From Wealth To Well-being

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 is the principal cultural aspiration and the surest perceived route to personal happiness, social status, and national success.” — Paul Ekins

Three Points • Consumption has the character of a runaway train in much of the world • Current consumption patterns have a growing dark side for individuals, societies, and the planet • 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

6%

29%

East Asia & Pacific

33%

21%

South Asia

22%

2%

Sub-Saharan Africa

11%

1%

Distribution of Global Consumer Class, 2002 % of World Total Total:

53%

16%

27% (other regions) Million Consumers

20%

47%

World total = 1.7 billion consumers

8% 1000

816

494

500 271

0

912

29%

U.S. & Canada

349 141

Western Europe

East Asia South Asia Industrial Developing & Pacific Countries Countries

Global Consumer Class Selected nations, 2002

243 Million (84% of population) United States China India Japan Germany Russian Federation Brazil

240 M (19%) 122 M (12%) 121 M (95%) 76 M (92%) 61 M (43%) 58 M (33%)

Millions of People

Consumer class

Car Growth in China

Millions of Cars

200

1 50(e

150

st.)

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 Billion Dollars (2001 dollars)

500

World

400 300 200 100

United States

0 1950

1960

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

(1970 = 1.0)

3.0

Gross World Product Index

2.0 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

20,000 15,000

100 Average Income

80 60

10,000

40 Very Happy People

5,000 0 1957

20 0

1967

1977

1987

Source: Myers

1997

Percent of People "Very Happy"

Average Income (1995 dollars)

25,000

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 A supportive social network Relations 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 Maximum Score

Enviro WB

Total WB

100 80 60

79

71

64

49

49

40

31

27

23

27

20 0 (Rank out of 180 countries)

Sweden

Benin

Saudi Arabia

(1st)

(47th)

(176th)

Rethinking Progress Human WB Maximum Score

Enviro WB

Total WB

100

Similar Human 80WB, but different Enviro WB: 60 How a nation 40 meets its development goals as important 20as whether it meets them 0

79

78 64

22

(1st)

52

50

49

Sweden (Rank out of 180 countries)

73

31

Netherlands United States (24th)

(27th)

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