|Charlie Woods is EDAS's Policy and Practice|
sub-group Chair and Director of the
Scottish Universities Insight Institute
What, if any, will be the impact of Covid-19 on our behaviour in the medium to long term, and what implications will this have for the functioning of the economy? As Mark Carney put it in a recent Economist article :
“Value will change in the post-covid world. On one level, that’s obvious: valuations in global financial markets have imploded, with many suffering their sharpest declines in decades. More fundamentally, the traditional drivers of value have been shaken, new ones will gain prominence, and there’s a possibility that the gulf between what markets value and what people value will close.”
For those of us not on the front line of responding to the crisis, the lockdown gives us more time to reflect. Some of that reflection is likely to focus on what is really important to us. This reflection may well result in different priorities, which could have economic consequences.
The answer to the question of what’s important will vary between individuals, depending in part on the circumstances in which they find themselves. But are there any general themes that can be found in the thoughts of others that might provide some guide?
One of the best known models of this type is that developed by Abraham Maslow in the 1940s and built on over the next forty years or so. It identified the basic and psychological needs that need to be more or less satisfied to provide the foundation upon which an individual can realise their full potential. This model is summarised in the diagram below:
Subsequent iterations of the model were developed further to include cognitive needs (knowledge, understanding, meaning etc.) and aesthetic needs (search for beauty etc.), placed between esteem needs and self-actualisation. The focus of Maslow’s work was on how people can realise their full potential through ‘self-actualisation’, he also went on to identify the main characteristics of those who self-actualise and their behaviours likely to lead to ‘self-actualisation’.
In their book ‘How Much is Enough?’ Robert and Edward Skidelski explore similar ground in trying to identify the ‘basic goods’ they feel are the key contributors to a ‘good life’. The characteristics of their basic goods are that they should be universal, final (not just means to other goods), not part of other goods and indispensable. Using these criteria they identify seven basic goods:
- Health – a full functioning of the body
- Security – undisturbed by war, crime or major social and economic upheaval
- Respect – regarding interests and views as worth of consideration
- Personality – autonomy, spontaneity, a private space to be oneself
- Harmony with nature
- Friendship – robust, affectionate relationships
- Leisure – activity in its own right without compulsion
Not surprising that there is quite a bit of overlap between Maslow’s work and that of the Skidelskis.
Another way of beginning to answer the question of what is important is by asking people. This was the approach taken by Oxfam in Scotland in developing their ’Humankind Index’. In 2011 they worked with over 3000 people across arrange of communities in Scotland to identify what they needed to live well. The results are summarised in the table below:
Looking at these different approaches a picture begins to emerge of what is important for a good life. It appears that the things that the basics that directly impact on wellbeing are also essential foundations in realizing human potential. This has significant implications for economic development. A wellbeing focused economy is an end in itself, but in contributing to realizing the potential of the individuals who live in a place, it will also be central to realizing a place’s economic potential.
If the necessary foundations for a good life are not widely available, then not only will individual wellbeing be compromised, there will also be wider implications for society and it’s economy. As Sendhil Mullainathan and Eldar Shafir pointed out in their book ‘Scarcity: Why having too little means so much’, when resources are scarce survival instincts come to the fore and longer term considerations are likely to be crowded out. In other words when you are struggling to survive from day to day, investing and innovating for a sustainable future take a back seat.
Trying to reimagine and make sense of the possibilities that could flow from any change in priorities will be critical to economic development post Covid-19. Will we for instance take the opportunity to frame the economy more as a way of organising production, exchange etc. in a sustainable way to directly promote wellbeing? Or will we revert to the more traditional frame of seeing the economy as a means of generating the resources to pay for good things and clear up the bad things generated in the process?