Skip to main content
SpringerLink
Log in

Hierarchical Needs, Income Comparisons, and Happiness Levels

  • Chapter
  • First Online:
A Positive Psychology Perspective on Quality of Life

Part of the book series: Social Indicators Research Series ((SINS,volume 51))

Abstract

The cornerstone of the hierarchical approach is that there are some basic human needs which must be satisfied before nonbasic needs come into the picture. The hierarchical structure of needs implies that the satisfaction of primary needs provides substantial increases to individual happiness compared to the subsequent satisfaction of secondary needs. This idea can be combined with the concept of comparison income which means that individuals compare rewards with individuals with similar characteristics. These two notions could provide additional explanations of empirical findings indicating a positive relationship between income and happiness up to certain level of income.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    In some formal specifications, y is income, y c is called reference group or comparison income, while the ratio y/y c is called relative income (see also Clark et al. 2008).

References

  • Adams, J. (1963). Towards an understanding of inequity. Journal of Abnormal and Social Psychology, 67, 422–436.

    Article  Google Scholar 

  • Alderfer, C. (1969). An empirical test of a new theory of human needs. Organizational Behavior and Human Performance, 4, 142–175.

    Article  Google Scholar 

  • Alesina, A., Di Tella, R., & Mac Culloch, R. (2004). Inequality and happiness. Journal of Public Economics, 88, 2009–2042.

    Article  Google Scholar 

  • Andrews, F. (1991). Stability and change in levels and structure of subjective well-being: USA 1972 and 1988. Social Indicators Research, 25, 1–30.

    Article  Google Scholar 

  • Ardrey, R. (1970). The social contract. New York: Dell.

    Google Scholar 

  • Ash, C. (2000). Social self-interest. Annals of Public and Cooperative Economics, 72, 261–284.

    Article  Google Scholar 

  • Atkinson, A., & Stiglitz, J. (1980). Lectures in public economics. New York: McGraw Hill.

    Google Scholar 

  • Bjornskov, C. (2003). The happy few: Cross-Country evidence on social capital and life satisfaction. Kyklos, 56, 3–16.

    Article  Google Scholar 

  • Blanchflower, D., & Oswald, A. (2004). Well-being over time in Britain and the US. Journal of Public Economics, 88, 1359–1386.

    Article  Google Scholar 

  • Bruni, L. (2002). A history of happiness in economics. Paper presented to the European Society for the history of economic thought conference, Crete.

    Google Scholar 

  • Bruni, L. (2004). The “technology of happiness” and the tradition of economic science. Journal of the History of Economic Thought, 26, 19–44.

    Article  Google Scholar 

  • Canova, L., Rattazzi, A., & Webley, P. (2005). The hierarchical structure of saving motives. Journal of Economic Psychology, 26, 21–37.

    Article  Google Scholar 

  • Canterbery, R. (1979). Inflation, necessities and distributive efficiency. Ιn J. Gapinski & C. Rockwoodn (Eds.), Essays in post-Keynesian inflation. Cambridge, MA: Ballinger.

    Google Scholar 

  • Clark, A. (2003). Inequality aversion and income mobility: A direct test (DELTA Working Paper, No 2003-11, pp. 1–18). Paris.

    Google Scholar 

  • Clark, A., & Oswald, A. (1996). Satisfaction and comparison income. Journal of Public Economics, 61, 359–381.

    Article  Google Scholar 

  • Clark, A., Frijters, P., & Shields, M. (2008). Relative income, happiness and utility: An explanation for the Easterlin paradox and other puzzles. Journal of Economic Literature, 46, 95–124.

    Article  Google Scholar 

  • Cummins, R. (2003). Normative life satisfaction: Measurement issues and a homeostatic model. Social Indicators Research, 64, 225–256.

    Article  Google Scholar 

  • Day, R. (1971). Rational choice and economic behaviour. Theory and Decision, 1, 229–251.

    Article  Google Scholar 

  • Doyal, L., & Gough, I. (1984). A theory of human needs. Critical Social Policy, 10, 6–38.

    Article  Google Scholar 

  • Deci, E., & Ryan, R. (2000). The ‘what’ and ‘why’ of goal pursuits: Human needs and the self-determination of behaviour. Psychological Inquiry, 11, 227–268.

    Article  Google Scholar 

  • Di Tella, R., MacCulloch, R., & Oswald, A. (2003). The macroeconomics of happiness. Review of Economics and Statistics, 85(4), 809–827.

    Article  Google Scholar 

  • Drakopoulos, S. (1991). Values and economic theory: The case of hedonism. Aldeshot: Avebury.

    Google Scholar 

  • Drakopoulos, S. (1994). Hierarchical choice in economics. Journal of Economic Surveys, 8, 133–153.

    Article  Google Scholar 

  • Drakopoulos, S. (2011). The concept of comparison income: An historical perspective. European Journal of the History of Economic Thought, 18, 441–464.

