Measuring Australia's well-being using hierarchical needs

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The Journal of Socio-Economics 35 (2006) 933–945 Measuring Australia’s well-being using hierarchical needs Matthew Clarke a,, Sardar M.N. Islam b , Sally Paech a a RMIT University, Australia b Victoria University, Australia Accepted 21 November 2005 Abstract A new approach to well-being measurement is presented in this paper based on multidimensional hier- archical human needs and motivation. This paper empirically applies this new measure of well-being to Australia for the period 1985–2000. This hierarchical approach is underpinned by a rigorous psychological theory of human motivation. Hierarchical human needs are classified into five categories. Eight indicators have been chosen to reflect these categories. A composite indicator of these eight indicators is calculated. This paper concludes that it is necessary to consider multidimensional human needs and motivation when analysing and seeking to improve well-being through economic and social development activities. © 2006 Elsevier Inc. All rights reserved. JEL classification: I 31 Keywords: Well-being; Hierarchy; Maslow; Australia 1. Introduction Determining whether well-being has improved is an important task. Numerical measures of well-being are becoming increasingly common and numerous methods of measurement now exist. This paper provides a systematic empirical study of well-being for Australia. Common measures of well-being include single dimension indicators such as Gross Domestic Product (GDP) per capita, life expectancy or literacy rates, or composite indicators using vari- ous combinations of these, such as the Human Development Index (HDI) (UNDP, 2002) or the Corresponding author at: School of Social Science and Planning, RMIT University, AGPO Box 2476V, Melbourne, Vic. 3001, Australia. Tel.: +61 3 9925 2960; fax: +61 3 9925 1010. E-mail address: [email protected] (M. Clarke). 1053-5357/$ – see front matter © 2006 Elsevier Inc. All rights reserved. doi:10.1016/j.socec.2005.11.063

Transcript of Measuring Australia's well-being using hierarchical needs

Page 1: Measuring Australia's well-being using hierarchical needs

The Journal of Socio-Economics 35 (2006) 933–945

Measuring Australia’s well-being usinghierarchical needs

Matthew Clarke a,∗, Sardar M.N. Islam b, Sally Paech a

a RMIT University, Australiab Victoria University, Australia

Accepted 21 November 2005

Abstract

A new approach to well-being measurement is presented in this paper based on multidimensional hier-archical human needs and motivation. This paper empirically applies this new measure of well-being toAustralia for the period 1985–2000. This hierarchical approach is underpinned by a rigorous psychologicaltheory of human motivation. Hierarchical human needs are classified into five categories. Eight indicatorshave been chosen to reflect these categories. A composite indicator of these eight indicators is calculated.This paper concludes that it is necessary to consider multidimensional human needs and motivation whenanalysing and seeking to improve well-being through economic and social development activities.© 2006 Elsevier Inc. All rights reserved.

JEL classification: I 31

Keywords: Well-being; Hierarchy; Maslow; Australia

1. Introduction

Determining whether well-being has improved is an important task. Numerical measures ofwell-being are becoming increasingly common and numerous methods of measurement now exist.This paper provides a systematic empirical study of well-being for Australia.

Common measures of well-being include single dimension indicators such as Gross DomesticProduct (GDP) per capita, life expectancy or literacy rates, or composite indicators using vari-ous combinations of these, such as the Human Development Index (HDI) (UNDP, 2002) or the

∗ Corresponding author at: School of Social Science and Planning, RMIT University, AGPO Box 2476V, Melbourne,Vic. 3001, Australia. Tel.: +61 3 9925 2960; fax: +61 3 9925 1010.

E-mail address: [email protected] (M. Clarke).

1053-5357/$ – see front matter © 2006 Elsevier Inc. All rights reserved.doi:10.1016/j.socec.2005.11.063

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Physical Quality of Life Index (PQLI) (Morris, 1979). A limitation of such approaches how-ever, is a lack of multidimensionality in human needs and motivation. One way to represent thismultidimensionality in well-being measurement is to consider hierarchical human needs.

