happiness, the sufficiency economy and the middle way peter warr

Happiness, the Sufficiency Economy and the Middle Way

Peter Warr

2

To be a tiger is not important. The important thing for us is to have a sufficiency economy, which means to have enough to survive.

H.M. King Bhumipol Adulyadej, December 1997

3

The Economics of ‘Enough’

All major institutions in Thailand claim to be adopting H.M. the King’s ‘Sufficiency Economy’ principles.

There is no debate about this matter, but there is a debate about what the principles mean and how they should be applied.

This presentation attempts to arrive at an “outsider’s” understanding of these concepts by looking at them in the following five ways:

4

Five perspectives

1. Extracting key themes from Royal speeches on the ‘Sufficiency Economy’

2. Relating these concepts to Buddhist philosophy

3. Relating the ‘Sufficiency Economy’ concepts to research on the economics of ‘happiness’

4. Relating the development of these concepts to major economic developments in Thailand

5. Relating the ‘Sufficiency Economy’ message to economic policy

5

Five perspectives

1. Extracting key themes from Royal speeches on the ‘Sufficiency Economy’

2. Relating these concepts to Buddhist philosophy

3. Relating the ‘Sufficiency Economy’ concepts to research on the economics of ‘happiness’

4. Relating the development of these concepts to major economic developments in Thailand

5. Relating the ‘Sufficiency Economy’ message to economic policy

6

H.M. King Bhumipol Adulyadej:

Themes of speeches on ‘Sufficiency Economy’

(i) Sensible material aspirations…

‘…Development of the nation must be carried out in stages, starting with the laying of the foundation by ensuring the majority of the people have their basic necessities … Once a reasonably firm foundation has been laid and in effect, higher levels of economic growth and development should be promoted…”.

18 July 1974

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‘…no matter what others say –whether they will accuse Thailand of being old-fashioned or obscurantist. So long as we have enough to live on and to live for – and this should be the wish and determination of all of us – without aiming for the apex of prosperity, we shall already be considered as the top in comparison with other countries in the present world…”

4 December 1974

A book entitled Mahajanaka, written by H.M. King Bhumipol, described the destructive effects of (a) greed and (b) ignorance

or delusion.

published 1992

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‘To be a tiger is not important. The important thing for us is to have a sufficiency economy, which means to have enough to survive.’

4 December 1997

‘I may add that full sufficiency is impossible. If a family or even a village wants to employ a full sufficient economy, it would be like returning to the Stone Age … This sufficiency means to have enough to live on. If everyone has enough to live on, everything will be all right.’

1998

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(ii) … while avoiding excessive risk…

Illustrative example of a diversified farm with thirty percent of land for a pond to collect water to be used for cultivation in the dry season, and to raise fish; thirty percent for rice cultivation sufficient for all year round home consumption; thirty percent for integrated field and garden crops, and fruits; and ten percent for housing and other activities such as livestock enclosures, mushroom nursery, and roads.

1994

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‘This sufficiency means to have enough to live on. Sufficiency means to lead a reasonably comfortable life, without excess, or overindulgence in luxury, but enough. Some things may seem to be extravagant, but if it brings happiness, it is permissible as long as it is within the means of the individual…’

‘Some people translate ‘sufficiency’ from the English as: to stand on one’s own feet… This means standing on our own two legs planted on the ground, so we can remain without falling over, and without asking others to lend us their legs to stand on…’

1998

(iii) …combined with self-reliance…

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(iv) … with concern for the protection of others…

‘Sufficiency Economy is a philosophy that stresses appropriate conduct and way of life while incorporating moderation, due consideration in all modes of conduct, and the need for sufficient protection from internal and external shocks.

21 November 1999

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(v) … and with concern for non-material aspects of life

‘Progress is not just about planting enough rice to eat. There must be enough to create schools, even works of art, so that Thailand prospers in every way, with no hunger or poverty, food for body and soul, and many other things.’

and

‘The driving force for development had to come from within, based on accumulation of knowledge. In summary: Self-reliance. Moderation. Resilience. Inner dynamic. Knowledge.’

2003

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(v) … and with concern for non-material aspects of life

‘Progress is not just about planting enough rice to eat. There must be enough to create schools, even works of art, so that Thailand prospers in every way, with no hunger or poverty, food for body and soul, and many other things.’

and

‘The driving force for development had to come from within, based on accumulation of knowledge. In summary: Self-reliance. Moderation. Resilience. Inner dynamic. Knowledge.’

2003

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Five perspectives

1. Extracting key themes from Royal speeches on the ‘Sufficiency Economy’

2. Relating these concepts to Buddhist philosophy

3. Relating the ‘Sufficiency Economy’ concepts to research on the economics of ‘happiness’

4. Relating the development of these concepts to major economic developments in Thailand

5. Relating the ‘Sufficiency Economy’ message to economic policy

15

The three poisonsGreedHatredIgnorance

The three antidotesRecognising unsatisfactorinessRecognising impermanenceRecognising the unreality of the self

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Five perspectives

1. Extracting key themes from Royal speeches on the ‘Sufficiency Economy’

2. Relating these concepts to Buddhist philosophy

3. Relating the ‘Sufficiency Economy’ concepts to research on the economics of ‘happiness’

4. Relating the development of these concepts to major economic developments in Thailand

5. Relating the ‘Sufficiency Economy’ message to economic policy

17

Life Satisfaction = -0.9 + 0.8*ln(GDP)

3.7

4.7

5.7

6.7

7.7

0 10000 20000 30000 40000 50000 60000

GDP per capita in US$ at PPP

Lif

e sa

tisfa

ctio

n, W

VS

(1 =

Dis

satis

fied

to 1

0 =

Sat

isfi

ed)