    Article  Google Scholar 

  • Drakopoulos, S., & Karayiannis, A. (2004). The historical development of hierarchical behaviour in economic thought. Journal of the History of Economic Thought, 26, 363–378.

    Article  Google Scholar 

  • Drakopoulos, S., & Theodossiou, I. (1997). Job satisfaction and target earnings. Journal of Economic Psychology, 18, 694–704.

    Article  Google Scholar 

  • Earl, P. (1986). Lifestyle economics. Brighton: Wheatsheaf Books.

    Google Scholar 

  • Earl, P. (1990). Economics and psychology: A survey. The Economic Journal, 100, 718–755.

    Article  Google Scholar 

  • Easterlin, R. (1974). Does economic growth improve the human lot? Some empirical evidence. In P. David & M. Reder (Eds.), Nations and households in economic growth: Essays in honor of Moses Abramovitz. New York: Academic Press.

    Google Scholar 

  • Easterlin, R. (1995). Will raising the incomes of all increase the happiness of all? Journal of Economic Behaviour and Organization, 27, 35–47.

    Article  Google Scholar 

  • Easterlin, R. (2001). Income and happiness: Towards a unified theory. Economic Journal, 111, 465–484.

    Article  Google Scholar 

  • Easterlin, R. (2004). The reluctant economist: Perspectives on economics, economic history and demography. Cambridge: Cambridge University Press.

    Google Scholar 

  • Ehrhardt, J., Saris, W., & Veenhoven, R. (2000). Stability and life satisfaction over time. Journal of Happiness Studies, 1, 177–205.

    Article  Google Scholar 

  • Encarnacion, J. (1964). A Note on Lexicographical Preferences. Econometrica, 32(1–2), 215–217.

    Article  Google Scholar 

  • Falkinger, J. (1990). On growth along a hierarchy of wants. Metroeconomica, 3, 209–233.

    Article  Google Scholar 

  • Ferrer-i-Carbonell, A. (2005). Income and well-being: An empirical analysis of the comparison income effect. Journal of Public Economics, 89, 997–1019.

    Article  Google Scholar 

  • Ferrer-i-Carbonell, A., & Frijetrs, P. (2004). How important is methodology for the estimates of the determinants of happiness? Economic Journal, 114, 641–659.

    Article  Google Scholar 

  • Festinger, L. (1954). A theory of social comparison processes. Human Relations, 3, 117–140.

    Article  Google Scholar 

  • Frank, R. (1985). Choosing the right pond. New York: Oxford University Press.

    Google Scholar 

  • Frank, R. (1999). Luxury fever. New York: The Free Press.

    Google Scholar 

  • Frey, B., & Stutzer, A. (2000). Happiness, economy and institutions. Economic Journal, 110, 918–938.

    Article  Google Scholar 

  • Frey, B., & Stutzer, A. (2002a). What economists can learn from happiness research? Journal of Economic Literature, XL, 402–435.

    Google Scholar 

  • Frey, B., & Stutzer, A. (2002b). Happiness and economics. Princeton: Princeton University Press.

    Google Scholar 

  • Gasper, D. (2005). Subjective and objective well-being in relation to economic inputs: Puzzles and responses. Review of Social Economy, 63, 177–206.

    Article  Google Scholar 

  • Georgescu-Roegen, N. (1966). Analytical economics. Cambridge: Cambridge University Press.

    Google Scholar 

  • Graham, C., & Felton, A. (2006). Inequality and happiness: Insights from Latin America. Journal of Economic Inequality, 4, 107–122.

    Article  Google Scholar 

  • Greenberg, J. (1990). Organizational justice: Yesterday, today and tomorrow. Journal of Management, 16, 399–432.

    Article  Google Scholar 

  • Gui, B. (2000). Beyond transaction: On the interpersonal dimension of economic reality. Annals of Public and Cooperative Economics, 71, 139–168.

    Article  Google Scholar 

  • Helliwell, J. (2003). How’s life? Combining individual and national variables to explain subjective well-being. Economic Modelling, 20, 331–360.

    Article  Google Scholar 

  • Helliwell, J., & Huang, H. (2005). How’s the job? Well-being and social capital in the workplace (NBER Working Paper, 11759). Cambridge: MA.

    Google Scholar 

  • Inglehart, R. (1990). Cultural shift in advanced industrial society. Princeton: Princeton University Press.

    Google Scholar 

  • Inglehart, R., & Rabier, J. (1986). Aspirations adapt to situations. In F. Andrews (Ed.), Research on the quality of life (pp. 1–56). Ann Arbour: University of Michigan.

    Google Scholar 

  • Inglehart, R., Foa, R., Peterson, C., & Welzel, C. (2008). Development, freedom, and rising happiness: A global perspective (1981–2007). Perspectives on Psychological Science, 3, 264–285.