A new approach is presented in this paper based on multidimensional hierarchical human needsand motivation. Improving well-being within this multidimensional approach requires progressivesatiation of hierarchical needs. This hierarchical approach is underpinned by a rigorous psycho-logical theory of human motivation (Maslow, 1970). Hierarchical human needs are classified intovarious categories, including basic, safety, belonging and self-esteem needs. This highest level ofneed is self-actualisation. Becoming self-actualised is predicated on the attainment or fulfillmentof the lower level needs. Therefore, the concept of self-actualisation can be considered analogouswith Sen’s concept of capabilities (Sen, 1985, 1987a,b) and Doyal and Gough’s (1991) conceptof social and critical participation. Within this paper therefore, well-being is defined as a functionof the extent to which society facilitates the attainment or fulfillment of the ultimate hierarchicalneed: self-actualisation.

It is possible to operationalise this approach by identifying outcomes and indicators thatrepresent or correspond to the four lower levels of needs upon which the achievement of self-actualisation is predicated. Eight indicators have been chosen to reflect these four hierarchicalcategories. A composite indicator of these eight indicators will be calculated using an approachsimilar to that of the HDI. Weights will also be assigned to the different levels within this hierar-chy to reflect the shift from minimally adequate standards to higher levels of well-being withinnations. This paper empirically applies this new measure of well-being to Australia for the period1985–2000.

The results of this new approach show a general increase of well-being based on the attainmentof hierarchical needs recorded across the region over the past 16 years. This paper concludes thatpolicy makers must consider multidimensional human needs and motivation when seeking toimprove well-being through economic and social development activities.

2. Defining well-being

Fundamental to the debate surrounding individual well-being (or welfare) is that a universallyacceptable definition has still not been agreed upon (Brekke, 1997)—indeed much of the literaturediscusses well-being without explicitly defining it (see Hudson, 1972; Leacomber, 1975; Dodds,1997). Well-being has been defined as a function of consumption (McKenzie, 1983; Slesnick,1998), particularly in areas of great poverty (Hueting, 1980), as a function of consumption andthe environment (Islam, 1998), as a function of consumer surplus (Johnson, 1996), as a functionof consumption weighted by probability of survival (Nordhaus, 1998), and as marginal propen-sity to consume (Islam, 2000). Alternatively, well-being is considered to be greater than simplyconsumption (Bonner, 1986), or indeed that well-being is specifically not linked to consumption(Boulding, 1949–1950, 1992; Sen, 1987b) but is rather a function of capital stocks (Daly, 1996), orexpenditure (Jorgenson, 1997), or income (Pearce et al., 1989; Usher, 1980; Kakwani, 1997a,b),or even the opportunity to consume—but not the consumption itself (Bliss, 1993).

As well-being can be defined in various ways, it can also be measured in different ways. It ispossible therefore to list various components that must be considered when developing a measureof well-being. For example, Nussbaum (2000) identified emotions, bodily integrity and health,social basis of self-respect, freedom from discrimination, and control over environment. Doyaland Gough (1991) identified physical security, economic security, opportunities to participate andcognitive and emotional capacity. However, the lack of an agreed definition often leads to simple

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representative indicators, such as income or GDP per capita, being used to measure well-being.For example, the World Bank uses income levels to classify nations into categories of developmentand implicitly uses these classifications as proxy indicators of well-being (World Bank, 2004).The use of GDP per capita is attractive to economists and non-economists alike. GDP per capita istangible and commonly understood. The logic of using GDP per capita as a measure of well-beingis therefore simple and attractive; if the economy is growing so must well-being, if GDP per capitafalls, so to does well-being.

The limitation of single indictors, such as GDP per capita, is that they exclude from consider-ations many other aspects of well-being. Composite indicators, such as the HDI were designed tocompensate this limitation. Whilst a composite approach to measuring well-being is an improve-ment over single representative measures, composite measures, such as the HDI, can also lacka multidimensionality and are not necessarily based on a substantial theory of human needs.The HDI is a function of life expectancy, literacy and GDP per capita. The purpose of theHDI is to extend consideration of human development of well-being way from the economic-centric nature suggested when simply using GDP per capita. However, the high correlationbetween the component indicators of the HDI arguably makes this attempt redundant (McGillivray,1991).

3. Maslow’s hierarchical framework

Malsow did not intend his theory of needs to be used outside of management psychology,however recent studies (Hagerty, 1999; Sirgy, 1986) have widened its use to consider developmentand well-being issues as strong links exist between understanding human motivation and definingwell-being. Within the hierarchy of human needs, human well-being is bounded by the fulfillmentof a given set of ascending needs. Human effort is exerted to achieve each level. The primary needsthat must be fulfilled are those basic needs such as food, shelter and water. Until these needs arefulfilled higher needs are not considered. However, once these needs are achieved, considerationmoves to the next tier of needs. The ultimate need to which humans spire is self-actualisation. Allbehaviour is therefore motivated by the ultimate desire to fulfill one’s own potential.

