News Ticker

A new layer to Maslow’s hierarchy?

f083e2d4cJosh Zumbrun from the Wall Street Journal has put some interesting graphs together on how the rich and poor spend their money compiled of recent data from the U.S. Labor Department’s Consumer Expenditures Survey.

Two stories pop out.

One is that the poorer you are (in the U.S. at least), the more you will spend of your income (proportionately) on the basic necessities of life: a roof over your head and food.

The second story, as pointed out in an Atlantic article citing Zumbrun’s graphs, raises an important question of how wealth builds on wealth.  Derek Thompson notes a very clear trend, by income decile, on the proportion of income spent on pensions and insurance. In other words, the richer you are (in the U.S.) the more you will spend, proportionately, on preserving your wealth.

Perhaps Maslow should have added another layer to his hierarchy of needs: preservation of wealth. After all, fear of loss is twice as motivating as the chance of success.

Those who start off with the least in life are unlikely to even be thinking about insurance and pensions. But increasing housing costs, which disproportionately affect the poor, squeeze what little leftover income people have to even have a chance of building wealth in the first place.

1 Comment on A new layer to Maslow’s hierarchy?

  1. Yep, housing unaffordability is a “poverty” trap. And those who do take out crazy mortgages need to ask themselves if it’s really worth it!

    For the sake of saying, we actually become trapped in lower needs from childhood (psychologically) when they are critically not met. An individual who grew up in real hardship can have an exaggerated craving for wealth as an adult, for example. So although they may become wealthy materially, psychologically they will always be poor…

    That is, they will never *feel* rich….or more specifically, they will never feel truly financially secure. Because they have an old feeling emotionally imprinted that is re-projected onto the present, no matter the real status of the present.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: