Wednesday, 20 August 2008
Have We Reached the Optimum Living Standards?
Add or View Comments- Wed, 20 Aug 2008
- View More On: Global Paradigm Shifts
This statement caught my eye today:
ExxonMobil’s primary role—and most important benefit to society—is to safely provide reliable and affordable supplies of energy to people around the world. Doing this well is essential to improving standards of living, and we are committed to doing so in a financially, environmentally, and socially responsible manner. [p3]
Economic expansion is a desire for billions of people around the world, and providing the energy necessary for growth is imperative. [p13]
Source: Exxon-Mobil Corporate Citizenship Report 2007
The foundation of this statement is the assumption that increasing living standards is fundamentally and unarguably desirable. My question is whether there is a point where diminishing marginal returns to increasing living standards will set in. If so, the basis for their core role of providing affordable energy and thus increasing living standards is undermined. Indeed, whether providing affordable energy is even increasing living standards is equally questionable given the damage from most energy production.
Define Living Standards
To clear things up, we need to know what living standards actually means and in particular, what Exxon-Mobil mean when they use it in such a statement.
The simplest measure of living standards is GDP per person. A more complex and useful measure uses something like the Human Development Index which includes wealth but also includes longevity and education. Further measures can include political freedom, wider health measures and even happiness measures. Clearly these become less objective as the elements are less well defined and/or harder to measure.
So the counter to my diminishing returns to living standards argument is that if living standards are defined with a wider measure and effectively analogous with happiness, we cannot possibly argue that more happiness can make us worse off. However, it is not difficult to argue that more wealth can make us worse off (in terms of happiness) - it is not the countries with the highest GDP per person that top the UN HDI.
Follow-up
I have asked Exxon-Mobil what they mean by "standards of living" and I'll post their reply.
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