Maslow’s theory of human need and motivation is suited to underpin a measure of well-being,as it provides an explanation of what is required to improve life outcomes. This hypothesis arguesthat the fundamental or ultimate needs of all human beings do not differ nearly as much as do theirconscious everyday desires. A measure of well-being that focuses on these fundamental needscan be applied across societies and time as fundamental needs are universal, whereas daily desiresdiffer both intertemporally and interspatially. This approach is not dissimilar to that presented inNussbaum, (1992, 1993, 2000) and Doyal and Gough (1991). As Maslow (1970) states: ‘endsin themselves are far more universal than the roads taken to achieve those ends, for these roadsare determined locally in the specific culture’. These needs are achieved through what Max-Neef(1991) coins ‘satisfiers’. Satisfiers change according to each culture and even differ within thosecultures.

The first set of hierarchical needs identified by Maslow is basic needs. Basic (or physiological)needs include air, water, food, sleep and sex. Unsatisfied basic needs cause feelings of physicalpain, illness and discomfort. Until these needs are satisfied, attention to higher needs is notpossible. The attainment of basic needs occurs at a low level of income. Their satisfaction is anabsolute outcome and thus not dependent on increasing income.

The second group is safety needs. These needs are psychological rather than physiological andtake the form of home and family. Within the approach used in this paper, the attainment of safety

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needs is not specifically dependent on income. Indeed, other than basic needs, income levelsare specifically not important in increasing well-being within this hierarchical needs fulfillmentapproach.

The third level of need is belonging needs. Humans desire to belong to groups such as clubs,work groups, families or gangs. This level of needs incorporates the need to feel (non-sexual)love and acceptance by others.

Closely related to this is the fourth level of self-esteem needs. Once people belong to groups,they seek to be admired by those around them. Self-esteem can be brought about through themastery of skills or attention and recognition from others.

Finally, once these four levels of needs have been satisfied, a person can become self-actualised.Self-actualisation is an ongoing process. It is the need to be what one was born to be. It is self-fulfillment of one’s own potential. Self-actualisation can be considered analogous to capability(Sen, 1985, 1987a,b; Nussbaum, 2000) and social and critical participation (Doyal and Gough,1991).

Doyal and Gough (1991) utilise a hierarchical concept in their theory of human needs, butdo so only in a methodological sense. They argue, that health and autonomy are fundamentaluniversal needs in a thin, Kantian sense. Then, using codified knowledge, it is possible to identifyuniversal satisfier characteristics that everywhere contribute to these. But all are simultaneouslynecessary even for low levels of functioning. Max-Neef (1991) argues that a range of human needs(subsistence, protection, affection, understanding, participation, idleness, creation, identity andfreedom) exists, but they do so simultaneously and are therefore non-hierarchical. This divergencecan be bridged however. Maslow notes that the dominant need is always shifting so that a self-actualised person does become hungry and tired and this basic need becomes the priority. Theimplication of this shifting dominated need (Maslow, 1970) or non-hierarchy of needs (Max-Neef,1991) is that policies aimed at maximising well-being must be more sophisticated to considerexplicitly the various forms of needs and their relative significance in achieving optimal well-being. Developing a measure of well-being based on Maslow’s approach of hierarchical needfulfillment encourages this outcome.

4. Fulfillment of hierarchical needs and well-being

Hindrances constructed by society can prevent people reaching the highest level of self-actualisation. That is why hierarchical needs fulfillment can be applied to national well-beingmeasures. This approach can demonstrate whether a society is assisting or hindering its citizensfrom becoming self-actualised. Societies that enable their members to achieve each level of thishierarchy will have higher levels of social well-being.

As this approach to well-being is underpinned by a theory of hierarchical needs, appropriateweights are given to the different levels of needs. In this approach therefore, needs at the higherlevel of the hierarchy are given more weight than those at the lower end of the hierarchy. The useof weights in this fashion demonstrates that the hierarchical structure of needs has been explicitlyconsidered in the conceptualisation and measurement of well-being since different hierarchicalstructures of needs provide different types and levels of well-being.

