Interview with Francesco Sarracino by Raymond Wagener – Climate change is creating a whole range of problems, jeopardising our planet’s biodiversity and causing social injustices. It is in this context that the Plaidons Responsable team of Caritas Luxembourg organized a cycle of 4 lunch debates with Francesco Sarracino in October and November 2022. Francesco is a Senior Researcher at STATEC Research and expert on well-being and quality of life.

1. Our life is based on a linear consumer vision: I produce, I buy, I consume, I throw away. As a consequence, our society is built on an economic model that is not sustainable and that creates social and environmental problems. Two ways out of this unsustainable model are being proposed by some people: “green growth” and “degrowth”. Why is the current economic model unsustainable? To what extent can sustainable development growth be achieved through “green growth” and “degrowth”?

The current economic model is too demanding on resources. Over the past 70 years, economic growth has been associated with the production of negative environmental externalities, such as pollution, increasing extraction of raw materials, CO2 emissions or loss of biodiversity, despite technological changes. Consider that the growth of the world’s GDP per capita has been strongly associated with the annual evolution of CO2 emissions since the 1970s. Only during global recessions have CO2 emissions temporarily decreased. The green growth strategy maintains that technological innovation will decouple economic growth from its negative externalities. Investments in green technologies will allow economic expansion while protecting natural resources for future generations. Supporters of degrowth, on the contrary, claim that halting the production and consumption of goods and services – and thus negative economic growth – is necessary to preserve resources for future generations. Unfortunately, efforts to date to limit production and consumption have proven insufficient, as confirmed by the United Nations in 2021.

2. Where does this failure come from?

This failure is the result of a deep misunderstanding of human nature. The standard economic view assumes that human beings are self-interested and prioritize the present over the future, which leads them to postpone sustainable actions and not care about future generations. The conclusion is that if people prioritize the present over the future, they need to be nudged or coerced to adopt sustainable behaviors. This is probably  why, despite all international efforts, the three Sustainable Development Goals related to the protection of the environment (goals 13, 14 and 15) have seen at best no progress, as certified by the United Nations in 2021. The reason is that the usual understanding of unsustainability is guided by wrong assumptions about human nature. This error has two consequences:

  • We have created a world in which economic growth is the primary means to achieve fulfilling lives, and in which our ability to lead a satisfying life depends on how much money we have. Our sense of self-esteem and success has become intrinsically tied to our financial standing, and we have constructed a lifestyle where even the intangible aspects of our lives are evaluated and commodified on the basis of monetary value. As a result, we have created a culture where everything is treated as a commodity that can be bought, sold or traded for money, resulting in the proliferation of expensive lifestyles.
  • In such a world, reducing the economy means telling people today to give up something for the benefit of people tomorrow. We have imposed a trade-off between current and future well-being; we have introduced a divide between generations.

3. What have studies on subjective well-being revealed about human nature that can help us understand the reasons for unsustainability?

We know three important things:

  1. people care about the future;
  2. they care about the environment;
  3. trust in others and in institutions is important for quality of life and it is declining in many countries.

This knowledge suggests that people may  adopt unsustainable behaviours if they feel that collective action (cooperation) to solve common problems is impossible – that is, when trust in others and in institutions is low. Let me explain: anxiety about the future, distrust of others and of institutions, those responsible for coordinating collective action, gives way to despair and disempowerment, which can result in behaviours prioritizing personal or immediate benefits over long-term sustainability. If people trust that others will do their part in a collective effort and that the coordinating institutions are trustworthy, they are likely to cooperate to solve common problems, such as environmental issues. However, if trust is low, the possibilities for cooperation are scarce and people adopt private solutions to shelter themselves and their loved ones from environmental degradation. This is a typical problem of collective impotence: the crisis of cooperation leads to private solutions, boosts consumption and growth, prioritizes money, introduces a trade-off between productive and unproductive activities, and worsens the ecological problem. Anxiety about the future combined with distrust of collective action makes people feel that they are alone in facing the uncertainty of the future. This creates formidable consumers.

A good example is the recent increase in demand for bunkers and shelter houses, also known as “doomsday prepping”. This trend can be seen as the result of people’s efforts to find private solutions to common problems (natural disasters, pandemics or political instability) and their distrust of the possibility of common solutions. Bunkers and shelter houses provide protection and security for individuals or small groups of people, but do not solve (in fact, they accelerate) the initial (common) problem they are trying to avoid.

In sum, public problems become business opportunities to be exploited for private profit. In this case, economic growth should not be considered a measure of social progress and development.

This view suggests that economic growth only increases the well-being of people to a limited extent, which should be the goal of any society.