    Article  Google Scholar 

  • Jackson, T., & Marks, N. (1999). Consumption, sustainable welfare and human needs —with reference to UK expenditure patterns between 1954 and 1994. Ecological Economics, 28, 421–441.

    Article  Google Scholar 

  • Kahneman, D., Wakker, P., & Sarin, R. (1997). Back to Bentham? Explorations of experienced utility. Quarterly Journal of Economics, 112, 375–405.

    Article  Google Scholar 

  • Kapteyn, A., & Wansbeek, T. (1982). Empirical evidence on preference formation. Journal of Economic Psychology, 2, 137–154.

    Article  Google Scholar 

  • Kenny, C. (1999). Does growth cause happiness or does happiness cause growth? Kyklos, 52, 3–26.

    Article  Google Scholar 

  • Kenny C. (2005). Does development make you happy? Subjective well-being and economic growth in developing countries. Social Indicators Research, 73, 199–219.

    Article  Google Scholar 

  • Knight, J., Song, L., & Gunatilaka, R. (2009). Subjective well-being and its determinants in rural China. China Economic Review, 20(4), 635–649.

    Article  Google Scholar 

  • Lane, R. (2000). The loss of happiness in the market democracies. Yale: Yale University Press.

    Google Scholar 

  • Lavoie, M. (2004). Post-Keynesian consumer theory: Potential synergies in consumer research and economic psychology. Journal of Economic Psychology, 25, 639–649.

    Article  Google Scholar 

  • Levi, I. (1986). Hard choices. Cambridge: Cambridge University Press.

    Google Scholar 

  • Layard, R. (2005a). Happiness. New York: The Penguin Press.

    Google Scholar 

  • Layard, R. (2005b). Rethinking public economics: The implications of rivalry and habit. In L. Bruni & P. L. Porta (Εds.), Economics and happiness: Framing the analysis (pp. 147–169). Oxford: Oxford University Press.

    Google Scholar 

  • Little, I. M. D. (1957). A critique of welfare economics. Oxford: Clarendon Press.

    Google Scholar 

  • Lluch, C., Powell, A., & Ross, A. (1977). Patterns in household demand and saving. Oxford: Oxford University Press.

    Google Scholar 

  • Locke, E. A. (1976). The nature and causes of job satisfaction. In M. Dunnette (Ed.), Handbook of industrial and organizational psychology (pp.1297–1349). Chicago: Rand McNally.

    Google Scholar 

  • Loewenstein, G. (1999). Because it is there: The challenge of mountaineering…for utility theory. Kyklos, 52, 315–343.

    Article  Google Scholar 

  • Lommerud, K. (1989). Educational subsidies when relative income matters. Oxford Economic Papers, 41, 640–652.

    Google Scholar 

  • Luttmer, E. (2005). Neighbors as negatives: Relative earnings and well-being. Quarterly Journal of Economics, 120, 963–1002.

    Google Scholar 

  • Maddison, A. (1991). Dynamic forces in capitalist development. Oxford: Oxford University Press.

    Google Scholar 

  • Martin, J. (1981). Relative deprivation: A theory of distributive justice for an era of shrinking resources. In L.Cummings & B. Staw (Eds.), Research in organizational behavior: An annual series of analytical essays and critical reviews (Vol. 3, pp. 53–107). Greenwich: JAI.

    Google Scholar 

  • Maslow, A. (1954). Motivation and personality. New York: Harper and Row.

    Google Scholar 

  • Max-Neef, M. (1995). Economic growth and quality of life —a threshold hypothesis. Ecological Economics, 15, 115–118.

    Article  Google Scholar 

  • McBride, M. (2001). Relative-income effects on subjective well-being in the cross-section. Journal of Economic Behavior and Organization, 45, 251–278.

    Article  Google Scholar 

  • Myers, D., & Diener, E. (1995). Who is happy? Psychological Science, 6, 10–19.

    Article  Google Scholar 

  • Oswald, A. (1997). Happiness and economic performance. Economic Journal, 107, 1815–1831.

    Article  Google Scholar 

  • Phelps, C. (2001). A clue to the paradox of happiness. Journal of Economic Behaviour and Organization, 45, 293–300.

    Article  Google Scholar 

  • Pfouts, R. (2002). On the need for a more complete ontology of the consumer. In E. Fullbrook (Ed.), Intersubjectivity in economics: Agents and structures (pp. 71–84). London: Routledge.

    Google Scholar 

  • Pugno, M. (2005). The Happiness paradox: A formal explanation from psycho-economics (Department of Economics Working Paper, No. 0501). University of Trento.

    Google Scholar 

  • Pugno, M. (2009). The Easterlin paradox and the decline of social capital: An integrated explanation. The Journal of Socio-Economics, 38, 590–600.