This approach does not seek to use the Maslow approach to predict patterns of economicdevelopment. Rather, it draws on Maslow’s description of needs to measure well-being. Table 1summarises the well-being outcomes associated with each level of need.

It is possible to operationalise this approach by identifying outcomes and indicators thatrepresent or correspond to the four lower levels of needs upon which the achievement of self-

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Table 1Selected well-being outcomes and indicators that correspond to Maslow’s categories of needs

Maslow’s categories of needs Some well-being outcomes that correspond with this need

Basic (physiological) HealthyVitality

Safety SafeSettledSecure

Belonging IncludedLovedParticipating

Self-esteem EmpoweredConfidentConvivial

Self-actualisation Actively seeking knowledgeInspired to reach potential

actualisation is predicated. Eight indicators have been chosen to reflect these four hierarchicalcategories. The indictors selected are:

Basic• Daily calories available per person• Access to safe waterSafety• Infant mortality• Life expectancyBelonging• Telephone mainlines• Fertility ratesSelf-esteem• Adult illiteracy• Unemployment

Significant literature exists regarding the identification of basic needs (see Streeten, 1995, fora summary of the issues surrounding this area). Two measures have been chosen as indicatorsfor this first level of need; calories per person and access to safe water. Without sufficient foodor sufficient water quality, long-term survival is not possible. Having attained the lowest level ofneeds required, attention would focuses on achieving a feeling of safety. Two indicators of safetyhave been chosen to measure this: infant mortality and life expectancy. Infant morality reflects thesafety of society’s most vulnerable members (unborn and new born babies) and life expectancyis a reasonable measure of how safe one’s life is across society. The relationship one has withone’s own family is often rated highly as a factor of self-reported happiness (Cummins et al.,2001). In this sense fertility rates represent belonging to a family. Belonging to the wider societyis represented by telephone mainline connections and fertility rates. Adult illiteracy rates amongstadults and unemployment rates have been selected to represent the concept of self-esteem.

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It is acknowledged that all indicators have limitations. However, it is argued that the selectedindicators are robust enough to provide a solid basis for this application and subsequent analysis.Each indicator has been selected to represent the various concepts encapsulated in each levelof need. The criteria upon which these indicators have been chosen are reliability, availability,reliance and timeliness (Baster, 1972). It is acknowledged that no indicator is perfect and strongarguments for alternative choices can be made.

Whilst Hagerty (1999) proposed the indicators that form the basis for this new measure,the ultimate choice of indicators must based on society’s preferences and value judgements. Tothis end, Doyal and Gough (1991) adopt a dual strategy of social policy formation in whichdecisions are made using ‘both the codified knowledge of experts and the experimental knowl-edge of those whose basic needs and daily life world are under consideration’ (1991, p. 141).This approach bears strong resemblance to normative social choice theory (Clarke and Islam,2004). Normative social choice theory is concerned with how the preferences, value judgmentsand choices of society can be identified and measured. Traditionally, voting systems were theprimary focus within this theory. However, it is possible to extend this theory to measure well-being. Normative social choice theory should be applied to well-being measures as it highlightssocial preferences and value judgments. It is concerned with economic and non-economic activ-ities that are important in determining well-being levels, quality and composition. Normativesocial choice theory can highlight changes within society and how these changes impact on well-being. Applying normative social choice theory to measuring well-being is dependent upon fouroperations determining: (1) whose well-being is being measured; (2) whether the well-beingof the group is different or equal to the sum of well-being of the group’s individual mem-bers; (3) how distribution of the individual well-being effects the group’s well-being; and (4)how to aggregate individual well-being to determine the level of group well-being (Bonner,1986).

5. Operationalising the fulfillment of hierarchical needs index (FHNI)

Having determined the indicators representing each set of hierarchical needs leading to well-being or self-actualisation, it is necessary to construct a social welfare function to operationalisethe FHNI.

The social welfare function is:

WB = SA(α1BN, α2SN, α3BeN, α4SEN) (1)

where WB = well-being, SA = self actualisation, BN = basic needs, SN = safety needs, BeN =belonging needs, SEN = self-esteem needs, and �1, . . ., �5 are the weights assigned to eachset of needs.

