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2 The Relationship between Need and Happiness

2.1 Satisfaction of Needs as a Cause of Human Action

Every event – and thus every action – has a cause. There is no such thing as an unfounded act. Needs can be seen as the cause of human actions. A need can be defined as a feeling of lack that can be eliminated by action. For example, food intake is based on a need for food, and meeting with friends satisfies the need for social contact.

Table 2-1 lists some human needs and possible actions for their satisfaction.

Need	Action/Omission
Social recognition	– Social commitment (e.g., in an organization)– Use of status symbols (e.g., luxury cars)
Need for entertainment	– Theater visit– Reading– Sports
Need for security	– Avoidance of dangerous situations– Installation of alarm systems in apartment or house

Table 2-1: Needs and possible actions or omissions

Table 2-1 shows that human needs can trigger a variety of actions. There is a general connection between need and action; i.e., an action always serves to satisfy needs. In this context, an action is always understood as a conscious activity. Pure bodily functions, such as the heart beating, are thus not considered actions, even though, as with conscious movements, muscle contractions occur. Likewise, reflexes, such as the hamstring reflex, are not considered actions because they cannot be consciously controlled. In general, actions can be defined as motivated behavior.

In current theories of human behavior, there is no uniform term for the triggering of an action. Terms such as need, desire, motivation, or excitement are used without a clear definition of whether these terms are used synonymously or not.⁷ In this book, these terms are generally referred to as needs. In the same way, colloquial terms, such as wants, will, or goals, fall under the concept of need, as do the technical terms preference and motive, which are often used in economics and psychology.

A need can be understood as the equivalent of energy potential in physics. A person performs an action only when there is a suitable need, just as current only flows through a conductor when it has a voltage source, or an object only falls when it is at a certain height.⁸ Every potential tends to degrade itself. In the case of a falling object, its potential energy is converted into kinetic energy, i.e., the original potential – the potential energy – dissipates. As an analogy, a person reduces their needs, i.e., their feeling of lack, through their actions. As a result, the feeling is no longer present after the action or is present to a lesser extent.⁹

Figure 2-1: Control cycle of need satisfaction

On the one hand, people experience the satisfaction of their needs as feelings of happiness, i.e., as feelings of contentment or euphoria. However, since the feeling of deficiency is often accompanied by negative emotions, an action could merely result in a reduction of those negative feelings. For example, if you step barefoot on a pointed object, you will feel pain and pull your foot back to reduce the pain. Actions, therefore, either result in an increase in positive feelings, a decrease in negative feelings, or both. In all cases, the level of happiness after the action is higher than it was before the action; i.e., the action always leads to an increase in happiness.

The relationship between needs, actions, and happiness can be described as a control cycle, as shown in Figure 2-1.

The control cycle begins with the perception of a need by the individual. The need is perceived as a feeling of lack, such as hunger. The individual then performs a sequence of actions to satisfy the need. In our example, the sequence of actions for eating is appropriate for satisfying the need. The sequence of actions includes all activities that belong to eating. These comprise all bodily movements that are necessary for food intake; i.e., the food is fed to the mouth, chewed, and swallowed. Usually, the food must first be prepared, which is also part of the action sequence. Thus, an action does not always consist of simple movements but can include a complex sequence of activities. This is usually the case with human actions.

The action has a result. The basic consequence of food intake is the onset of a feeling of satiety. The hunger, i.e., the negative sensation, decreases. However, food can also cause feelings of happiness in the form of positive sensations. These can be conveyed, for example, by the taste of the food. Thus, the happiness increase is greater if the preference for the respective dish is higher. The greatest feeling of happiness will therefore arise when you eat your favorite dish. But food intake is a cyclical process. When the food has been consumed by the body, the need arises anew, and this then leads to a renewed performance of the action.

The entire process takes place repeatedly. The individual constantly perceives certain needs; they then act and register the result of the action as an increase in the feeling of happiness. This control cycle is, of course, a simplified scheme that illustrates the process of satisfying needs. Reality is far more complex. Thus, actions can be influenced by several needs. For example, if you decide to eat in a restaurant, the choice of the restaurant may depend not only on the quality of food but on the ambience as well. However, the ambience has nothing to do with reducing the feeling of hunger; rather, it satisfies other needs.

Nevertheless, the control cycle in Figure 2-1 illustrates the principle of satisfying needs because every action is part of such a control cycle. Based on the insight that humans have many different needs, the human need structure can be represented graphically as follows (Figure 2-2).

Figure 2-2: Scheme of the human need structure

In the following sections, I discuss some basic characteristics of needs and then present a microeconomic model to describe the structure of needs. Rather than the term happiness, I refer primarily to the term utility since this term is generally used in microeconomics. However, the terms utility and happiness are used interchangeably in this book.

2.2 Characteristics of Needs

Human needs are not equally important but can be divided into more and less important needs. In times of food shortages, the next meal is certainly more important than the next visit to the cinema. When human needs are arranged in the order of their importance, one gets a hierarchical scheme that can be used for classification purposes. The American psychologist Abraham H. Maslow (1908–1970) proposed a hierarchical classification of needs that is still used today. Table 2-2 shows an extract from Maslow’s hierarchy of needs.¹⁰

Needs with a high priority, such as hunger or thirst, are called basic needs. According to Maslow, people always try to satisfy their basic needs first. Only thereafter do they devote themselves to satisfying secondary needs.¹¹ This is also the reason why self-realization needs exist primarily in societies where basic needs can be met to a high degree due to material prosperity. Basic needs then fade into the background, paving the way for the emergence and satisfaction of secondary needs.

