Existential Economics

Humans are often described as social animals because we are so driven by the need for connection and much of our success as a species relies on our ability to work together. This is certainly true but our social nature is not what distinguishes us from other organisms. Many animals possess a similar social orientation. Some scholars have argued that we are not just social but are also political animals. This is also correct but similarly does not truly distinguish us. Primatologists have documented many ways other animals engage in what can be described as political behavior, such as rhesus monkeys helping other monkeys in positions of power to advance their own standing in the group. 

What may really differentiate humans from other organisms is our existential nature. We have a distinct cocktail of cognitive and emotional capacities that orient us towards meaning-making. We are not the only self-aware organism but are distinctly introspective and able to mentally time travel. This grants us the cognitive freedom that comes from being able to reflect on past experiences, run mental simulations of the future, and decide how to regulate our own behavior in the service of the beliefs, values, and goals that provide us with meaning. We also have imaginations that push us to think beyond the limits of our physical selves, as well as the limits of what is possible based on current science and technology. What seems like fantasy today has the potential to be reality in the future because we can turn discoveries and dreams into long-term, meaning-affirming projects that advance civilization. 

Even our social nature is distinctly existential. We don’t just seek others for sex, support, and status. We long for deeper connection, to feel like people “really get us.” This helps explain why individuals can feel lonely and isolated even when they are surrounded by other people. Our social nature is also implicated in the existential pursuit of symbolic immortality; we invest in cultural identities that allow us to feel like we are part of something larger and longer lasting than the individual mortal self. And we experience rich cognitive-emotional states such as awe, nostalgia, inspiration, gratitude, and hope that elevate perceptions of meaning in life. 

There are so many ways in which our existential fears, curiosities, and aspirations shape our lives and yet economists and many other social scientists often neglect the existential nature of humanity in their discussions of economic and related issues. 

Even psychologists ignore critical existential features of the human experience as they increasingly embrace a victimhood culture that imagines people as having little or no agency. I am always amazed when I see successful academics who are undoubtedly teaching their own children the importance of critical thinking, self-control, resilience, persistence, artistic passion, creative problems-solving, and long-term goal-striving publicly promote a worldview that treats individuals as if their life outcomes are largely or completely controlled by external forces, and not at all by the self-regulatory, imaginative, and motivational capacities that make an existentially fulfilling life possible. 

Yes, discrimination and poverty (as well as many other challenges that don’t fit into the popular group identity framework) make life unfair and can cause great suffering. But keep in mind that many of the social, cultural, legal, scientific, and technological innovations that have increased longevity, literacy, equal rights, wealth, and freedom were advanced by people who faced many barriers and experienced great tragedy—often under conditions that would be considered impoverished in the developed world today. The capacity to overcome hardship in the service of pursuing a meaningful life is a vital part of the human story. And even the most socially and economically fortunate among us experiences personal misfortunes, struggles with private demons, and must face the pain caused by losing loved ones and the existential anxiety associated with the awareness of one’s own physical transience.

Despite life’s challenges, humans all over the world move forward with confidence and hope. They work to improve their own lives and the lives of others. They create and innovate. I propose that they are able to do so, in large part, because they are fortified by a belief in their ability to live a meaningful life. Meaning is a critical intrapsychic resource that helps people navigate life’s many trials and find the inner strength and inspiration that supports individual and societal flourishing. This includes economic flourishing and related activities that economists and business scholars care about, such as entrepreneurship. 

Some economists do appreciate the importance of psychological well-being and other areas of research in cognitive and social psychology that have deepened the analysis of how humans make economic and related decisions. But existential psychology has had little influence on the field. Yet, a growing empirical literature reveals that existential psychological variables, particularly meaning in life, measurably influence and are influenced by many of the variables that economists study. For example, consider the relationship between money and meaning.

Money and Meaning

A large and growing body of research indicates that meaning in life, an indicator of existential well-being, plays an important role in overall psychological and physical well-being. People who view their lives as meaningful are more satisfied with the conditions of their lives and less at risk of depression, drug and alcohol abuse, and suicide. When people face mental health challenges and are seeking treatment, meaning in life plays an important role in treatment success. The belief that one’s life is meaningful also predicts future physical health and longevity. Economists interested in well-being should thus be very interested in the potential influence of economic variables such as income on meaning in life, as well as the potential influence of meaning in life and related existential psychology variables on economic activities. 