5.1. Weights

If well-being or self-actualisation is achieved through the attainment of various hierarchicalcomponents, a decision must be made as to the importance of the different components withrespect to their impact on well-being. A decision, therefore, must be made as to the relativeimportance between the hierarchical components within that functional relationship.

As an aggregation of different components or as a function of separate forms, weighting is animportant issue when measuring different levels of well-being.

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The determination of weights is dependent on various value judgments made explicit withinthe social welfare function and is based on normative social choice theory (Clarke and Islam,2004). Even when explicit weights are not defined, a value judgment has been made in that allcomponents are equally weighted. This decision is just as much a value judgment as settingseparate weights for each component.

No agreement exists as to how these weights should be determined. A number of variousmethods have been suggested (Islam and Clarke, 2003; Clarke et al., 2003). Firstly, the decision-maker unilaterally sets the weights according to their own value judgments on equity (Dasguptaand Pearce, 1972). Equity may refer to income levels or be beyond income and may be equity interms of access to social services, ascetic environments, or satisfactory mental health. Secondly,the weights may be set to reflect society’s preferences on equity reflected in such policy instrumentsas marginal taxation rates. The justification for this approach is that society, represented throughsuccessive governments, has determined that through progressive tax rates, the benefits of thoseon higher incomes should be weighted less than the benefits of those on lower incomes. As such,the calculation of well-being should be biased in favour of those on lower incomes rather thanthose on higher incomes as this is society’s preferences (Dasgupta and Pearce, 1972). Thirdly, asimilar approach, first suggested by Foster (1966), has that the aggregation of well-being based onindividual well-being be weighted by the ratio of the average national income to the individual’sincome. Fourthly, rather than use the ratio of national average income to individual income, theshape and elasticity of the marginal utility of income could determine the weights. The majordifficulty of this approach however rests on the assumption that such a calculation of utility can bedetermined. Whilst some estimates have been made (see Theil and Brooks, 1970, for an exampleof an early attempt) ‘most economists remain unshaken in their belief in the impossibility ofmeasuring differences in the marginal utility of income across individuals’ (Pearce and Nash,1981, p. 27).

Clearly then, weights can take any reasonable form, being only dependent on the value judg-ments upon which they are based.

Within this paper the weights have been set by the authors based on a value judgment that theappropriate weights should reflect a hierarchical and linear progression. As the fulfillment of theseneeds is hierarchical, greater weight is given to the higher needs. As a simple linear progression isused, basic needs are weighted least (×1), safety needs are weighted as twice as important (×2),belong needs three times as important (×3) and self-esteem needs four times as important (×4).This decision is consistent with normative social choice theory in which society’s preferences andvalue judgments are interpreted by the analyst (Bonner, 1986). A case could be made for reversingthe weights to reflect a country’s level of development, i.e. greater weight given to lower levelneeds as that should be a developing country’s priority. However, this undermines the strength ofthe hierarchical approach.

5.2. Aggregation

The estimation of this measure of well-being relies on aggregating changes in illiteracy rates,calorie intake, telephone mainlines, etc. Such an aggregation requires finding a common denom-inator. A normalised index for each component can be calculated in order to find this commondenominator. A normalised index is calculated by dividing each year’s figure by the highest figureoccurring throughout the time series. Such an index therefore compares movements within a spanof numbers rather than the numbers themselves. By using this approach, different indicators canbe compared (and aggregated).

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This approach is similar to that used in calculating the HDI with one significant difference.Within the HDI, the normalised number is calculated by comparing one country’s performanceagainst the performance of all other countries for that year. Thus, countries are ranked against oneanother. Even though only one country (Australia) is reviewed in this paper, a wider applicationwould result in a country being compared against itself over the period being reviewed (i.e.1985–2000). Thus, comparisons between countries are actually comparisons of how countrieshave improved (or worsened) relative to their own standards. Therefore, whilst the indicators acrossall levels of needs may be substantially higher in “rich” developed countries, the measurement ofwell-being will not necessarily be higher in these countries than in countries with lower indicators.This is because well-being is based on movements within these indicators, not on their absolutenumbers. Thus, a country with a poor record of infant mortality (of say, 100 in every 1000) willimprove in terms of well-being if the infant mortality is reduced over the specified time period,compared to a country with a low level of infant mortality (of say, 10 in every 1000) that remainsstatic.