(1

= D

issa

tisf

ied

to 1

0= S

atis

fied

)

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THA

Life Satisfaction = -0.9 + 0.8*ln(GDP)

3.7

4.7

5.7

6.7

7.7

0 10000 20000 30000 40000 50000 60000

GDP per capita in US$ at PPP

Lif

e sa

tisfa

ctio

n, W

VS

(1 =

Dis

satis

fied

to 1

0 =

Sat

isfi

ed)

(1

=D

issa

tisf

ied

to 1

0 =

Sat

isfi

ed)

19

Happiness = 2.3 + 0.08*ln(GDP)

2.3

2.5

2.7

2.9

3.1

3.3

3.5

0 10000 20000 30000 40000 50000 60000

GDP per capita in US$ at PPP

Hap

pine

ss, W

VS

(1 =

Not

at a

ll ha

ppy

to 4

= V

ery

happ

y)(1

=N

ot a

t all

hap

py to

4 =

Ver

y ha

ppy)

20

THA

Happiness = 2.3 + 0.08*ln(GDP)

2.3

2.5

2.7

2.9

3.1

3.3

3.5

0 10000 20000 30000 40000 50000 60000

GDP per capita in US$ at PPP

Hap

pine

ss, W

VS

(1 =

Not

at a

ll ha

ppy

to 4

= V

ery

happ

y)(1

= N

ot a

t all

hap

py to

4 =

Ver

y ha

ppy)

21

ARG

AUS

BRA

CAN

CHNCZE

EGY

FRADEUHKG

HUN

IND

IDN

ITA

KOR

MEX

PHL

POL

SAU

ZAF ESP

SWETHA

TUR

GBRUSA

VEN

Happiness = 0.68 + 0.24*ln(GDP)

2.5

2.7

2.9

3.1

3.3

3.5

0 10000 20000 30000

GDP per capita in US$ at PPP

Hap

pine

ss, R

oper

rep

orts

(1 =

Ver

y un

happ

y to

4 =

Ver

y ha

ppy)

(1=

Not

at a

ll h

appy

to 4

= V

ery

happ

y)

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Experience

Happiness

Income

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Beyond a GDP per capita of about $20,000 there is small additional gain in realised happiness or life satisfaction.

Diminishing marginal happiness.

Why? Some hypotheses:

Individuals adapt, becoming accustomed to affluence. The ‘hedonic treadmill’ (apologies to Paul Frijters)

At low incomes we spend on necessities. At high incomes we spend on status / positional goods. If all obtain these goods there is no net gain in ‘status’, no net gain in happiness.

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Implications:

The concept of ‘enough’ starts to make sense, even to an economist

We expect risk aversion

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A

Expectation I

Happiness

Income

B

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But what if individuals are not good at predicting the happiness they will really derive from greater wealth?

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Actual and Expected Happiness: The Impact Bias

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What if individuals mistakenly think that marginal happiness is increasing?

– They will be dominated by greed– They will be excessively materialistic– They will be excessively risk taking

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Expectation II (Greed)

Happiness

Income

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Expectation II (Greed)

Happiness

Income

A

B

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Five perspectives

1. Extracting key themes from Royal speeches on the ‘Sufficiency Economy’

2. Relating these concepts to Buddhist philosophy

3. Relating the ‘Sufficiency Economy’ concepts to research on the economics of ‘happiness’

4. Relating the development of these concepts to major economic developments in Thailand

5. Relating the ‘Sufficiency Economy’ message to economic policy

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0

20000

40000

60000

80000

100000

120000

1951

1953

1955

1957

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

Level of real GDP per capita

-15

-10

-5

0

5

10

15

20

Growth rate of real GDP per capita

Level of real GDP per capita at 2003 prices, baht, per year - LHS axis

Growth rate of real GDP per capita at 2003 prices, per cent, per year - RHS axis

II IIII IV

Thailand: Real GDP Per Capita and Growth of Real GDP Per Capita, 1951-2006

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‘To be a tiger is not important. The important thing for us is to have a sufficiency economy, which means to have enough to survive.’

4 December 1997

34

Five perspectives

1. Extracting key themes from Royal speeches on the ‘Sufficiency Economy’

2. Relating these concepts to Buddhist philosophy

3. Relating the ‘Sufficiency Economy’ concepts to research on the economics of ‘happiness’

4. Relating the development of these concepts to major economic developments in Thailand

5. Relating the ‘Sufficiency Economy’ message to economic policy

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The sufficiency economy perspective does not imply that zero growth is optimal.

Long term economic growth generates demonstrable social gains

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Life expectancy at birth (male and female)

0

10

20

30

40

50

60

70

80

1960 1964 1969 1974 1980 1985 1991 1995

0

10

20

30

40

50

60

70

80

Male Female

Source: Public Health Statistics obtained by National Statistical Office

37

Infant mortality (deaths per 1000), 1960 - 2000

Source: Public Health, Division of Vital Statistics, Ministry of Public Health various issues.

Infant Mortality

0.00

10.00

20.00

30.00

40.00

50.00

60.00

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

*

1998

2000

2002

Dea

ths

per

100

0

Infant Mortality

38

Maternal mortality (deaths per 1000 births), 1960 - 2000

Source: Public Health Statistics, Division of Vital Statistics, Ministry of Public Health, various issues.

Maternal Mortality

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

*

1999

2002

Dea

ths

per

1000

bir

ths

Maternal Mortality

39

Thanks for listening

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