Friday, May 07, 2004

Pyramid scheme

Virginia Postrel takes on psychological giant Abraham Maslow.

With its emphasis on shifting relative prices, microeconomics is a clearer guide than Maslow’s hierarchy of needs for understanding the increasing value of aesthetics. There is no pyramid of needs, where each layer depends on completely satisfying the need under it. Rather, the value of the next increment of what we consume changes depending on what we already have. The marginal value of some characteristics, such as nutrition or shelter, is high initially—we don’t want to starve or to freeze to death—but that value drops off faster than the marginal value of other characteristics, including aesthetics.