SIPA hosted a hat-trick of superstar economists this past Monday night for a panel discussion on sustainable consumption. Cambridge development economist Sir Partha Dasgupta joined Nobel Laureates Robert "Uncle Bob" Solow and our own Joseph "Brother Joe" Stiglitz for an hour that promised a "multidisciplinary perspective" on all the stuff we buy and eat. Dasgupta did not refer to himself by the street name all economists apparently have, but it’s probably safe to assume that “Sir Partha Dasgupta” is good enough. Dasgupta is a welfare economist, so his work focuses on finding ways to maximize the well-being of people in an economy. But as Solow was quick to point out, all would be well and good if there were an easy way to define and measure such a thing. Even Aristotle had a hard time figuring out what happiness was and he didn’t have to deal with UN politics, subjective survey questions or any of the other countless factors that make quantifying well-being so difficult. Agreeing on a definition of ‘‘well-being’ is the first step in deciding whether the pace at which we consume is sustainable.
That is why Dasgupta spent most of his time explaining how we might be thinking about consumption the wrong way. For the past century or so microeconomics has assumed that what people like is determined from within and that the economist’s job is to work around those preferences. But as anyone who had a childhood friend with cooler toys knows, this isn’t exactly true. When the kid next door has a shiny, red toy truck, we want a shiner, redder toy truck. Sometimes consumption is competitive. Other times we consume something because we try to fit in with others – not to get ahead of them. This is why millions have been spent on things like Henna tattoos, Pogs, and Ugg Boots.
Dasgupta sees a lot of opportunity here. What if we had the power to influence what is competitive and what is social about consumption? What if we decided that instead of buying expensive cars as status symbols, we all bought the same rusty but functional bike to commute to work? And what if we instead competed to see who owned the most recycling bins? The answer is that we’d all be living in Portlandia, but that is exactly Dasgupta’s point. Consumption might be determined as much by where we are and who we’re with as it is by what we supposedly "like." In econ-speak, this is the possibility of “multiple equilibria.” We could all alter our behavior to consume much less—or much more— and conceivably be just as happy. Dasgupta hinted at the difficulties of modeling that kind of behavior, but the gory details will probably occupy the next four years of some sad grad student’s life.
The commentary by the other panelists remained rather restrained. Solow urged everyone to remember that preferences and norms change over time, and that there is always a danger in applying our generation’s ideas to the well-being of future generations that don’t even exist yet. Stiglitz pointed out that Americans work far more than Europeans do and appear to be similarly happy, a possible example of the multiple equilibria that Dagupta was looking for.
By far the most interesting questions came from the audience. One man asked about the potential of social media in altering consumption preferences, a question the panel might not have been equipped to answer despite its two Nobel prizes. The tendency of the discussion was, after all, to pose questions rather than answer them. Maybe we should think not only about what we’re leaving for our children, but also about how we value it ourselves—and how our children might not feel the same way as we do now.