Need Type	Examples
Physiological needs	– Hunger– Thirst– Need for health– Fatigue– Sexuality
Need for security	Need for:– Stability– Law– Freedom from anxiety
Social needs	Need for:– Affection and love of other people– Esteem
Self-actualization needs	Need for:– Music and art– Knowledge acquisition

Table 2-2: Types of needs and concrete examples

Such a hierarchy of needs, however, only allows a static description of the importance of individual needs. If the satisfaction of basic needs causes these needs to recede into the background and make room for subordinate needs, the importance of the needs within the hierarchy must be subject to temporal fluctuations that depend, among other things, on the satisfaction ratio of other needs. Hence, needs are not of constant importance for people, and their weighting can change over time.¹² Thus, one can distinguish between long-term and short-term fluctuations in this significance. Long-term fluctuations develop over months or years, and shortterm fluctuations over minutes or hours. Long-term changes in the hierarchy of needs can often be attributed to a change in the weighting of needs, whereas shortterm fluctuations are more likely to result from a shift in human attention.

Fashion trends in the apparel industry can be seen as an example of long-term changes in needs weighting. For example, in the 1970s, platform shoes enjoyed great popularity. This trend continued for several years and then receded. About 30 years later, this trend was created anew. Even the current retro look of cars or electrical appliances can be interpreted as an expression of a weight shift.

A distinction should be made between long-term fluctuations in the weighting of needs and short-term changes in the hierarchy of needs. These short-term changes are usually based on the fact that the degree to which individual needs are met changes within a few minutes or hours. As an example, imagine that you want to spend a nice evening with your partner. You may have reserved a table in a fine restaurant and bought tickets for the cinema or theater. You are feeling good all around. However, during dinner, you suddenly get a severe toothache. You will likely try to obtain painkillers and may even go to the dentist; i.e., you will change your original intention. The arrangement of the evening served in the broadest sense to satisfy the need for entertainment. The appearance of a toothache, however, brought the basic need for health and integrity to the fore. At the beginning of the evening, this need had a high satisfaction ratio and was not within your perception area. The occurrence of the toothache reduced the satisfaction ratio of the need for health, which then entered the perception area as a result. Because the need for health has a high weighting, actions are now determined by this need, and pain relief is sought. Figure 2-3 schematically depicts this shift in attention. The oval frame indicates the needs in the area of perception.

Figure 2-3: Shift of attention with decreasing satisfaction ratio

A person tends to be more attentive to needs with a low satisfaction ratio than to needs with a high satisfaction ratio. This leads to the fact that needs with a high satisfaction ratio often recede into the background.¹³

This is evidenced by the cultural history of mankind, which over the last 10,000 years has evolved from an agricultural society into a modern industrial society. The technical progress associated with this development has significantly increased humanity’s ability to satisfy its needs. Think of the advantages that have arisen from the use of electrical energy. At the same time, however, the number of needs has significantly increased. Today, when we visit a museum in which former living conditions of people are depicted, we quickly realize what we would miss in that situation. The living conditions of the past often seem primitive to us today, although they were normal for the people living at that time. Which inhabitant of an industrial nation can imagine life without electricity, refrigerators, washing machines, or sanitary facilities? Yet this was perfectly normal in Europe at the end of the 19th century. Our astonishment can be explained by the fact that we evaluate the simpler living conditions of that time from the perspective of our current structure of needs. We recognize that many of our current needs could not be adequately met by the means available in the 19th century.

However, not every need with a low satisfaction ratio inevitably reaches the human perception area. An example of this is the spontaneous decision to go on holiday to a particular place. Such spontaneous decisions can be triggered, e.g., by a newspaper report on the specific holiday destination, i.e., by a situation-related influencing factor. The need had a low satisfaction ratio before the triggering event and did not enter the perception area. The focus on the holiday destination was only generated by the newspaper report and was associated with the need for relaxation and thus entered the perception area. Especially, in the case of subordinate needs, a focus can be triggered by certain situations, such as reading a newspaper report. The situational significance of a need thus also depends on the perception of its satisfaction ratio.¹⁴

2.3 The Relationship between Need and Happiness

As already mentioned in Section 2.1, the satisfaction of needs leads to an increase in happiness and utility. However, the growth rate of utility is not independent of the consumption quantity of a good, but the rate decreases with increasing consumption. This means that the increased consumption of a good leads to a saturation effect. If a person has not eaten for a long time, they are likely to throw themselves greedily at an offered slice of bread. The second slice will probably still taste good and increase their utility, but the utility increase may be a little smaller than with the first slice. If you continue the game in this way, each additional slice of bread means a smaller increase in utility. There is – also literally – a saturation effect here. If you continue to eat anyway, you may feel sick, which corresponds to a reduction in utility. In this case, each additional slice of bread would have a negative utility increase; i.e., nausea would increase, and utility would decrease. In microeconomic theory, the increase in utility resulting from an arbitrarily small increase in the consumption quantity of a good is referred to as marginal utility. In our example, each additional slice of bread has an ever-smaller increase in utility. In economics, this is known as the principle of diminishing marginal utility.¹⁵

