UNDP

 

Terms:

 

Consumption-poverty-inequality-environment nexus

Social responsibility

Sustainable

Inequality

HPI (Human Poverty Index)

Conspicuous consumption

Globalization

Global elites

Leap-froging

(perverse) subsidies

 

The UNDP article takes a somewhat different approach to the question of consumption than the book does.

The book emphasizes how the consumption decision is made, focusing mainly on the role of prices and income. There is only a minimal mention of distributional issues. The UNDP article raises much more pointed questions about the link between income and consumption and the distributional impact, as well as raising questions about the environment and consumption (which we will discuss in more depth later in the course as well, when we talk about externalities.)

 

Consumption is central to survival.

Basic needs include food, clothing and shelter.

But many types of consumption are not based on basic needs.

 

What questions are raised by this article?

1. What patterns of inequality are of concern?

a. Within the industrial countries, b. btw them and the ‘developing’ countries, c. and between current and future generations.

Worsening inequality, with a group of poor people being left behind.

2. What is link btw consumption and happiness?

            Not very strong. (US peaked in 1957)

3. What is the link btw consumption and the environment?

            Consumption means the use of resources.

The bad news is that we have rapidly increased our use of resources.

The good news is that technological innovations have helped make resources go further, and correct some of the previous resource degradation that has taken place.

Global warming may be the most serious concern facing us.

4. Who is likely to be affected by the worsening environment?

Not necessarily those doing the consumption.

Both poverty and wealth can be linked to environmental degradation.

5. What is conspicuous consumption and why do we observe it?

            Consumption aspirations – definition of ‘necessities’ has changed

6. What role does globalization play?

They define it as the increased integration – trade, investment, financial markets, as well as cultural exchange.

Emergence of global elites (Mexico, Mumbai)

We will talk later in the course about the process and implications of globalization.

7. What role does marketing/information play?

First we need to ask whether these are the same thing?

How do these affect tastes and preferences? (Basic economic theory rather problematically assumes tastes and preferences are fixed.)

8. What role should/has policy played?

In general the role of the government involves:

a. redistribution

b. the encouragement of certain types of behavior (R & D, etc.) through subsidies (can show as negative tax)

c. the discouragement of certain types of behavior (polluation) through taxes and other regulations

d. promote consumer education (eg: Surgeon General, certain types of R & D)

More specifically the UN argues that there is a need to:

 

a. Address growing inequality by ensuring a minimum consumption level to all humans.

We will talk more about this when we get to the section on inequality.

b. Develop better technologies.

Developing countries need to ‘leapfrog’ ie bypass those steps in development that are the most environmentally damaging.

Eg: promote solar power.

Mandate cleaner motorized vehicles.

c. Remove perverse subsidies and restructure taxes

(Good example of perverse subsidy – SUVs)

d. increased consumer education and protection through labeling, health and safety standards, etc.

e. address the global impact of consumption

f. build alliances btw consumers, environmentalists, inequality advocates

g. “Think globally, act locally.”

 

Conclude on optimistic note – consumption is necessary, but need to balance with environmental and equality concerns.