Rethinking Consumption: From Wealth to Well-being

Gary Gardner, Erik Assadourian, and Radhika Sarin

State of the World 2004

The Consumer Society

A society in which acquisition and use of “ goods and services principal cultural aspiration is the and the surest perceived route to personal happiness , social status , and national success .”

— Paul Ekins

Three Points

1. Consumption has the character of a

runaway train

in much of the world 2. Current consumption patterns have a

growing dark side

for individuals, societies, and the planet 3. A

different model

of consumption is available—one that can deliver a

higher quality of life

1. The State of Consumption Today

Private Consumption Expenditures, 2000 Selected Region % of World Population % of World Consumption Expenditures U.S. & Canada 5% 32% Western Europe East Asia & Pacific South Asia Sub-Saharan Africa 6% 33% 22% 11% 29% 21% 2% 1%

1000

Distribution of Global Consumer Class, 2002

27% (other regions) 16% 20% 53% 47% World total = 1.7 billion consumers 8% 29% 912 816 494 500 349 271 141 0 U.S. & Canada Western Europe East Asia & Pacific South Asia Industrial Countries Developing Countries

Global Consumer Class Selected nations, 2002 Brazil Brazil 0 243 Million (84% of population) 240 M (19%) 122 M (12%) 121 M (95%) 76 M (92%) 61 M (43%) 58 M (33%) Consumer class 200 400 600 800 1000 Millions of People 1200 1400

Car Growth in China

200

150

(est.) 150 100 50 0

~ 0

1980

5

2000

10 14

2002

Year

2003 2015

What drives the appetite for consumption?

Physiological Drives

- Survival instinct: natural impulse to alleviate discomfort (hunger, cold, etc.)

Social and Psychological Needs

- Means of expressing social identity - Seeking comfort, style, and status

Large Supply of Goods

- Increase in production efficiency = greater availability of goods

What drives the appetite for consumption?

Globalization

- Reduction of tariffs and cheap labor = lower costs, more affordable products

Technological Innovations

- Greater capacity to extract raw materials and resources at lower cost (i.e., fishing trawlers)

Cheap Energy and Transportation

- Increased distribution and expanded markets

Business Practices to Stimulate Consumer Demand

Advertising

- Pervasive in commercial broadcasting, print media, Internet - Product placement in movies, TV programs

Global and U.S. Advertising Expenditures, 1950-2002

500

World

400 300 200 100 0 1950 1960

United States

1970 1980 Source: McCann-Erickson 1990 2000

Business Practices to Stimulate Consumer Demand

Credit Cards

- Consumers can purchase goods beyond their means

Government Policies

- Economic subsidies affect consumption patterns - Ex.: subsidies for suburban homebuilding lead to demand for household goods, cars, roads, etc.

2. The Dark Side of Consumption

The Dark Side of Consumption

• Huge amount of

consumer waste

– Unlimited consumption at odds with patterns in natural world – In nature, no worthless waste, all matter reused or recycled • Natural areas under

stress

- All the world’s

ecosystems

are

shrinking

to make way for human development

Global Living Planet Index

Tool developed by World Wildlife Fund (WWF) International to measure

health of natural systems

(e.g., forests, oceans, freshwater systems, etc.)

Economic Activity and Ecosystem Health, 1970-2000

3.0

2.0

Gross World Product Index 1.0

0.0

1970 Global Living Planet Index 1980 1990 Source: Maddison, IMF, UNEP, WWF, RP 2000

The Personal Toll

HEALTH 65 % of American adults are overweight or obese DEBT 61% of Americans with credit cards carry a balance, averaging $12,000 TIME Americans work the equivalent of 9 weeks more each year than Europeans

Wealth vs. Well-being

Once basic needs are met,

affluence

and the

accumulation of goods

do

not

necessarily correlate with a

higher quality of life

Average Income and Happiness in the United States, 1957-2002

25,000 20,000 15,000 10,000 5,000 0 1957 Average Income Very Happy People 1967 1977 1987 Source: Myers 1997 100 80 60 40 20 0

3. A New Model is Possible

Aspects of Well-being

Basic Needs

Food, shelter, secure livelihood

Good Health

Physical and mental health and a robust natural environment

Healthy Social Relations

A supportive social network

Security

Personal safety and security of one’s possessions

Freedom

The capacity to achieve one’s development potential

Well-being Index

• Tool developed by Robert Prescott-Allen to

measure societal health

• Uses 87 different indicators to measure

human and ecological well-being

– e.g., Life expectancy, school enrollment rate, extent of deforestation, level of carbon dioxide emission, etc.

• Values for indicators are standardized and summed into a

single score

Well-being (WB) Ranking

(selected countries)

Human WB Enviro WB Total WB Maximum Score 100 80 60 79 49 64 71 49 40 27 31 23 27 20 0 (Rank out of 180 countries)

Sweden

(1 st )

Benin

(47 th )

Saudi Arabia

(176 th )

Rethinking Progress

Human WB Maximum Score 100 79 80 but different 60

How

a nation

whether

them 40 development goals 20 it meets 0 49 64 (Rank out of 180 countries)

Sweden

(1 st ) 78 Enviro WB 22 50

Netherlands

(24 th ) 73 Total WB 31 (27 th ) 52

United States

Toward an Infrastructure of Well-being Physical Infrastructure

e.g., urban planning, mass transit

Political Infrastructure

e.g., subsidies, taxes, laws on working hours

Cultural Infrastructure

e.g., harnessing advertising, improving education

Getting to the Good Life

Current economic goal of

unlimited consumption

is

unsustainable New emphasis for economy:

    to create societies with a higher quality of life to live in harmony with natural environment to facilitate healthy choices to tend to the basic needs of all

About the Authors

Erik Assadourian is a Staff Researcher at the Worldwatch Institute Gary Gardner is the Institute’s Director of Research Radhika Sarin was formerly a Staff Researcher at the Institute

More information on

State of the World 2004

at www.worldwatch.org