Are we consuming too much?

In a world filled to the brim with inequality and negative externalities that our past and current consumption impose upon future generations (e.g. climate change and environmental destruction), it has frequently been voiced that a part of society (the wealthy…) overconsumes. But by what standard should we measure whether there is overconsumption?

Keynes suggested that people consume for two reasons, namely to satisfy absolute wants and relative ones. According to Keynes, absolute wants are those that we have “whatever the situation of our fellow human beings may be”, while relative ones are those that we satisfy only to show superiority over others. Here, Keynes described something that Veblen called conspicuous consumption; basically consumption that is undertaken only to increase one’s own social status in comparison to one’s peers’.

Clearly, there is nothing wrong per se with relative consumption – if it increases happiness, then the more the better. However, there is a tendency to view relative consumption as something bad. For example, Professor Singer recently suggested that conspicuous consumption may be immoral since the money for it could be used for better reasons like reducing poverty.

It should be clear that Professor Singer’s argument may also be used to address absolute consumption. Let us, for clarity, split absolute consumption into two sub-categories – `basic need consumption’ and `comfort consumption’. Basic need consumption is simply the amount of consumption necessary to cover one’s basic needs. The United Nations defined these basic needs as consisting of food, safe drinking water, sanitation facilities, health, shelter, education, information and access to social services. Someone who is deprived of these basic needs is living in `absolute poverty’, and the estimated amount of money necessary to achieve this basic need consumption is $1.25/day (in Purchasing Power Parity). There is, as always, some discussion of whether this required amount of basic need consumption is too high or too low, but let’s simply stick to it for now.

In contrast, comfort consumption is consumption that is optional and only undertaken to simplify one’s life or meet additional desires (other than relative ones). For example, buying a house or a car tends to be undertaken to simplify one’s life, and going on holidays or buying books is done to meet additional desires. Thus, it is comfort consumption that gives us the possibility to lead a secure, cosy life and pursue additional dreams. It is clear that any reason forwarded against conspicuous consumption may equally well be raised against comfort consumption. For example, apart from raising one’s own happiness, there is no need to go on a holiday or to buy a car. Consequently, the money may be better spent on reducing poverty.

So, we have two categories of consumption, namely basic need and comfort (which includes relative) consumption. Clearly, basic need consumption is a necessity without which one cannot live, while comfort consumption is, in a sense, optional. So what tells us whether we consume too much? Obviously, we can turn to the old philosophers to gain a first insight here. For example, according to Buddhist teaching, “whoever in this world overcomes his selfish cravings, his sorrows fall away from him, like drops of water from a lotus flower.” Similarly, according to Matthew (19:24), Christian teaching forwards that it is “easier for a camel to go through the eye of a needle than for a rich man to enter into the kingdom of God”, while Taoists believe that “he who knows he has enough is rich”. In the Oracle of Delphi it is carved that “nothing in excess” is the goal to pursue. While one may feel for some reason at once supportive of these messages, it is nevertheless not clear why they should apply or be followed. Certainly there is a moral reason behind this, but if I do not harm anyone with my consumption, even if it is extremely large, and if I gained the riches through my own hard and rightful work, then why should there be a problem?

Furthermore, what is a rich man? How does one know when one has enough? And what are selfish cravings in comparison to selfish desires like those that one satisfies with comfort consumption? It is easy to know that Mr Pink who owns three houses, a Rolex and a Lamborghini is rich, but only 400 years ago Mr Brown who had his own piece of land and maybe a cow was perceived to be well off, too. However, while we nowadays may view  Mr Pink as being sweetly rich, we would view Mr Brown as rather poor and just about being able to meet his basic needs. Consequently, the understanding of what constitutes a rich or poor person evolves with the stage of development of society. As a result, it is difficult to perceive what the old philosophers exactly meant when talking about “the rich”.

Thus, the road to pursue in trying to understand what constitutes an overconsumption has to lie in the fact that it may precisely not be true that one does not harm anyone by overconsuming, and that there are other moral obligations that arise once one has the ability to prevent harm. For example, if the current generation’s consumption induces significant climate changes that then deprive future generations of their ability to satisfy their basic needs, then the current generation’s consumption harms the future generation. Similarly, if I buy a Rolex while I could instead spend the money on feeding a starving child, then I do not prevent harm that I easily could avert. These points then touch upon the aspects of intergenerational and intragenerational justice. There is, like anywhere, no unique theory of justice. Here I am going to use a sufficientarian notion of justice – not because it is necessarily the best, but simply because it is a good first step and sufficient to help make a point. My view is that a first step, and only a first step, towards justice is that the basic needs of all should be covered. This includes the basic needs of everyone in the current generation, but also those of the future generations. This is simply a minimalistic theory of justice that minimizes suffering. Indeed, we will see that there are enough shortcomings already based on this rather basic approach to justice, that we do not (yet) need to deeply go into more demanding theories of justice. Once basic needs are covered, then at least the basic foundations are laid in such a way as to allow a person to live a life without a daily worry focused on survival.

