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Less is more: what does mindfulness mean for economics?

Dan Nixon.

Economic theory generally assumes that more consumption means greater happiness. This post puts forward an alternative, “less is more” perspective based around the concept of mindfulness. It argues that we may achieve greater happiness by seeking to simplify our desires, rather than satisfy them. The result – less consumption but greater wellbeing – could be especially important for debates around secular stagnation and ecological sustainability.

What is mindfulness?

The past decade has witnessed an explosion of interest in mindfulness, which refers to “paying attention to what’s happening in the present moment in the mind, body and external environment, with an attitude of curiosity.” It is the subject of bestselling books, popular online resources and widespread media coverage. The idea is that, by teaching a person to be more focused on the present moment (typically through simple meditation exercises), they will become considerably less caught up in thoughts about the past or worries about the future.

Practising mindfulness has been found to reduce the incidence of depression, stress and anxiety and it is now widely used by mental health practitioners. But the uptake is far broader than this, with courses on mindfulness increasingly offered in schools, the armed forces and workplaces (including the Bank of England and many commercial banks).

Why does this matter for economics?

Mindfulness has been the subject of extensive research in the fields of psychology, neuroscience, sociology and philosophy. For economists, a number of angles may be of interest. It has been argued that it directly improves wellbeing. In the workplace, it can boost productivity by raising employees’ cognitive skills (as well as reducing days off due to mental illness).

But there are more profound lessons for economics, too.

At root, mindfulness can be understood in terms of what I call – for want of a less clichéd expression – a “less is more” approach to the relationship between consumption and happiness. If true, this has pretty fundamental implications. But before exploring this idea further, we first need to review the “more is more” assumptions of neoclassical consumer theory.

Homo economicus: more is more

The term “economic man” was first used in the late nineteenth century, in response to the writings of John Stuart Mill, to mean “a being who desires to possess wealth”. Since then, homo economicus has come to mean an individual that acts rationally to achieve his or her predetermined goals, obtaining the highest possible utility given the information available.

Over time, criticisms of homo economicus have come from various angles. Anthropological studies have suggested that human behaviour in some societies differs considerably from this caricature. And studies in behavioural economics have shown how, in reality, people are nicer than the homo economicus model would suggest – they have “other-regarding preferences” – and how this description ignores the limits to the information people have to base their economic decisions on (see Rabin (1998) for a review).

The illusion of desire: the “less is more” challenge to economic theory

At the heart of the “less is more” challenge to consumer theory that I set out here is an understanding of our desires. The key insight of this approach is that we can be happier by seeking to simplify our desires rather than satisfy them; the result is less consumption yet more utility.

To see where this claim comes from, we turn briefly to Buddhist philosophy – where mindfulness has its origins – and two key tenets in particular:

So, the more we get attached to having certain things – things which only make us happy for a while – the more we set ourselves up for disappointment when we inevitably don’t get what we want – or “enough” of what we want. As the writer Eckhart Tolle puts it:

“There are two ways of being unhappy. Not getting what you want is one. Getting what you want is the other.”

The “less is more” critique of homo economicus, therefore, implies that desires (or preferences) need not be taken as given. We need to consume some things but many of our desires, the argument goes, prove to be illusory when we consider the transience of the satisfaction they bring or the feelings of attachment they generate. By better understanding our desires, we may find it makes more sense to try to simplify them rather than satisfy them. Pursuing this approach, fewer desires “crystallise” into consumption, yet happiness is higher.

How does the rise of mindfulness fit into all of this? While it has its roots in Buddhist thinking – and has been practised for thousands of years in that context – the recent explosion of interest has largely occurred in Western societies. Even so, the recent interest in mindfulness likely contains at least an element of the philosophy set out above. Indeed some papers explicitly characterise mindfulness as observing experience directly, rather than “through the filter of our beliefs, assumptions, expectations and desires”. Others argue that mindfulness may promote reflection on our consumption activity, including how we react to advertisements (see Rosenberg (2004)), such that desires “need not be reacted to in knee-jerk fashion” (Brown, Ryan and Cresswell (2007)).

To test this, Brown et al (2007) look at individuals’ “financial desire discrepancies” – the gap between current and desired states. And interestingly, the authors find that individuals who practise mindfulness reported lower desire discrepancies and higher subjective wellbeing. This is just one study and more research is needed. But it does suggest that mindfulness can cultivate a stronger perception of having “enough”, rather than craving for more – precisely in line with the “less is more” reasoning set out above and in the graphic below.

What might a more “mindful” economy look like?

At a microeconomic level, the “less is more” theory contests the fundamental notion that, beyond a certain level at least, utility increases with consumption. This is pretty profound. Arguably, it goes further than critiques that point out the existence of altruistic behaviours or limitations to individuals’ information sets. And it gives further support to studies that highlight the importance of immaterial determinants of wellbeing.

Within macroeconomics, too, there is an extensive literature on happiness and the “less is more” theory is consistent with the empirical claim that happiness does not increase as a country’s income rises. Various organisations have been developing measures of wellbeing that go beyond measures like GDP. Incorporating “less is more” ideas into these frameworks would not be straight-forward; when it comes to measurement, for instance, it would be important to distinguish between workers voluntarily working fewer hours (and consuming less) due to things like mindfulness, say, compared to workers losing their jobs involuntarily for some other reason (which, as Paul Krugman notes, is “almost always a terrible experience”). Even so, it would be worth exploring this further, and any policy implications.

The debate on secular stagnation provides extra motivation for looking at new ways to achieve happiness. Economists disagree on the underlying causes of low growth (compare for instance Gordon, Summers and Rachel and Smith) but many agree that the prospect of protracted periods of stagnation looms large as a genuine threat for advanced economies over coming decades. Now, if that’s the world we are in, increased attention will naturally turn to alternative ways to increase wellbeing; “less is more” ideas could form one part of the solution.

Finally, there could be interesting implications in the field of environmental economics (see Carney (2015)). Since human wellbeing and ecological sustainability are often assumed to be in conflict, the neat thing about the “less is more” critique is that it achieves less consumption without constraining people’s decisions. Already, there is some empirical support for this idea: Brown and Kasser (2005) find that human wellbeing and ecologically sustainable behaviours in fact go hand in hand, identifying mindfulness as one factor that is significant in driving this relationship.

Economics, consumption and mindfulness

It’s been said that “economics is all about consumption”.

The rise of ideas like mindfulness offers a counter to this view. Of course, the “less is more” critique only works to the extent that individuals trying out things like mindfulness do indeed experience the greater sense of having “enough” described here.

But insofar as it is possible to achieve better outcomes with lower rates of consumption, the lessons for economics would be far-reaching.

Dan Nixon works in the Bank’s Stakeholder Communications & Strategy Division.

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Bank Underground is a blog for Bank of England staff to share views that challenge – or support – prevailing policy orthodoxies. The views expressed here are those of the authors, and are not necessarily those of the Bank of England, or its policy committees.