From Wealth to Well-being

8/14/2019 From Wealth to Well-being

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State of the World 2004

Rethinking Consumption:

From Wealth to Well-beingGary Gardner, Erik Assadourian, and

Radhika Sarin


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The Consumer Society

A society in which acquisition and

use of goods and services is the

principal cultural aspiration and thesurest perceived route to personal

happiness, social status, and

nationalsuccess.

Paul Ekins


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Three Points

Consumption has the character of arunaway train in much of the world

Current consumption patterns have agrowing dark side for individuals,societies, and the planet

A different model of consumption isavailableone that can deliver ahigher quality of life


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1. The State of Consumption Today


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Private ConsumptionExpenditures, 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 WorldPopulation

% of WorldConsumptionExpenditures

Selected Region


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Distribution of GlobalConsumer Class, 2002

0

500

Mil

lionConsumer

s

WesternEurope

349

20%

East Asia& Pacific

494

29%

South Asia

141

8%

1000

IndustrialCountries

912

53%

DevelopingCountries

816

47%

World total =1.7 billionconsumers

U.S. &Canada

271

% of World Total% of World Total: 16%27%

(other regions)


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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%)


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Car Growth in China

0

50

100

150

200

1980 2000 2002 2003 2015

Year

MillionsofC

ars

510 14

150(e

st.)

~ 0


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What drives the appetite forconsumption?

Physiological Drives- Survival instinct: natural impulseto 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


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What drives the appetite forconsumption?

Globalization- Reduction of tariffs and cheaplabor = lower costs, moreaffordable products

- Increased distribution and expanded

markets

Cheap Energy and Transportation

Technological Innovations

- Greater capacity to extract rawmaterials and resources at lower

cost (i.e., fishing trawlers)


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Business Practices toStimulate Consumer Demand

BillionDollars

(2001do

llars)

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 2000Source: McCann-Erickson

United States

World


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Business Practices toStimulate 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.


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2. The Dark Side of Consumption


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The Dark Side of Consumption

Huge amount of consumerwaste

Unlimited consumption at oddswith patterns in natural world

In nature, no worthless waste,all matter reused or recycled

Natural areas under

stress

- All the worlds ecosystemsare shrinking to make wayfor human development


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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.)


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Economic Activity andEcosystem Health, 1970-2000

0.0

1.0

2.0

3.0

1970 1980 1990 2000

Source: Maddison, IMF, UNEP, WWF, RP

(1970

=

1.

0)

Gross World

Product Index

Global Living

Planet Index


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The Personal Toll

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

DEBT

Americans work the equivalent of9 weeks more each year than

Europeans

TIME

65 % of American adults areoverweight or obese

HEALTH


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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


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Average Income and Happinessin the United States, 1957-2002

0

5,000

10,000

15,000

20,000

25,000

1957 1967 1977 1987 1997

Source: Myers

A

verageIncom

e

(1995dollars

)

0

20

40

60

80

100Perc

entofPeople

"V

ery

Happy"

Average

Income

Very Happy

People


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3. A New Model is Possible


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Well-being Index

Tool developed by Robert Prescott-Allento measure societal health

Uses 87 different indicators to measurehuman and ecological well-being

e.g., Life expectancy, school enrollmentrate, extent of deforestation, level of carbon

dioxide emission, etc.

Values for indicators are standardizedand summed into a single score


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0

20

40

60

80

100MaximumScore

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)


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0

20

40

60

80

100MaximumScore

Human WB Enviro WB Total WB

(Rank out of

180 countries)

Sweden(1st)

79

4964

Netherlands(24th)

78

22

50

United States(27th)

73

31

52

Rethinking Progress

Similar Human WB,

but differentEnviro WB:

How a nationmeets its

development goals

as important aswhetherit meets

them

T d I f t t


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Toward an Infrastructureof Well-being

PhysicalInfrastructure

e.g., urban planning, masstransit

PoliticalInfrastructure

e.g., subsidies, taxes, laws onworking hours

CulturalInfrastructure

e.g., harnessing advertising,improving education


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Getting to the Good Life

New emphasis for economy: to create societies with a higher

quality of life

to live in harmony with naturalenvironment

to facilitate healthy choices

to tend to the basic needs of all

Current economic goal ofunlimitedconsumption is unsustainable


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More information onState of the World 2004

at www.worldwatch.org

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From Wealth to Well-being