The principle of diminishing marginal utility can be further illustrated by the example of a lottery prize. Imagine you win $1,000 in a lottery. You are likely to be very happy with this prize because you can use the $1,000 for shopping, i.e., to satisfy certain needs. The lottery win leads to an increase in happiness. It depends on your personal need structure how strong this increase in happiness is. However, if you win $1 million in the lottery, your increase in happiness will be significantly higher because you can fulfill considerably more wishes with $1 million than with $1,000. The additional $999,000 thus has a significant influence on perceived happiness.

Now, imagine you win $100 million in the lottery in the first case and $101 million in the second. The prize of $100 million will again mean a clear increase in happiness, whereas the increase from the prize of $101 million will probably not be much different. This is because, with $100 million you have basically the same possibilities as with $101 million. Although, in this case, the difference is $1 million, and thus even larger than in the first example, the increase in happiness is only marginal.

Figure 2-4: Schematic diagram of happiness levels for need type 1

The principle of diminishing marginal utility can be applied to non-material goods in the same way. For example, social contacts are also subject to saturation. If you meet your friends 20 times a month, an additional appointment is less important than if you met them only once a month.

The principle of diminishing marginal utility tends to apply to all needs for which there is no clear upper limit for the positive effect on happiness, i.e., for those needs where the principle “the more, the better” applies (e.g., money). I refer to these kinds of needs as type 1 needs. Figure 2-4 shows the relationship between happiness level and consumption quantity as an example of this type of need.

However, there are needs for which perceived happiness does not constantly increase with consumption quantity but reaches a maximum at a certain level and then decreases again. In the example above (eating slices of bread), it was mentioned that a negative perception results if one continues to eat beyond a certain degree of saturation. This means that there is an optimal satisfaction ratio for certain needs. The human sensation of warmth is another example of this type of need. Because every person has a personal temperature range that they find pleasant, deviations above and below this range are assessed negatively and thus represent a reduction in utility. A third example is the taste of salt. Food is usually salted because salt has a positive effect on taste. If food is unsalted, it may taste bland, and eating it will lead to less happiness than eating a more salted food. However, if too much salt is added, the food tastes overly salty and is perceived negatively. Hence, there is a certain consumption quantity that leads to an optimum satisfaction ratio for salt. This quantity varies from person to person and, moreover, depends on the respective food.

I refer to needs that have an optimal satisfaction ratio with a positive consumption quantity as type 2 needs. Figure 2-5 shows a schematic diagram of their associated utility curve.

Figure 2-5: Schematic diagram of happiness levels for need type 2

The third type of need results in the avoidance of certain situations. For example, every human being tries to reduce contact with poisonous or harmful substances. The more one is exposed to such harmful experiences, the lower one’s happiness level. Therefore, the maximum happiness level for these needs is reached when one is not exposed to a harmful situation at all. Perceived happiness decreases with increasing intensity or frequency of negative situations.

Situations or substances that lead to a reduction in happiness can be described as damaging. Figure 2-6 illustrates the happiness curve of such damage.

Figure 2-6: Schematic diagram of happiness levels for need type 3

This need type comprises situations that cause fear in a person, i.e., all kinds of phobias. I call needs whose optimum utility lies at a consumption quantity of zero as type 3 needs. Since a type 3 need is about less, it is the opposite of a type 1 need, which is always about more. Need type 2 can be interpreted as a mixed form of need types 1 and 3.

Of course, the specific course of the utility curves could be different for all three types of needs. For example, the utility curve could increase or decrease more steeply. Furthermore, there could be a whole range of consumption quantities that are perceived as optimal for need type 2, which would lead to the utility curve forming a flat plateau. However, the above-mentioned characteristics – i.e., the more, the better, optimal consumption area, and the less, the better – allow needs to be assigned to one of the three types of needs, irrespective of the specific course of utility.

2.4 Definition of a Utility Function That Describes the Need Structure

For the three types of needs, the relationship between a need and utility is graphically illustrated in Figures 2-4 to 2-6. This connection will now be concretized by a mathematical function, a so-called utility function. A utility function assigns a certain numerical value to each combination of consumed goods, wherein a higher numerical value represents a higher utility. Consumed goods include non-material goods, such as love or acknowledgment, for which it is normally not possible to indicate the quantity consumed. However, such quantities can still be considered in a utility function.

The following simple utility function, based on only two components or goods, illustrates this.

In Equation 1.10, U denotes utility or happiness, N represents the number of foods, and S denotes the number of social contacts. The utility U in this simple model is hence equal to the sum of the number of available foods and the number of social contacts. If one assumes that this utility function represents the structure of a person’s needs, the happiness of this person depends only on the number of foods and the number of social contacts, and the more they have of both, the happier the person is. The needs in Equation 1.10 are additive, meaning they are independent of each other. For example, a utility value of 25 can be achieved by combining N = 25 and S = 0 or combining N = 10 and S = 15. For a person with a utility function with Equation 1.10, both combinations of goods would be equally desirable.

However, Equation 1.10 does not consider some of the characteristics of the need types described in the previous sections. These characteristics should be considered in the utility function if it is to provide an adequate description of the human need structure. The most important prerequisites for the definition of a utility function are therefore summarized here:

1. Every action has a triggering need as a cause and leads to an increase in happiness or avoids a decrease in happiness. The activity with the highest (predicted) increase in happiness tends to be executed.

2. Needs can be arranged hierarchically according to their importance.

3. The utility function must be able to map the three types of needs described.

4. It must be basically possible to map any number of needs in the utility function.

If we now apply these preconditions to Equation 1.10, we see that it can fulfill preconditions 1 and 4. A suitable action for satisfying need component N is the consumption of food, which leads to an increase in utility, as does the satisfaction of need component S through social contacts. The need structure represented in Equation 1.10 can thus explain corresponding actions. The two need components in N and S are additive, and since you could easily add further need components, you would be able to map any number of needs in this way.

Precondition 2, on the other hand, is not fulfilled by Equation 1.10 because the need components N and S are equally weighted. For a person with such a need structure, whether they consume food or have social contacts would be irrelevant. The same would apply when further need components were added. They would all be equally weighted, and the resulting actions would thus be equivalent in terms of the increase in happiness. However, the criterion of the hierarchy of needs allows for certain needs to have a higher value than others. A suitable utility function must thus reflect the weighting of individual needs. In addition, Equation 1.10 violates the principle of diminishing marginal utility described above because every unit consumed results in the same increase in utility. Nor is precondition 3 fulfilled because utility increases continuously with the amount consumed. There is no upper limit to utility, but this is necessary for the mapping of need types 2 and 3. Equation 1.10 could therefore only map type 1 needs and consequently does not provide a realistic description of the human need structure.

For this reason, the utility function must be refined. In the functions described below, utility U is no longer represented as an arbitrary real number as in Equation 1.10 but only as a relative number that can have values between zero and one. The utility can thus be interpreted as a satisfaction ratio of needs. This uniform scale of utility is worth further examining because it has an upper limit with a value of one, while the scales of classical utility functions have a constantly increasing utility value with increasing consumption and thus have no upper limit or only an infinite upper limit.¹⁶

A utility function that represents utility with relative values and meets the above criteria could look like this:

In Equation 1.20, ui designates the satisfaction ratio and ai the weighting of the need i. The need hierarchy can be mapped via the weighting factor ai by selecting a higher weighting factor for basic needs than for subordinate needs. The weighting factors here represent the percentage weighting of the individual needs. As a result, both the satisfaction ratio of individual needs and the overall utility range between zero and one. This is important in further investigations. The uniform scale of utility defined in Constraint 1.50 has an upper limit of one and can thus be used to map the three types of needs. A utility function that satisfies Constraints 1.20 to 1.50 thus fulfills the four prerequisites for modeling the human need structure.

In addition, the degree to which a single need component uj is met must be functionally linked to the quantities actually consumed. In Equation 1.20, all need components are thus far represented only by their satisfaction ratio. However, the degree to which a need is met is influenced by real variables, such as the consumption of certain quantities of goods. The relationship between the satisfaction ratio of a need and the quantities of goods consumed can also be expressed by a function. Hence, the model is extended by an additional Constraint that represents this functional relationship.

The value xj denotes the quantity of the good required to satisfy the need j. The functional relationship between xj and uj depends on the respective type of need. Needs with positive growth in happiness (type 1) have an ascending satisfaction ratio as consumption volumes increase. The relationship between consumption quantity and satisfaction ratio must be defined so that the satisfaction ratio approaches the maximum value of one in progressively smaller steps without ever reaching this maximum (cf. Figure 2-4). In the same way, the functional relationship must be chosen for the other two types of needs. For type 2 needs, the satisfaction ratio must increase to the maximum value of one up to a certain consumption quantity and then fall again (cf. Figure 2-5). In the case of type 3 needs, aimed at avoidance, the linkage must finally be chosen so that the maximum satisfaction ratio of one is reached with a consumed quantity of zero before decreasing (cf. Figure 2-6). The exact formulation of examples for secondary Constraint 1.55 leads to complex mathematical functions, which are not considered at this point. For this reason, example equations for Constraint 1.55 are explained in Appendix A rather than here.

The model is basically capable of mapping the entire complexity of human needs because any number of need components with their respective weighting can be considered in a utility function. For example, single needs can be replaced by several specific needs that describe the behavior in more detail. In the previous examples, the need for food was discussed. This is not very specific because it could consist of many separate needs that characterize individual preferences. For example, some people may prefer meat dishes to vegetarian dishes, and then perhaps beef to pork. Others might prefer French, Italian, or Greek cuisine. The need for food can therefore manifest itself in many different individual needs that can refer to an individual food or even ingredient. Each of these needs can be assigned its own weighting factor. In the same way, other needs can be broken down into individual needs. Thus, from the modest number of basic needs in Table 2-2, many components of a person’s individual need structure can emerge.¹⁷

But what exactly does utility, i.e., the numerical value used in the model as a measure of the level of happiness, mean? First, in order to make an interpretation, it is necessary to describe how utility, as a purely numerical value, can be related to the feeling of happiness that a person experiences from their actions. It is, therefore, a matter of the connection between the numerical value and the sensations or emotions experienced. Emotions are a special kind of sensation and play an important role in many decisions.