4. To what extent is general income growth likely to increase average happiness?

We should expect very little gain in well-being from income growth. It is commonly accepted that richer people are on average happier than others, but the relationship between income and well-being is stronger for poor people: beyond a certain threshold (in Luxembourg, data indicate a household income of about 10,000 euros per month), additional income adds very little to people’s well-being. Moreover, income growth – which at national level means economic growth – is not associated with the growth of well-being. This relationship has been observed in the United States, the United Kingdom, India and China, for instance. Luxembourg also belongs to this group.

5. In your presentation, you talk about the Easterlin paradox.  The Easterlin Paradox was theorized by Professor Richard Easterlin (a Professor of Economics at the University of Southern California). In his paper entitled, “Does Economic Growth Improve the Human Lot? Some Empirical Evidence”, he concludes that a country’s level of economic development (i.e. the increase in the standard of living) and the level of happiness are not related. Could you please discuss the Easterlin paradox in a little more detail, in particular how it relates to measures of social well-being?

The Easterlin paradox is that although wealthier people tend to be more satisfied with their lives than poorer ones, economic growth does not necessarily lead to increased well-being. Adaptation and social comparison theories explain this paradox by suggesting that income only provides a temporary improvement in well-being. This happens because people quickly adapt to their new circumstances and compare themselves to others. Another explanation is defensive growth, to which I have contributed. This theory suggests that economic growth results from individuals’ efforts to protect themselves from the negative consequences of the growth process, such as pollution and resource depletion – hence the name “defensive growth”.

6. Why is money so important if it does not improve our well-being?

Defensive growth posits that money plays a prominent role in people’s lives because it provides a defense – real or illusory – against the erosion of social and environmental resources, and an insurance against the uncertainties of the future. When social cohesion is weak and cooperation to solve common problems is difficult, individuals resort to private solutions to protect themselves and their dear ones from public problems. For example, they might purchase filters and install better windows to insulate themselves from polluted air, invest in private security systems to protect their belongings from rising crime rates, or spend significant sums on health care to cope with the impact of stressful living conditions in polluted environments.

7. Could you please, discuss these indicators and your conclusion concerning defensive growth: “This kind of economic growth has disappointing effects on well-being because it offers private solutions to people’s well-being needs”?

Defensive growth leads to the substitution of non-market sources of well-being for market goods and services. This is a self-reinforcing vicious cycle, in which the depletion of public resources leads to increased consumption of private goods and further degradation of the environment. In the examples given above, individuals resort to private solutions to cope with issues that would be better tackled collectively. Instead, the sum of individual efforts accelerates growth, degrades the social and natural environment, and makes the situation worse. The result is a society of formidable consumers, where material possession is the only way to stay afloat. The advertising industry sits on top of this vicious cycle, as unhappy, scared and insecure people are most sensitive to its messages.

8. Could you please discuss further the notion of  “well-being as a policy target” as well as the vicious cycle of the current economic model and the virtuous cycle of “promoting sustainability by promoting well-being”?

If we are looking for happy, satisfying, fulfilling and sustainable lives, we are on the wrong track. We should focus on what matters for well-being, de-emphasize the role of money and give people time to dedicate to themselves and the things that matter to them. This does not imply giving up the comforts of modern life — I am not nostalgic for the good old days. The big environmental challenges of our time have a common root in the way modern economies are organized. It is necessary to move beyond our current social organization and prioritize what matters for well-being. Here is where neo-humanism, a project to bring societies into a virtuous cycle, can provide useful insights for sustainability. By organizing knowledge from quality-of-life studies, neo-humanism argues that it is possible to establish a virtuous cycle in which the explicit pursuit of well-being through policies, such as those related to social relations, contributes to socially and environmentally compatible economic growth. Neo-humanism argues that it is possible to establish a virtuous cycle by promoting well-being through policies that support social capital. People with rich social lives are more satisfied with their lives, tend to consume less and to compare themselves less with others. On one hand, this reduces the negative externalities of consumption for the benefit of the environment and creates the conditions for cooperation and cohesion in happy societies. On the other hand, increased well-being contributes to productivity, which is good for economic growth. Such growth, however, is driven by creativity, not by defensive consumption; it may be slow, but well suited to fit people’s needs. Most importantly, people’s ability to enjoy life does not depend on the resources they own, and economic growth is a desirable but not necessary consequence of human activity.

Many initiatives can be adopted to promote the virtuous cycle of neo-humanism, from promoting a culture of social relationships in schools and the workplace to reorganizing public spaces for social interaction; from promoting high-quality and free education and health care to reducing income inequality, lowering the retirement age or supporting universal basic income.