Generally, income is positively associated with happiness, but the relationship between money and meaning is more complex. First, though rich countries tend to report higher life satisfaction than poor countries, rich countries are not where people feel the most meaningful. A study of well-being across 132 nations found that individuals in poor countries report higher meaning in life than individuals in wealthy countries and that this relationship can be partially explained by the higher levels of religiosity in poor countries. 

Why should we care about the potential for economic wealth to distinctly influence life satisfaction and meaning? For one, poor countries have lower suicide rates than wealthy countries, and meaning—but not life satisfaction—was found to explain this relationship. This suggests that existential well-being variables such as meaning in life have unique implications for individual and societal flourishing, a point I will return to later in this essay when discussing the self-regulatory dimension of meaning. 

The relationship between money and meaning might be different within a specific nation because worldviews about what people should value vary between cultures. Perhaps in highly individualistic, capitalistic, and wealthy nations like the United States, money plays a more central role in meaning-making. Surveys have found that Americans with higher incomes report higher levels of meaning in life than those with lower incomes. 

However, research that takes a deeper look at this relationship paints a more complicated picture. For example, in one set of studies, researchers found that the positive relationship between income and meaning disappears for people who report high levels of happiness. Both low income and high income Americans reported similarly high levels of meaning in life if they were very happy. To test this experimentally, in a second study, the researchers recruited participants with different household incomes and experimentally induced happiness. Half of the participants were asked to spend some time imagining and writing about an event that would make them feel very happy. The other half thought and wrote about what they do in a typical day (the control condition). The researchers found that income was positively associated with meaning in life, but only for participants in the control condition. Low-income and high-income participants in the happiness condition reported similarly high levels of meaning in life.

Other studies suggest that meaning in life also influences how people’s feelings about their income contributes to their overall well-being. For example, research finds that though there is a positive relationship between income satisfaction and life satisfaction, this relationship becomes much weaker for those reporting a strong sense of meaning in life. Perhaps meaning in life reduces people’s prioritization of materialistic interests and serves as a mental resource that helps them cope with financial stress. 

My colleagues and I have examined the relationship between money and meaning with a focus on why money would matter for existential flourishing. In our research, we also found a positive relationship between income and meaning, but this effect became statistically non-significant when controlling for perceived economic security (the extent to which people indicate being able to meet their financial needs). Perceived economic security, however, remained a significant predictor of meaning when controlling for income. One possibility is that money is most relevant to meaning when it reflects people’s efforts to meet their basic needs and the needs of their families. 

Understanding the psychological states that are at the core of meaning in life judgments can provide additional clarity on the relationship between money and meaning. People are most likely to view their lives as meaningful when they feel personally significant, that they are making valued contributions to the world. This further suggests that it isn’t really money that increases meaning. It is that in the modern world money is often (but not always) implicated in the activities involved in making contributions to the world, such as working to support a family, building and growing a business that serves a need in the market, and related economic pursuits that help individuals and communities thrive. Most people in the industrialized world are not growing or hunting their own food, building their own homes, and so on. They are engaged in the type of labor and trade that involves money and therefore money is implicated in their efforts to live a meaningful life. People all over the world report that family and other close relationships are their greatest sources of meaning in life, and so when individuals are able to financially contribute to their families and give back to their communities, they are likely to get a meaning boost from earning money. 

Of course, people contribute to their families and communities in ways that do not involve making money, and such activities also increase meaning. For instance, research finds that parents report higher levels of meaning than adults without children, and they are especially likely to feel meaningful when they are spending time with their children. This helps explain economic-related decisions that reflect a prioritization of more time with family over higher income. 

As further evidence that the connection between money and meaning is about contributions to the world, in studies my research team and I have conducted, we find that the need for meaning orients people toward helping others. Specifically, the more individuals think about meaning and are focused on living a meaningful life, the more motivated they are to engage in prosocial behavior such as volunteering and charitable giving. 

