State of the World 2004 Rethinking Consumption: From Wealth to Well-being Gary Gardner, Erik Assadourian, and Radhika Sarin.

State of the World 2004

Rethinking Consumption:From Wealth to Well-being

Gary Gardner, Erik Assadourian, and Radhika Sarin

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

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

Sub-Saharan Africa 11% 1%

South Asia 22% 2%

East Asia & Pacific 33% 21%

Western Europe 6% 29%

U.S. & Canada 5% 32%

% of World Population

% of World Consumption Expenditures

Selected Region

Distribution of Global Consumer Class, 2002

0

500

Mil

lio

n C

on

sum

ers

WesternEurope

349

20%

East Asia& Pacific

494

29%

South Asia

141

8%

1000

IndustrialCountries

912

53%

DevelopingCountries

816

47%

World total = 1.7 billion consumers

U.S. &Canada

271

% of World Total% of World Total:16%

27% (other regions)

Global Consumer ClassSelected nations, 2002

Millions of People

United States

China

India

Japan

Germany

Brazil

Russian Federation

243 Million (84% of population)

240 M (19%)

Consumer class

122 M (12%)

121 M (95%)

76 M (92%)

61 M (43%)

58 M (33%)

Car Growth in China

0

50

100

150

200

1980 2000 2002 2003 2015Year

Mil

lio

ns

of

Ca

rs

5 10 14

150(est.)

~ 0

What drives the appetite for consumption?

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

- Means of expressing social identity

- Seeking comfort, style, and status

Social and Psychological Needs

- Increase in production efficiency =

greater availability of goods

Large Supply of Goods

What drives the appetite for consumption?

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

- Increased distribution and expanded markets

Cheap Energy and Transportation

Technological Innovations

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

Business Practices to Stimulate Consumer DemandB

illi

on

Do

llar

s (2

001

do

llar

s)

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

Advertising- Pervasive in commercial broadcasting, print media, Internet

- Product placement in movies, TV programs

0

100

200

300

400

500

1950 1960 1970 1980 1990 2000

Source: McCann-Erickson

United States

World

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

0.0

1.0

2.0

3.0

1970 1980 1990 2000

Source: Maddison, IMF, UNEP, WWF, RP

(197

0 =

1.0

)

Gross World Product Index

Global Living Planet Index

The Personal Toll

61% of Americans with credit cards carry a balance, averaging $12,000

DEBT

Americans work the equivalent of 9 weeks more each year than Europeans

TIME

65 % of American adults are overweight or obese

HEALTH

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

0

5,000

10,000

15,000

20,000

25,000

1957 1967 1977 1987 1997

Source: Myers

Ave

rag

e In

com

e (1

995

do

llars

)

0

20

40

60

80

100

Percen

t of P

eop

le "V

ery Hap

py"

Average Income

Very Happy People

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

0

20

40

60

80

100Maximum Score

Human WB Enviro WB Total WB

(Rank out of 180 countries)

Sweden(1st)

79

49

64

Benin (47th)

27

71

49

Saudi Arabia(176th)

3123 27

Well-being (WB) Ranking(selected countries)

0

20

40

60

80

100Maximum Score

Human WB Enviro WB Total WB

(Rank out of 180 countries)

Sweden(1st)

79

49

64

Netherlands (24th)

78

22

50

United States(27th)

73

31

52

Rethinking Progress

Similar Human WB, but different Enviro WB:

How a nation meets its

development goals as important as

whether it meets them

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

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

Current economic goal of unlimited consumption is unsustainable

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