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What do we want in a Post-Covid Economy?

What will a post-covid economy look like? Will it recover from the deep recession that has been forecast? Or will we even be thinking about our economy in recession versus growth terms? Although it’s more likely that we’ll be more similar to pre-covid than different – desire for consistency is a human trait after all – many have suggested that this could be a trigger for change. And a well-publicised YouGov poll suggested that 91% of people in the UK don’t want everything back the way it was. Let’s face it, we weren’t exactly basking in sunshine and roses this time 12 months ago. It got me to thinking about what I would want a post-covid economy to look like. And, as somebody who studies motivation, I figured I should start by thinking of it through the lens of goals.

Let’s get a few assumptions and caveats out of the way first. I’m not an economist. I’m looking at the economy from a psychological perspective using management and cognitive theories; not economic ones. What I end up with will probably be both nonsensical (from an economist’s perspective) and common-sensical (from everybody else’s perspective). I’m not expecting these rambling thoughts to pass muster against heavy critique, it’s more about playing with ideas to start us thinking and talking about where we can go. And last, but certainly not least, I am viewing “the economy” as a tool to help us achieve our goals in society, not as a goal in and of itself.

This last point is very important. (Again, I’m not the first to have said it and for those who want an interesting read, I’d recommend The Growth Delusion.) We should want a strong economy if, and only if, it helps us. We should want growth in gross domestic product (GDP) if, and only if, it helps us. Yet economic growth has become the driving force behind most government decisions. In the US, on both sides of politics, you have the view, “It’s the economy, stupid”. And right now, President Trump is putting lives at risk around the world by removing restrictions solely to increase economic growth.

GDP as a Goal

How has it come to this? I think that it’s because, from a goal-setting perspective, a GDP growth rate of either 2-3% (for established economies) or 7-10% (for emerging ones) is an extremely powerful goal. That’s not to say it’s the right goal to have; it’s just that it’s a powerful one. And that’s because of why goals motivate us in the first place. I’ve written a fact-sheet on understanding goal-setting so I won’t go into it in detail here (if you want to read the fact-sheet click here; if you want to read a summary academic-practitioner paper click here). For now, let’s focus on the characteristics that lead to motivating goals: 1) specific (not just “do your best”); 2) challenging but achievable; 3) measurable; and 4) one that people are committed to.

We can see that a growth rate for an established economy of 2-3% ticks all of these. It’s specific at 2-3% rather than open-ended, we can measure it using GDP, it’s not easy to keep within range but it can be done using economic levers, and economists and politicians are certainly committed to it! An economic goal of “make a little bit of money” wouldn’t be as compelling because it’s not specific and while it’s measurable and I’m sure many people would be committed to it, it’s not particularly challenging.

So, we have this immensely powerful goal that, because of its psychological properties, has now shifted from being a measure of the tool that will help us get what we want, to being what we want. That’s two steps it’s managed to cut out! Pretty impressive. And because goals drive our behaviour, we focus on what we need to do to get our GDP back up to 2-3% – hence Trump’s decision.

But this is a single goal. One goal – increasing GDP year on year. Everything comes down to the monetary value of what the people in a country have produced. Is this what we are aiming for as a society? Is this what we truly value?

Living with Multiple Goals

In the organisational behaviour and psychology research fields, we’ve realised that life isn’t as simple as single goals. You don’t set a New Year’s Resolution and then work towards that unswervingly. Well, at least, I don’t. I set a resolution, let’s say to eat my 5 portions of fruit a day. But within a week, that goal is bumping up headlong against another goal of trying to meet deadlines and I don’t have time to go and buy some more fruit. And by the next week, it’s not just competing for time, but it’s now rammed against a more abstract goal of needing comfort food because I’m stressed and I really just want chocolate and who needs that much fruit anyway!

Needless to say, we all have many goals that we are all trying to juggle in the best way possible. Focusing on only one goal is like focusing your life completely around trying to eat more fruit. And if it sounds silly for people as individuals, why do we think it would be different for people as a collective?

I know that in the economics field, many have tried to pull together indices that combine various aspects of the world to try and offset this single-goal problem of GDP (for explanations of some click here and here). From what I understand, these are often criticised as being “cherry-picked” to meet the author’s aim. If we took a multiple goals perspective, though, we could see, discuss, debate and decide upon what our goals were first, before arguing about the best way to measure them.