A basic assumption of the model is that a human being wants to increase their level of happiness through their actions or prevent a decrease in this level. A positive happiness level is perceived through positive feelings or emotions, whereas a reduction in happiness levels accordingly leads to negative emotions. Negative emotions lead to the above-mentioned feeling of lack. The following table shows a selection of positive and negative emotions.

Positive Sensations/Emotions	Negative Sensations/Emotions
– Joy/euphoria– Satisfaction– Contentment	– Anger/rage– Sorrow– Disappointment

Table 2-3: Basic positive and negative sensations and emotions

The list in Table 2-3 can be arbitrarily extended. Moreover, there can be a mixture of different emotions, described as well-being, mood, or even happiness or utility. The numerical value calculated from the utility function can be interpreted as a measure of this level of happiness. It is a purely abstract value, and the feelings and emotions to which it corresponds cannot be exactly assigned. Generally, utility value can only be used to compare different emotionalities to establish a ranking. If a utility function has been determined for a person, one can say that this person experiences a situation with a higher utility value in a higher sense of happiness than a situation with a lower utility value. In addition, it would be possible to identify situations that lead to similar feelings of happiness, but the numerical value of the utility cannot make any statements about the type of emotion experienced.

However, for a model that describes human needs and actions, statements about emotions experienced are not necessary. The model should only precisely describe the structure of needs so that human actions can be explained. The specific emotion experienced is not necessary for understanding the action, and the abstract description of a happiness level using a numerical value is sufficient. The above-mentioned comparison with energy further illustrates the connection between utility and emotions. A certain level of energy can include various forms, such as kinetic energy, thermal energy, or even matter. Similarly, a certain level of happiness can manifest itself in different sensations and emotions.

A further problem is the standardization of the scale of utility, i.e., the determination of which utility value ranges are perceived as negative, neutral, or positive. One cannot generally say at which utility value emotions are positive and at which value they are negative. The only values on the scale of utility that can be uniquely assigned are zero and one. The value zero is the minimum of the scale of utility and must necessarily correspond to a form of suffering, i.e., a negative emotion. If this were not the case, it would not be possible to depict suffering in the model. All utility values above zero can only depict situations that can be assessed as better. A utility value of one must be evaluated accordingly as a form of happiness and thus positively. If even the maximum utility of one did not correspond to a state of happiness, one would not be able to represent a state of happiness at all. The range of positive and negative emotions can therefore be freely selected between zero and one when defining a utility function. For example, one could say that everything above a utility value of 0.5 is perceived as positive, and everything below is considered negative. A value of exactly 0.5 would then result in a neutral emotion. However, this limit could also be set at 0.3 or 0.7. Each definition in this area naturally leads to a different utility function. In any case, the scale of utility must be defined in such a way that it corresponds to human decision-making behavior.¹⁸

Fortunately, a standardization of the scale of utility is not necessary for the determination of maximum utility. Since the scale of utility used in this model has an upper limit of one, which is the same for all needs, the maximum utility can be derived from the need structure itself.

2.5 Determination of Maximum Utility

Before the possibilities for maximizing the utility function are presented, it is necessary to take a closer look at the actions that satisfy needs. All the above-mentioned examples of actions, such as eating or going to the theater, do not deal with the structure of the need itself but mostly refer to aspects that lie outside the human being. These needs, which certainly make up the largest part for most people, are what I call outwardly directed needs.

Outwardly directed needs are distinguished from those needs that are directed at the own need structure itself. I call these needs inwardly directed needs because the structure of needs is part of the human interior. Such an inwardly directed need may be, e.g., the will of a person to give up smoking. According to our model, a smoker consumes cigarettes because this satisfies a specific need, and when they decide to stop smoking, this desire also corresponds to a specific need. If one designates the first need (smoking cigarettes) as B1 and the second need (to quit smoking) as B2, then need B2 aims to reduce the weighting of need B1 to zero. A decrease in the weighting of need B1 leads to an increase in the satisfaction ratio of need B2. If need B1 no longer exists, it has a weighting of zero; i.e., it is no longer an effective component in the need structure. In this case, need B2 reaches its maximum satisfaction ratio of one because the goal has been fully met. Inwardly directed needs are usually type 3 needs because they aim at less consumption to achieve a greater satisfaction ratio.

Outwardly directed needs, on the other hand, refer to everything that is outside the human need structure. For example, the need B1 (smoking) – like all consumption needs – is an outwardly directed need. Needs related to the human body, such as personal hygiene, are also outwardly directed needs.

The distinction between outwardly and inwardly directed needs plays a central role in determining the maximum utility in Equation 1.20 as well as in the microeconomic interpretation method.

The maximization of overall utility is now explained using a simple utility function with two components (needs) as examples. Let us look at Equation 1.60.