This outcome could be considered a significant flaw in the calculation of the index of well-beingbased on the fulfillment of hierarchical needs. It appears to reward countries with low startingpoints and penalises countries that are already developed. However, this outcome can also be seenas a major advantage as well. Human beings are adaptive by nature. Small mercies can be foundin the most miserable of circumstances and tedium found in lavish surrounds (Sen, 1990; Hirsch,1995). If an increase in wealth leads to happiness it is only a temporary situation, a disequilibriumof sorts. (Ng (2001) provides an extensive review of this literature). Equilibrium soon returnsand peoples’ levels of satisfaction will subsequently fall. Thus, increasing well-being is partlydependant upon regular improvements in satiating various hierarchical needs. It, therefore, maybe that well-being within developed countries will plateau at a certain point when all hierarchicalneeds have been reached and constant improvements within each category is no longer possible.It is thus not difficult to accept that there maybe a cap on levels of human happiness or well-being(Cummins et al., 2001). Thus, it is improvements in social well-being rather than the levels ofwell-being that is of greater interest in this paper.

6. Findings

As this new measure of social well-being is based on fulfilling hierarchical needs within society,it is able to provide useful insights into the structure of society in terms of those needs. It providesinformation on which needs are being successfully attained and which needs are failing to be met.Alternative measures do not provide such information (Islam and Clarke, 2000, 2001).

Social well-being increases over the period of study but does so in a series of falls andrises. Within 5 of the 15 observed periods, social well-being actually falls. Of interest the lostopportunity in the early 1990s in which social well-being is actually marginally higher in 1997than it was in 1989. During this period national GDP per capita increased by nearly 20% (seeFig. 1).

Compared to the large increases in social well-being as measured by GDP per capita the risein social well-being as measured by the fulfillment of hierarchical needs is quite modest. Thisseems to be intuitively correct and is line with other subjective studies of Australia’s well-being(Cummins et al., 2001). Furthermore, it seems that strong increases in economic growth havehad little or no effect on increases in social well-being as measured by the SWF developed inthis paper. During years of constant levels of economic growth, social well-being actually roseand fell independently of these constant increases. If social well-being is able to fall or remain

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Fig. 1. Comparison of hierarchical needs SWF and GDP per capita.

unchanged during periods of economic growth, such growth arguably has little impact on socialwell-being.

There are three main advantages to this new measure of social well-being based on the ful-fillment of hierarchical needs. Firstly, it provides an intuitively more correct measure of socialwell-being than GDP per capita. Secondly, it provides insights into the structure of society and howsociety is assisting its members achieve various needs. Thirdly, it provides policy implications.Recently, some attention has focussed on Maslow’s (1970) hierarchy of needs and the appro-priateness of this theory for formulating public policies (Hagerty, 1999; Sirgy, 1986). Hagerty(1999) has shown that economic development for nations generally follows an S-shape in termsof Maslow’s hierarchy of needs. This work adds to various other theories predicting stages ofdevelopment (see Rostow, 1971).

It can also be seen that the various hierarchical needs, in Australia for example have alsochanged at different rates over time (see Fig. 2). By disaggregating this new measure of well-

Fig. 2. Disaggregated hierarchical needs for Australia (unweighted).

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being based on the fulfillment of hierarchical needs, it is possible to view how the structure of thevector of needs that impact on well-being have changed, and thus changing the total system, overtime.

Fig. 2 shows the disaggregated hierarchical needs (unweighted) during this time period forAustralia. It highlights that basic needs increased steadily overtime, whereas the overall increasein safety needs occurred in fits of rises and falls. Self-esteem and self-actualisation needs did notrecord a great growth over the full period, but did rise and fall throughout the 15 years. Interesting,belonging needs increased the most of the period, but reflect a sense of the lost decade discussedabove with a sustained drop during the period 1989–1999. This is most likely linked to the increasein unemployment rates during the recession of the early 1990s.

The significance of being able to disaggregate this new hierarchical measure of well-being istwo-fold. First of all, it allows policy-makers to view society as a system and understand howdifferent policies can impact on those different systems. Secondly, and closely related, it allowsa greater understanding of the hierarchical nature of both human needs but also how these needsare linked to a hierarchical understanding of different concepts within well-being.

7. Conclusions

The approach developed in this paper is different to previous extension of Maslow’s approachoutside of the realm of management psychology. It is not an attempt to predict movements indevelopment (Hagerty, 1999) in a similar vein to Rostow’s (1971) stages of growth theory, butrather it is an approach to measure social well-being. Measuring well-being is essentially anempirical exercise and so this approach is empirical in nature.

