Economics and the Environment, 8th Edition

CHAPTER 11Is More Really Better? Consumption, Welfare, and Behavior

11.0 Introduction

What were your grandfather and grandmother doing in 1960, when they might have been in their early twenties? Were they in college? Or, working? If they were in school in the United States, then they had, on average, about 30 percent of your income. Put another way, in inflation-adjusted terms, for every $100 you spend a week, they spent only $30. What did that mean? They grew up in small houses without air conditioning; were very unlikely to own a car, a record player, or a typewriter; probably had never flown on a commercial airplane; hardly ever ate out in restaurants; seldom traveled away from their home city; had no Tylenol, Advil, or allergy medications (just aspirin); obviously, had no smartphone, Internet, cable subscription, or playstation. Do you think you are happier than they were? If not, why not? If so, how much? A little? A lot? Are we making progress? Or, are we a society mired in “overconsumption?”

Within the benefit–cost efficiency framework, there is simply no room for the concept of overconsumption. The whole point of doing a benefit–cost study, after all, is to ensure that we do not sacrifice too much consumption in pursuit of environmental quality. From an efficiency perspective, increase in consumption in our generation over what our grandparents enjoyed clearly reflects progress.

How then can overconsumption be viewed as an environmental problem? First, consumption (or ...