cropped-logo
Lesson Progress
0% Complete

In every economic system, companies target maximizing their profit and households target maximizing their well-being.2 According to the publication Psychology Today, well-being is the experience of health, happiness, and prosperity. It includes having good mental health, high life satisfaction, a sense of meaning or purpose, and an ability to manage stress. More generally, well-being is just feeling well.3 In the European cultural space, well-being is based on the following values: good health; comfortable living conditions; personal liberty; safe working conditions; and guarantees in case of unemployment.

These elements of well-being can be divided into economic (economic well-being) and general cultural well-being, which in turn are associated with fundamental societal values.4/5/6 Well-being can be achieved by satisfying societal needs and/or eliminating peoples’ unnecessary desires. 

A simplified schematic overview of our needs is shown on Maslow’s hierarchy of needs in Figure 1. Abraham H. Maslow (1908–1970) was an American psychologist who was best known for a theory of psychological health predicated on fulfilling innate human needs in priority, culminating in self-actualization. 

Figure 1. Maslow’s hierarchy of needs7

 

According to Maslow’s hierarchy of needs, human well-being is based on physiological and safety needs being met. Physiological needs are needs we cannot live without (food, water, air, sleep, etc.), and safety needs include feeling safe (physical and financial safety, job security, health). These two groups of needs are also called basic needs. When basic needs are satisfied, a person strives for realizing their social needs. We all look for social connections with friends and family and want others to respect us. In doing so, we try to increase our self-esteem and self-confidence. Self-realization is the realization of one’s full potential. This is the highest level of the hierarchy that we strive for.8

Unfortunately, needs and desires are often mistaken for synonyms and so are used interchangeably. In fact, a need refers to something that is needed for survival, and desires refer to the things and phenomena that people desire in life. A person’s survival is not in danger if he is unable to fulfill his desires, especially given that desires are endless because we are never completely satisfied. It can be said that desires distort our self-esteem and ultimately even reduce our well-being.9 At the same time, all people strive to fulfil their needs but also their desires to be happy.

In economic terms, people need to consume different types of goods and services in order to meet their basic and social needs. In the following chapters we explore on which bases the characteristics of goods are classified, and whether or not the market can handle the distribution of these goods.

2 Kerem, K., Randveer, M., 2007

3 Psychology Today (05.05.2020)

4 Sutrop, M., 2016

5 Stiglitz, J. E., Sen, A., Fitoussi, J.-P. 2009

6 OECD Better Life Index (25.08.2020)

7 Professional Academy, (08.05.2020)

8 Ibid

9 Purju, A., 2004

× Chat with us! Available from 10:00 to 18:00 Available on SundayMondayTuesdayWednesdayThursdayFridaySaturday