Experimental research further supports this idea. For example, in one study, individuals were given five dollars for participating in a study and were asked to spend the money that day. In one condition, participants were asked to spend the money on a gift for someone else or to donate it to a charity. In the other condition, participants were asked to buy something for themselves or to use it to pay for a personal expense. Later that day, participants were emailed a follow-up questionnaire that included items assessing meaning in life. Participants who spent the money on others or charity reported higher levels of meaning than participants who spent the money on themselves. Helping others boosts meaning.

Money isn’t the key ingredient to a meaningful life, but meaning in life might increase the amount of money people make. Longitudinal research finds that perceptions of meaning in life predict future household income and net worth. This gets to what I consider a critical aspect of existential economics, the self-regulatory and motivational power of meaning. 

Meaning as a Self-Regulatory Resource: Existential Agency

Scholars tend to think of meaning in life as merely an indicator of well-being or a psychological resource that helps protect well-being when people are facing stressful or traumatic life experiences. But it is so much more. When individuals view their lives as meaningful, they are more likely to exercise self-control, and they are more driven, confident, inspired, and motivated to create and innovate. 

Here is just one example of how this self-regulatory aspect of meaning directly connects to economics. Youth raised in poverty are more likely than their middle- and upper-class peers to engage in antisocial behavior such as fighting, bullying, and disobedience. This makes it harder for them to succeed at school and work and thus increases the likelihood that they will continue to live in poverty as adults. An important question for social scientists interested in reducing poverty is what can be done to help economically disadvantaged youth regulate their behavior in ways that lead to upward economic mobility? Helping young people meet their existential needs is one possible intervention as research finds that the positive association between poverty and antisocial behavior is only observed among youth who score low on a measure of meaning in life. For those who report moderate or high levels of meaning, household income does not predict antisocial behavior. 

Though there are now numerous studies revealing that meaning promotes self-control and goal-directed behavior, including studies conducted by my research team, none of this work directly measured the extent to which people believe they can influence the meaningfulness of their lives, which may be a critical part of the story, as Victor Frankl argued in Man’s Search for Meaning. Consider, for instance, the following quote from Frankl:

We who lived in concentration camps can remember the men who walked through the huts comforting others, giving away their last piece of bread. They may have been few in number, but they offer sufficient proof that everything can be taken from a man but one thing: the last of the human freedoms—to choose one’s attitude in any given set of circumstances, to choose one’s own way. 

Inspired by his experience as a prisoner in a Nazi concentration camp during World War II, Frankl argued not only that meaning in life is a fundamental human need but also that individuals have the psychological freedom to pursue a meaningful life, regardless of life circumstances. My colleagues and I refer to this self-regulatory and motivational aspect of meaning as existential agencythe belief that one has the power to find, maintain, and restore meaning in life. 

In theory, people could view their lives as meaningful without feeling like they determine the meaningfulness of their lives. But this is probably not the norm, even among those who subscribe to a worldview that views human life as inherently meaningful. I suspect that most of the time when people view their lives as meaningful, they view themselves as having existential responsibilities. They view themselves as existential agents. I propose that existential agency is the dimension of meaning in life that pushes people forward, giving them the drive and self-confidence, and sometimes even courage needed to pursue their dreams, and improve their lives and the lives of others. Recently, my colleagues and I have started testing this idea by examining the extent to which feelings of existential agency predict a range of cognitive, emotional, and motivational states, as well as specific goal-directed activities such as entrepreneurship.

Existential Entrepreneurship

Though some behavioral scientists focus on how personality traits influence entrepreneurship, economists and business scholars typically focus on variables outside of individual psychology (e.g., business regulations, access to capital) when considering variables that promote or undermine entrepreneurial activity. However, it is important to remember that individual human brains are at the core of every business venture, and thus psychology is a key ingredient of entrepreneurship. For instance, starting a business involves goal-directed motivation, confidence, resilience, and related psychological characteristics. 

Given the self-regulatory and motivational nature of existential agency, it may play an important role in energizing the entrepreneurial spirit. Consistent with this idea, in a national survey my colleagues and I conducted, we found that among Americans who plan to start a business, the more existentially agentic they feel, the more they report being motivated to pursue their entrepreneurial aspirations. This relationship remained strong even when controlling for a number of other variables such as employment status, income, political identity, age, and social support from family and friends and, critically, meaning in life. In fact, existential agency was the strongest predictor of entrepreneurial motivation in our analysis. We also found a positive relationship between meaning in life and entrepreneurial motivation but that this relationship was the result of existential agency. It is the agentic aspect of meaning, not the general perception of meaning, that energizes entrepreneurship. 