In principle, this approach to justice is then related to the concept of harm. Though there are subtle philosophical differences and still extensive discussions without full consensus, in general it should easily be acceptable that person A is responsible if he or she directly harms another person B. In addition, person A is also accountable for not preventing harm from person B, if it is in the ability of person A to prevent the harm. This is a somewhat consequentialist understanding of justice – the consequence matters more than the reason for action. As an example, this understanding of justice implies that killing someone is bad, but also not preventing someone from drowning while one could rescue that person is also bad. One could argue that harming someone directly is morally worse than harming someone indirectly, but the reason for that is not necessarily obvious and furthermore does not matter for us right now. Simply put – both causing direct harm and not preventing indirect harm (if one has the ability to prevent it) is bad.

We are now equipped with a minimal notion of justice, and also with an understanding of what consumption level is covered by this notion of justice, namely basic needs consumption. Let’s see where this takes us in our understanding of overconsumption. In the intragenerational setting, estimates by Chen and Ravallion suggest that, in 2005, approximately 1.4 billion people lived below the basic need consumption at an average income of $0.87/day (PPP), with an average shortfall of $0.38/day (based on the $1.25 threshold). Consequently, roughly $0.5 billion/day is needed to prevent harm from everyone, in the sense that this raises everyone’s consumption above the basic needs. This is about the annual GDP of Australia or Taiwan. There are roughly 0.5 billion wealthy people living, on average, on $31/day per person. If they give up approximately $1 per day, then this would still keep them $28.75/day above the basic need consumption. Thus, their consumption is optional, i.e. comfort consumption. Consequently, our notion of minimal justice demands that this group of wealthier ones has the ability to prevent indirect harm and should take action accordingly. Obviously, a more rigorous analysis would take national poverty lines into account and adjust this result accordingly. One could also take all those who live above $1.25/day into account when calculating the required amount to be transferred, and even adjust this amount by the respective incomes (like a progressive transfer). But the results will still hold.

In the intergenerational setting, the question is whether our current level of consumption harms future generations in the sense that we deprive them of resources that are necessary to keep them from consuming below the basic needs level. There are clearly many uncertainties that need to be taken into account here. One way that is used to study to what extent our current consumption affects future generations is the so-called Integrated Assessment Modelling. Here, the impact of several hypotheses on consumption paths over time, together with their feedback effects on climate change and interactions with technological change, population growth and other factors, are studied. One of the most famous models is the DICE model by Professor Nordhaus. According to his model, consumption during the next 100 years will steadily increase. Consequently, we should worry much less about intergenerational justice based on the sufficientarian notion of justice. However, the optimal scenario of the DICE model leads to a temperature increase of at least 5°C by 2200. As a consequence, the optimal results of the DICE have been called in question, especially by the International Panel of Climate Change (IPCC). For example, for a temperature increase of 5°C, the estimates suggest a significant loss of species (more than 40%), hundreds of million people faced with water stress or increased health burdens. Consequently, there is significant uncertainty over the true impact of climate change on consumption. Nevertheless, the DICE model also suggests that policies that reduce the temperature increase to below 2°C will have little impact on the consumption path. The 2°C threshold is the increase in temperature at which effects on the climate and mankind are still believed to be moderate. Hence, good policy has the ability to minimize the consumption externality on future generations while still allowing consumption to grow.

Clearly, these simulations abstract from regional or local impacts that may have a substantial adverse effect on inhabitants. For example, local changes in climates may significantly alter the living conditions of its inhabitants. How these are supposed to be valued is not an easy task. For example, is it enough to know that average consumption will rise so that, in the future, it is possible for the rich to compensate the poor for the severe climate change impacts that we induce? This is clearly a difficult question for our notion of justice. The reason is that by its excessive consumption the current generation harms a sub-population of a future generation. However, the economic values that the current generation creates for the future generation are sufficient to avert the harm. The only condition required then for this to be a just allocation is that the future generation manages to transfer enough consumption to those that are living – due to the climate change we induced – below the basic need consumption. So, though our actions harm someone directly, we also give the ability to others to prevent the harm that we produced. The main problem here is that we require the future generation to decrease the inequality that we created, and we can by no means be certain that this will be the case. This will be a discussion for a later post.

In conclusion, discussions of overconsumption should focus more closely on issues of intragenerational equity and basic needs consumption. Applications of other theories of justice, like those that focus more strongly on equality, should then be left as a possible second step or as a reminder of what may be achievable or potentially desirable. However, demanding the whole nine yards if few are prepared to even take the first step may be counterproductive. The Millenium Development Goals point in the right direction that our notion of intragenerational justice prescribes, but clearly there is a long way to go still.

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3 comments
  1. Hi ingmar, seems to be a quite necessary article…
    Do you remember IPCC has just downsized its forecast for the temperature rise?
    Best regards
    Gert

    Like

    • Thanks for commenting! 🙂
      The IPCC is now working on the 5th Assessment Report, due September 2013. So let’s see what they suggest then…

      Like

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