Max-Neef's 'Threshold Hypothesis' - 30 years later

Luis Valenzuela-Rivera and Roberto Pastén

MPRA Paper from University Library of Munich, Germany

Abstract: Thirty years ago, Ecological Economics published a brief article by the Chilean economist Manfred Max-Neef in which he proposed a ``threshold hypothesis'': there is a GDP level after which economic growth may lead to a deterioration in the quality of life rather than its improvement. Does the hypothesis stand to the new and better data available? This paper addresses this question. First, it provides methodological clarifications which are relevant to the testing of the hypothesis, which have so far overlooked in the literature. Key is that the hypothesis as defined by Max-Neef is not really testable, so a weaker version is proposed. Second, in light of these clarifications, we test this weaker version using all ISEW data available to date, as well as life satisfaction data. Neither indicator supports the threshold hypothesis. Empirical caveats remain in place, particularly in the lack of coherence across ISEW/GPI studies. Many gaps remain for further research.

Keywords: Threshold Hypothesis; ISEW; GPI; Life satisfaction; Happiness (search for similar items in EconPapers)
JEL-codes: I31 Q56 Q57 (search for similar items in EconPapers)
Date: 2025, Revised 2026
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