An Economic Goal Hierarchy

Another caveat before we move on. What I’m describing here is a very simplified version of an economic goal hierarchy. These are just a few goals of the many that we may want to achieve as a society and their relationships will be far more complex than I have depicted below. This is a starting point and framework for discussion, and definitely not the end point of what I think our economic goal hierarchy should look like.

A goal hierarchy outlines all the goals held by a person, or in this case, our society. At the top of the hierarchy are the more vague, abstract and long-lasting goals, while towards the bottom of the hierarchy, the goals are more specific, measurable and short-lasting. So as a society we might decide that our long-term goals are to be sustainable, healthy and happy (in a eudaimonic rather than hedonistic sense). We want to be safe, have access to healthcare, education and a job. And we want to have an economic growth rate of 2-3%. You can see how these lists range from the more ethereal (e.g., sustainable), moving down through more functional, tangible goals (e.g., access to healthcare), to the concrete (e.g., growth rate).

But a goal hierarchy does much more than just list the goals. It shows us how they are related to each other. We would expect that if we achieve our goal of having access to healthcare that we will be helping our goal of being healthy as shown by the blue line in the figure below. And that having access to education will help us achieve our eudaimonia/happy goal. We can picture these connections as lines between the goals – solid lines are strong connections and dashed lines are weak connections – but remember again that this is a simplified version and doesn’t contain all the necessary complexity!

Simplified example of an economic goal hierarchy with goals at different levels and connections between them
Simplified example of an economic goal hierarchy

But connections can be negative as well (see the red lines in the example above). There is some evidence to show that GDP can have a negative effect on sustainability. Moreover, it could be that for everybody in the world to have a job we would drive our planet towards unsustainable consumption and for all the positives that jobs provide us in terms of meaning and avoiding poverty there are also some negatives around physical and mental health. The point here is not to define what I think the connections are, or should be, the point is that we need to acknowledge that goals are interdependent. Goals not only help each other, they can conflict with each other in the same way that eating fruit conflicts with eating lovely, comforting chocolate.

What Do We Want Our Post-Covid Economic Goal Hierarchy to Look Like?

Drawing out a goal hierarchy helps bring the issues to the forefront. We can’t ignore them when we have to put them down on paper. When we start to draw in negative connections, we realise that we have goal conflicts that we need to address. How we solve these goals conflicts depends on what we want to do as a society but without knowing that they exist we can’t move forwards.

Another thing we start to uncover are our assumptions. One of the problems we have at the moment is the assumption that a GDP growth rate will help us to achieve all of our mid-range goals, and either directly or indirectly, our long-term goals. But the evidence that this will occur is contested. Again, it’s not until we have to put it down in black and white (or blue and red) that we really think about what we are expecting GDP to do.

We can also identify gaps and goals that might not actually be doing what we want them to do. Take, for example, having access to a job. Some would argue that it is only weakly connected to eudaimonia/happiness and is negatively related to health and sustainability. Maybe it’s not the right goal? Instead, we could think about something that would be more strongly related to eudaimonia without any negative tradeoffs with health or sustainability. Instead of “having access to a job”, maybe we should make the goal “being able to contribute to society in meaningful and valued ways”? When we put that into our goal hierarchy, we can see that it will definitely help us achieve our long-term goals but may be hindered by GDP. Again, I’m not advocating for this position, merely showing how we need to use goal hierarchy as a framework for us to move the conversation forward.

Moving Forwards

What do we want our economy to do for us? At the moment, we are focused on the goal at the bottom of the hierarchy – GDP growth rate – and assuming that the upward connections will happen. That GDP will turn our world into a place we want to be living in. Given how society has polarised into haves and have-nots, I’m guessing that these upward connections have not happened; the previous status quo was not okay.

That means that we need to think, discuss and debate what we do want in our society. What are the long-term goals for our countries and our communities? What do we want people to have done, felt, been during their life-time? Only once we know this, and can plot out the connections between the goals, can we work out how to best achieve it.

What do we want our post-covid economic goal hierarchy to look like?