As an illustration, the first need can be defined as the desire to consume alcohol. The variable a1 is the weighting factor of this need, and u1 is its satisfaction ratio. The second need can be defined as the desire to consume cigarettes, where a2 is the weighting factor of this need and u2 its satisfaction ratio. The utility of a person with such a need structure is only determined by alcohol and cigarette consumption. The weighting factors and satisfaction ratios in this example were chosen arbitrarily but in compliance with Constraints 1.30 to 1.50. In this example, a total utility value of U = 0.7 * 0.1 + 0.3 * 0.9 = 0.34 is calculated for the initial situation. From the utility value alone, it is not yet possible to draw conclusions about the perceived level of happiness because, as mentioned above, within the limits of zero and one, there is no norm as to whether a utility is high or low.

In our example, the need for alcohol has a higher weighting than the need for cigarettes but a lower satisfaction ratio. The action of the individual concerned would therefore aim at increasing alcohol consumption as this would tend to lead to a larger increase in happiness than increasing cigarette consumption.

However, it is up to the individual to decide whether or not to give up alcohol consumption. To this end, the utility function must be extended to include a third component that aims to eliminate the first need, i.e., to set the weighting a1 to zero. Need 3 is an inwardly directed need, while needs 1 and 2 are outwardly directed needs.

The utility function then looks like this:

Need 3 is only important if it has a positive weighting. Here, the weighting factor a3 was arbitrarily set at 0.4. Since the sum of all the weighting factors of a utility function according to Constraint 1.40 must be one, the weighting factors of the other needs must be reduced. In Equation 1.70, the weighting factor a1 was reduced from 0.7 to 0.3. However, it is also conceivable to split the reduction between a1 and a2.

In the same way, the satisfaction ratio u3 was arbitrarily set at 0.1. This value was chosen to be low because need 1, which is to be eliminated by need 3, is still included in the need structure, and thus a high satisfaction ratio for need 3 would not be justified. It is important to emphasize once again that there is no norm for deciding which values are high or low within the limits of zero and one, neither for the satisfaction ratio nor for total utility. Such a definition must always remain arbitrary. The total utility for the new need structure is again 0.34; i.e., the individual’s level of happiness has remained the same, taking into account the assumptions made. The example of Equation 1.70 shows that a change in the structure of needs leads to a change in weighting and can influence the overall utility of a person.

With the need structure of Equation 1.70, the individual will strive to stop consuming alcohol. If this is successful, a new need structure will result. This is illustrated in Equation 1.80.

By eliminating need 1, the weighting is now split between only two needs. The weighting factors were again set arbitrarily. However, the satisfaction ratio u3 must assume the value one because the objective of this need has been completely achieved by eliminating need 1. One cannot do more than eliminate the need; multiple eliminations are not possible. Equation 1.80 has an overall utility value of 0.93, which is an improvement compared to Equation 1.60. This example shows that it is possible to increase happiness levels by practicing renunciation. This is because the elimination of needs from the need structure means nothing other than practicing renunciation.¹⁹

One can now continue in the same way and extend Equation 1.80 by need 4 that aims to eliminate need 2 (cigarette consumption). Need 2 can be eliminated by setting the associated weighting factor to zero, resulting in Equation 1.90.

After eliminating need 2, the overall utility is one, which is the maximum value. This is because the satisfaction ratios of needs 3 and 4 both have a value of one, and, by definition, the sum of the weighting factors is one. Even a change in the arbitrary weighting of 0.5 for both needs would not have any influence on overall utility.

Applied to Equation 1.20, this means that maximum utility can be achieved by eliminating all outwardly directed needs. What remains is a need component aimed at eliminating all other needs. In Equation 1.100, this component is represented by the index n + 1 with a weighting factor an+1 and a satisfaction ratio un+1.

When this goal has been achieved, this component has a satisfaction ratio of one as well as a weighting of one. In this case, all other need components have a zero weighting and are no longer part of the need structure. Equation 1.110 demonstrates this.

U = 1 applies here; i.e., the overall utility or happiness has reached its maximum value by the elimination of all other needs.

The maximization undertaken here does not correspond to the maximization of utility in the traditional microeconomic models. In those models, an unchangeable utility function is maximized, taking into account constraints (prices, disposable income, and available time). The maximization carried out here, however, consists of transforming the utility function because through the dissolution of all outwardly directed need components, the need structure of the individual changes. Traditional microeconomic models, on the other hand, assume a stable preference structure. Therefore, in these models, there is a constant rather than a variable utility function. Because the model developed here describes the universal connection between needs and actions, the underlying human behavior model can be described as homo agens (“the acting man”). The traditional microeconomic models, on the other hand, are based on the behavioral model of homo economicus (“the economic man”).²⁰

Equation 1.110 shows that an absolute level of utility or happiness can be achieved solely in a state of wantlessness. However, this state can only be achieved if all other needs of the need structure have been dissolved. Since man, as a physical being, is subject to various needs imposed by the body, it is assumed that a complete elimination of all needs cannot be reached. This is because basic needs, such as hunger or sleep, cannot be easily overcome. It may be possible to learn to master them to a certain extent, but it is not possible to dissolve them completely. There is at least no known method by which this objective could be achieved. In this respect, the result of utility maximization is primarily not of practical but only theoretical importance.