    Article  Google Scholar 

  • Putnam, R. (2000). Bowling alone. New York: Simon and Schuster.

    Google Scholar 

  • Rablen, M. D. (2008). Relativity, rank and the utility of income. The Economic Journal, 118, 801–821.

    Article  Google Scholar 

  • Ryan, R., & Deci, E. (2000). Self-determination theory and the facilitation of intrinsic motivation, social development, and well-being. American Psychologist, 55, 68–78.

    Article  PubMed  Google Scholar 

  • Ryan, R., & Deci, E. (2001). On happiness and human potential: A review of research on hedonic and eudaimonic well-being. Annual Review of Psychology, 52, 141–166.

    Article  PubMed  Google Scholar 

  • Schor, J. (1991). The overworked American. New York: BasicBooks.

    Google Scholar 

  • Scitovsky, T. (1976). The joyless economy: An inquiry into human satisfaction and consumer dissatisfaction. Oxford: Oxford University Press.

    Google Scholar 

  • Snyder C., & Lopez S. (2002). Handbook of positive psychology. Oxford: Oxford University Press.

    Google Scholar 

  • Sousa-Poza, A., & Sousa-Poza, A. (2000). Taking another look at the gender/job-satisfaction paradox. Kyklos, 53, 135–152.

    Article  Google Scholar 

  • Stellar, J. (2011) How has the recession affected our happiness? Retrieved from internet on August 30, 2011. Available at http://greatergood.berkeley.edu/author/jennifer_stellar

  • Stevenson, B., & Wolfers, J. (2008). Economic growth and subjective well-being: Reassessing the Easterlin paradox. Brookings Papers on Economic Activity, 39, (1, Spring).

    Google Scholar 

  • Studger, A., & Frey, B. (2010). Recent advances in the economics of individual subjective well-being (Discussion Paper 04/10). Center of Business and Economics (WWZ), University of Basel.

    Google Scholar 

  • Sugden, R. (2002). Beyond sympathy and empathy: Adam Smith’s concept of fellow-feeling. Economics and Philosophy, 18, 63–87.

    Google Scholar 

  • Thiele, S., & Weiss, C. (2003). Consumer demand for food diversity: Evidence for Germany. Food Policy, 28, 99–115.

    Article  Google Scholar 

  • Tomes N. (1986). Income distribution, happiness and satisfaction: A direct test of the Interdependent Preferences Model. Journal of Economic Psychology, 7, 425–446.

    Article  Google Scholar 

  • Tversky, A. (1969). Intransitivity of preferences. Psychological Review, 76, 31–48.

    Article  Google Scholar 

  • Veenhoven, R. (1991). Is happiness relative? Social Indicators Research, 24, 1–34.

    Article  Google Scholar 

  • Veenhoven, R. (2000). Freedom and happiness: A comparative study in forty-four nations in the early 1990s. In E. Diener & E. Suh (Eds.), Culture and subjective well-being (pp. 257–288). Cambridge, MA: MIT Press.

    Google Scholar 

  • Veenhoven, R. (2011). Average happiness in 148 nations 2000–2009. World database of happiness, Erasmus University Rotterdam, The Netherlands. Retrieved from internet on August 30, 2011 at: http://worlddatabaseofhappiness.eur.nl/hap_nat/findingreports/RankReport_AverageHappiness.php

  • Waterman, A. (1993). Two conceptions of happiness: Contrasts of personal expressiveness (eudaimonia) and hedonic enjoyment. Journal of Personality and Social Psychology, 64, 678–691.

    Article  Google Scholar 

  • Wright, R. (2000). Nonzero: The logic of human destiny. New York: Pantheon Books.

    Google Scholar 

  • Xiao, J., & Noring, F. (1994). Perceived saving motives and hierarchical financial needs. Financial Counseling and Planning, 5, 25–44.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Philosophy and History of Science, University of Athens, University Campus, Athens, 15771, Greece

    Stavros A. Drakopoulos

Authors
  1. Stavros A. Drakopoulos
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Stavros A. Drakopoulos .

Editor information

Editors and Affiliations

  1. School of Psychology, Aristotle Univ. of Thessaloniki, Thessaloniki, 541 24, Greece

    Anastasia Efklides

  2. , School of Psychology, Aristotle University of Thessaloniki, Thessaloniki,, 541 24, Greece

    Despina Moraitou

Rights and permissions

Reprints and permissions

Copyright information

© 2012 Springer Science+Business Media Dordrecht

About this chapter

Cite this chapter

Drakopoulos, S.A. (2012). Hierarchical Needs, Income Comparisons, and Happiness Levels. In: Efklides, A., Moraitou, D. (eds) A Positive Psychology Perspective on Quality of Life. Social Indicators Research Series, vol 51. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-4963-4_2

Download citation

Publish with us

Policies and ethics

Search

Navigation