled out. No wonder this game doesn’t go so well for most people. No wonder so many people are susceptible to even the smallest wobble.
Imagine the world really did work in that pyramid way. Establishing real financial security before worrying about status. Not building a dream home before we’ve got a nest egg. Not borrowing to go on holiday before we’ve got a proper emergency fund. Focusing on having enough money, whether through assets or secure income, to no longer have to worry about the future.
If people actually lived like that, Maslow’s hierarchy really would look like a pyramid. You’d build your financial security before worrying about your status, and then status spending would only reflect your real, actual status, not the status you want to display. You could almost then guarantee that it would be a thin layer, because without the posturing it is currently comprised of, and the borrowing that finances it, no one would need to spend too much time there.
Self-actualisation would be a doddle too, because you would be secure enough to think about what you want to do, what you want to be, and how you want to achieve that, not worrying about the unstable mess your spending and consuming has become.
So stop spending on status. Instead, build yourself a Maslow’s pyramid with a big wide financially secure base, and then you’ll see that everyone else’s status spending is as meaningless and doomed as a wobbly Jenga with nothing to support it.