However, the consideration of this theoretical result is sufficient for this investigation since the main focus is on the conclusions that can be drawn from utility maximization and the characteristics of the need structure. Any theory can provide knowledge about the subject it describes. The microeconomic model presented here is a description of the relationship between needs, actions, and happiness, i.e., elementary aspects of human existence. Since the model describes the logical relationship of needs to each other and the conditions of states of happiness, it enables people to understand the inner causes of happiness and suffering. These findings are important, even if they are only theoretical in nature.²¹

The microeconomic model is comparable to an X-ray image in medicine. An X-ray image reveals internal structures that would otherwise not be visible, e.g., a bone fracture. But an X-ray does not show the pain someone with a broken bone feels, and it does not say anything about the limitations one is subject to with a broken bone. Nevertheless, the X-ray image can be of great use in treatment. The utility function reveals the inner structure of the world of needs by describing it mathematically without being able to say anything about the accompanying characteristics, such as emotions. In addition, it enables conclusions and insights that are beneficial for understanding our happiness. In this sense, the microeconomic model can be considered a useful tool that can complement models from other sciences.

If one assumes, in a kind of thought experiment, that the structure of needs can be influenced at will, the state of wantlessness corresponds to maximum utility, i.e., absolute happiness. This result is independent of the weighting of a person’s needs before maximization. This is because the needs of type 1 – i.e., the needs for which the more, the better applies – cannot achieve a maximum degree of fulfillment since one would be able to constantly increase the level of happiness by increasing the consumption quantity. An optimal satisfaction ratio can therefore only be achieved for needs that are not of type 1. Such needs are usually outwardly directed needs because they depend on external aspects, such as the salt content of food. But external factors cannot be arbitrarily influenced by man. The satisfaction ratio may be optimal for these outwardly directed needs of types 2 and 3 but may not be selfinfluenceable. One has only limited influence on whether the soup in the restaurant is salted or whether one is exposed to any pollutants in the environment. Therefore, it cannot be assumed that an optimum satisfaction ratio can be achieved for these needs in the long term. On the other hand, the degree to which inwardly directed needs are met does not depend on external factors. Since they refer only to their own need structure, their satisfaction ratio depends merely on the weighting factor of the influenced outwardly directed needs. Using the above-mentioned assumption that the weighting factors can be changed at will, the individual has complete control over the degree to which those needs are met and can thus achieve a stable optimum.

Under the given conditions, the state of wantlessness is the only theoretically conceivable possibility for achieving a state of absolute happiness. If Equation 1.110 were extended to include other outwardly directed needs, the overall utility would fall below the value of one. This is because outwardly directed needs mean that the overall utility depends on external factors that are only available and influenceable to a limited extent. The optimum in Equation 1.110 is hence valid for any utility function. It applies to every human being in every situation, regardless of whether they lived in the past, live in the present, or will live in the future, i.e., regardless of individual differences in the structure of needs. This optimum results logically from the structure of human needs and therefore has a universal meaning.

The fact that wantlessness can be interpreted as a state of absolute happiness makes it possible to establish a relationship to religion. This is because human happiness is one of the main themes of religion, and the absolute – e.g., in the form of God – plays a central role in religion.

Supplement: Notes on J. K. Mehta’s Theory of Wantlessness

The Indian economist Jamshed Kaikusroo Mehta (1901–1980) developed an economic theory in the middle of the 20th century whose results coincide with the model presented here. In Mehta’s theory, needs cause discomfort – he uses the specific term pain – that can be reduced by the actions of the individual. As a result, the individual experiences the satisfaction of needs as a positive feeling, which Mehta calls pleasure.²² Thus, in his model, the reduction of discomfort and positive feelings always go hand in hand. They are the engine of human action.

However, the positive feeling that is achieved through the satisfaction of needs is not permanent because needs tend to return and cause renewed discomfort:

"There is no other way of getting pleasure except by getting rid of pain. Nor can satisfaction of wants be, in any sense, a permanent solution; for, satisfied wants always have a tendency to recur.”23

Hence, through the simple satisfaction of needs, one can only achieve a suboptimal utility value. But the individual also has the prospect of reaching maximum utility. A human being could achieve this by dissolving their needs. The discomfort created by these needs would then disappear and lead to a maximum state of happiness. Mehta defines this as a state of wantlessness. According to Mehta, the state of wantlessness can only be achieved through needs that aim to dissolve other needs:

"The process of killing wants has been called elimination of wants. But wants can be killed only by wants. Hence stronger, and for our purpose here nobler and superior, wants must be employed to kill the baser and inferior wants."²⁴

Thus, the outwardly directed needs of the homo agens model correspond to the inferior needs of Mehta’s model, and the inwardly directed needs correspond to his superior, noble needs. In Mehta’s model, the structure of a person’s needs in a state of wantlessness consists of only one need component. In this state, no new needs arise, and it is therefore identical to absolute happiness:

"In this way we can ultimately reach a stage in which only one – the most superior – want would be left. And it is only when that stage is reached that we can with impunity satisfy the want. Once satisfied such a want never recurs. The pleasure then obtained lasts, as it were, forever. The state of happiness is reached – the state in which the mind remains absolutely free from the tormenting pressure of wants. The one final want, the satisfaction of which frees us from all wants, can be called the want of being wantless. By the process of killing or eliminating wants we thus ultimately reach the state of wantlessness – a state in which perfect happiness is experienced." ²⁵

This corresponds exactly to the state of wantlessness described by Equation 1.110.