Within this calculation, the attainment of these needs for the entire society is considered. Analternative approach may be to measure the success of a society by the attainment of thesehierarchical needs by a low-income section of a society. Countries can increase their socialwell-being without increasing economic growth or even during times of decreasing economicgrowth (conversely, social well-being can fall despite increases in economic growth). Socialwell-being is dependent on fulfilling a given set of hierarchical needs and the role of the stateshould be to support this attainment. As various levels of human need are attained, higherconcepts of social well-being (well-being, utility and capacities) are also attained. Therefore,not only can societies aim to increase total social well-being, they can also aim to achievemaximum social well-being by recognizing the hierarchical structure of human needs andmotivation.

Acknowledgements

The authors gratefully acknowledge the financial support from Australian Research Council(LPO348013), World Vision of Australia, and the Victoria Department of Premier and Cabinet toundertake this research.

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Appendix A. Fulfillment of hierarchical needs index (FHNI) raw data

Basic needs Safety needs Belonging needs Self-esteem needs FHNI

Daily calorieintake

Access towater

Infantmortality

Lifeexpectancy

Telephonemainlines ’000

Fertilityrate

Illiteracyrate

Unemploymentrate

Index Index Index Index Index Index Index Index Index

1985 3091.0 0.913 99.9 1.000 9.90 0.495 75.7 0.960 391.8 0.747 1.89 0.990 100.0 1.000 8.0 0.825 0.8671986 3159.8 0.933 99.9 1.000 9.85 0.497 75.9 0.962 405.8 0.774 1.87 0.979 100.0 1.000 8.5 0.776 0.8611987 3178.0 0.939 99.9 1.000 9.80 0.500 76.1 0.964 419.1 0.799 1.85 0.969 100.0 1.000 8.1 0.815 0.8711988 3196.0 0.944 99.9 1.000 9.20 0.533 76.4 0.968 429.3 0.818 1.84 0.963 100.0 1.000 7.2 0.917 0.8981989 3215.9 0.950 99.9 1.000 7.70 0.636 76.7 0.972 441.5 0.842 1.84 0.963 100.0 1.000 6.9 0.957 0.9201990 3385.0 1.000 99.9 1.000 8.00 0.613 77.0 0.976 456.3 0.870 1.91 1.000 100.0 1.000 6.9 0.957 0.9311991 3305.0 0.976 99.9 1.000 7.10 0.690 77.2 0.979 465.5 0.887 1.86 0.974 100.0 1.000 9.6 0.688 0.8821992 3316.0 0.980 99.9 1.000 7.00 0.700 77.5 0.983 472.0 0.900 1.90 0.995 100.0 1.000 10.8 0.611 0.8741993 3338.0 0.986 99.9 1.000 6.10 0.803 77.6 0.984 483.5 0.922 1.87 0.979 100.0 1.000 10.9 0.606 0.8841994 3288.0 0.971 99.9 1.000 5.90 0.831 77.7 0.986 495.6 0.945 1.85 0.969 100.0 1.000 9.7 0.680 0.9031995 3200.0 0.945 99.9 1.000 5.70 0.860 77.9 0.987 492.4 0.939 1.82 0.953 100.0 1.000 8.5 0.776 0.9211996 3230.6 0.954 99.9 1.000 5.80 0.845 78.0 0.989 500.7 0.954 1.80 0.942 100.0 1.000 8.6 0.767 0.9191997 3224.0 0.952 99.9 1.000 5.30 0.925 78.1 0.990 512.7 0.977 1.77 0.927 100.0 1.000 8.6 0.767 0.9281998 3220.0 0.951 99.9 1.000 5.00 0.980 78.6 0.996 509.3 0.971 1.76 0.921 100.0 1.000 8.0 0.825 0.9441999 3210.0 0.948 99.9 1.000 5.60 0.875 78.7 0.998 515.3 0.982 1.75 0.916 100.0 1.000 7.2 0.917 0.9532000 3297.5 0.974 99.9 1.000 4.90 1.000 78.9 1.000 524.6 1.000 1.75 0.916 100.0 1.000 6.6 1.000 0.986

Sources: World Bank and authors’ own calculations.

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