The role of existential psychology in entrepreneurship extends beyond an individual’s entrepreneurial ambitions. Most people don’t start businesses, but their attitudes about entrepreneurship matter. Entrepreneurship is more likely to thrive if the broader society believes entrepreneurs make valuable contributions to the world. For instance, people may be more inspired to start a business if they view entrepreneurship as valued in their culture. In addition, a society that believes entrepreneurs make valuable contributions to the world may be more likely to support economic policies that encourage entrepreneurship. And a society that celebrates entrepreneurship and supports it through policy will build a reputation that attracts immigrants looking to realize their entrepreneurial dreams. Thus, the psychology of entrepreneurship should also include investigations of how even those who do not want to start businesses themselves view entrepreneurship. 

Existential agency should encourage positive attitudes towards entrepreneurship. If people view themselves as having the ability to make meaningful contributions to the world, they should be more likely to believe that people in general can contribute to society through agentic activity such as entrepreneurship. In a recently published study, my colleagues and I found support for this prediction. Specifically, in our study, after having a national sample of American adults complete a number of questionnaires, including one measuring existential agency, we assessed attitudes about entrepreneurship by having them rate their agreement with statements such as “Entrepreneurs have an important role to play in solving national and global problems,” “Entrepreneurs can have a powerful positive impact on the quality of our lives,” and “In order to develop innovative and creative solutions to current and future societal problems, we need more entrepreneurs.” We observed that existential agency is a unique and strong predictor of positive attitudes about entrepreneurs. In other words, existential agency is not only a contributor to individual entrepreneurial motivation; it is a contributor to the attitudes that help promote a culture that values and encourages entrepreneurship.

Toward an Existential Science of Human Progress and Flourishing

In this essay, I have focused on a handful of relatively narrow research areas to illustrate the importance of existential psychology to research questions and societal issues that economists (and other social scientists) study. This type of research can also inform public policy discussions that have important implications for individual and societal flourishing. It is critical to keep in mind that meaning is a basic psychological need that is most likely to be fulfilled when people feel like they are making valuable contributions to the world. Programs and policies that offer economic support but not a path to self-sufficiency make long-term dependence on the state more likely. Those programs and policies may also make it difficult for people to build, create, and innovate, ultimately undermining their meaning in life and the existential agency that helps individuals live healthy and fulfilling lives, support themselves and their families, and positively contribute to their communities. 

More broadly, I believe that existential psychology has an important role to play in understanding and continuing human progress. Economics is a big part of the story of progress. For instance, societies are more likely to flourish when they have economic freedom. I propose that psychology is also an important part of the story. To make the world a better place, people must want the world to be a better place, believe it can be a better place, and view themselves as having the ability and responsibility to positively contribute to the cause of progress. In addition, progress requires curiosity, creativity, tolerance, resilience, and other cognitive and affective characteristics and states that cultivate entrepreneurial, innovative, and solution-focused individuals and societies. 

Meaning in life and existential agency support such characteristics and states and encourage a progress-oriented mindset. In a future essay, I will write more about the existential psychology of human progress, but for now I simply want to encourage the economists and other thinkers involved in the human progress movement to keep in mind the unique existential nature of our species and how it influences many aspects of our lives.

Clay Routledge
Clay Routledgehttps://www.clayroutledge.com
Clay Routledge is the Vice President of Research and Director of the Human Flourishing Lab at the Archbridge Institute. He is also co-editor of Profectus, an online magazine dedicated to human progress and flourishing. As a leading expert in existential psychology, Clay’s work focuses on helping people reach their full potential and build meaningful lives. Clay is a highly cited researcher who has published more than 100 scholarly papers, co-edited three academic books, authored three books, and received numerous awards for his research and mentorship. As a public intellectual, Clay has authored dozens of articles for popular outlets, and his work has been covered by numerous newspapers, television and radio shows, podcasts, and documentary programs. His newest book, Past Forward: How Nostalgia Can Help You Live a More Meaningful Life, was published in 2023.
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