Moreover, J. K. Mehta made a reference to religion, one of whose functions, in his opinion, is to evoke the superior needs of man. For example, in India, gurus have such a function.²⁶ However, Mehta has not developed a microeconomic method for interpreting religious teachings on the basis of his model. Yet, with his theory of wantlessness, he has eliminated a crucial gap in Western microeconomic theory, whose models only consider outwardly directed needs. With these insights, he was far ahead of his time.

⁷ The economist Tibor Scitovsky (1910–2002) refers to the concept of instinct, which has been defined in classical philosophical literature and behavioral science as the basis of human behavior, cf. Scitovsky, T. (1977), pp. 21–22. From this, he delimits the term excitation, which is used in neurophysiology, cf. ibid, p. 23.

⁸ The concept of potential here is merely used as an illustration. This is not to claim that there is any physiological equivalent for this potential. The neurosciences have not yet found a clear mechanism for the control of human activity. So far, there are no parameters that can be measured in the same way energy is measured in physics.

⁹ The feeling of satiety when eating is an example of the reduction in potential. Hunger; i.e., the need to eat, triggers the action of eating and is reduced by this action. Tibor Scitovsky takes the view that human actions are based on states of excitement, whereby the excitement is reduced by the action, cf. Scitovsky, T. (1977), p. 32. Abraham Maslow also attributes human behavior to motivation but additionally assumes that there are behaviors that are not motivated. As an example, he mentions spontaneous mental associations when listening to certain words, cf. Maslow, A. H. (1954, reprinted 2007), p. 71. However, it is questionable whether mental associations can be understood as human actions. According to the concept of action on which this book is based, associations cannot be attributed to human actions because they cannot be consciously controlled.

¹⁰ For the classification of needs, cf. Maslow, A. H. (1954, reprinted 2007), pp. 57–68. In general, Maslow’s hierarchy of needs is represented as a pyramid of needs, wherein the basic needs form the bottom level, with the levels above being occupied by the next most important categories. The top of the pyramid comprises self-actualization needs. The table used here lists Maslow’s need categories in reverse order.

¹¹ Cf. Maslow, A. H. (1954, reprinted 2007), pp. 57–60.

¹² The sociologist Karl Otto Hondrich (1937–2007) describes four models for changing needs, cf. Hondrich, K. O. (1979), pp. 130–133.

¹³ Cf. Maslow, A. H. (1954, reprinted 2007), pp. 59–60.

¹⁴ Appendix A.2 looks more closely at the significance of the perception area for human decision-making behavior.

¹⁵ In microeconomics, the principle of diminishing marginal utility is used more or less strictly as a premise. The principle of diminishing marginal utility is formulated in Gossen’s First Law, cf. Gossen, H. H. (1854), pp. 4–5.

¹⁶ A utility function very often used in microeconomic studies is the Cobb-Douglas function, i.e., U(x,y) = xcy1-c with 0 < c < 1, where x and y represent the consumption quantities of the respective goods. This function has no upper limit for U since functional value and thus utility increases with an increase in consumption quantity. The upper limit would thus be infinite. Appendix A compares the uniform scale of utility used here with alternative scales of utility.

¹⁷ It has already been mentioned that the weighting of needs may be subject to fluctuations whose laws are not known. Those temporal changes in the weighting of needs can be reflected by their own utility functions. Strictly speaking, a specific utility function is only valid for a certain point in time. The model would hence need to be supplemented by a time index in order to account for this fact. However, this would not affect the structure of the model. Since only this structure is important for the following analysis, a time index is not used.

¹⁸ Cf. Appendix A.3.

¹⁹ In this respect, the model presented here differs from the models in classical microeconomics, in which only outwardly directed needs (preferences) are considered. Thus, in traditional microeconomics, actions are not aimed at changing the structure of preferences, although this may well happen in reality, as the above examples show. Classical microeconomic theory certainly has room for improvement in this area, cf. Appendix A.

²⁰ Appendix A.1 compares these two behavioral models.

²¹ There are studies on the connection between religious experience and the activity of certain regions in the brain. For example, people’s brains were examined during a meditation. Cf. Newberg, A. et al. (2008), pp. 9–21. Further investigations may make it possible to gain insights into nature and/or the limits of religious experience in the future. In addition, it is conceivable that humans may transform themselves into a new form of existence through biological or technological progress, from which they can reach a state of wantlessness. This means that the result of the model is not necessarily bound to the current biological form of humans.

²² Cf. Mehta, J. K. (1962), p. 66.

²³ Cf. Mehta, J. K. (1967b), p.27.

²⁴ Cf. Mehta, J. K. (1962), pp. 66–67.

²⁵ Mehta, J. K. (1962), p. 67. Cf. id. (1967a), pp. 62–63.

²⁶ Ibid. Mehta also mentions Jesus, Buddha, Muhammad, and Krishna as wantless people, cf. Mehta, J. K. (1967b), p. 123.