Maybe You Should Re-Think Economics as a Doughnut 

A "renegade economist" thinks redefining the dismal science might save the world.

An illustration of a pink doughnut with sprinkles

Economics has a reputation for being a “dismal science,” but self-proclaimed “renegade economist” Kate Raworth has a sweeter view of the subject in her new book, Doughnut Economics. The book’s premise considers the shape of a doughnut as a guide to understanding how a modern, globalized economic system is interconnected but can serve people fairly and lead to happier, more fulfilled humans.

Raworth talked to Inverse about how doughnuts might hold the key to making our lives better.

How did you come up with the idea of donuts related to economics?

I tried to draw a picture of humanity thriving in the twenty-first century and — odd though it sounds — it came out looking like a doughnut. The hole in the middle is a place in which people are falling short on life’s essentials, from food and decent housing to healthcare and political voice. We want to get everyone out of that hole.

But we must also make sure we don’t overshoot the doughnut’s outer crust by putting too much pressure on Earth’s critical systems that allow us to flourish — a stable climate, healthy oceans and thriving ecosystems. In essence, the doughnut is the space in which we can meet the needs of all within the means of the planet.

And it prompts a powerful question: If getting into the doughnut is humanity’s twenty-first century goal, what economic mindset will give us even half a chance of getting there? That’s why I wrote Doughnut Economics, to promote the best ideas in new economic thinking that can equip us for the future we know is coming.

Can you talk about the thought process of using circles and why humans seem to gravitate towards them as an explanation device?

Once I had drawn the doughnut image — and been amazed by the international interest in it — I realized that many cultures have drawn similar circular shapes to symbolize well-being, from the Taoist yin-yang to the Maori takarangi to the Celtic double spiral. All of these circular shapes invoke a sense of dynamic balance: They are holistic and never static. Perhaps Western culture can overcome its obsession with endless growth and aspire to a desire to endlessly thrive.

Why are people so bored and fed up with economics when you argue it’s more important than ever?

Many people think economics is a matter of using complicated equations to calculate the financial value of things, which makes it seem obscure and cut-off from daily life. And when economists failed to see the financial crash coming, the field lost credibility.

But it is ripe for reinventing. Economics — from the Ancient Greek — literally means “household management,” and it couldn’t be more relevant today, especially when it comes to the management of our planetary household. We will soon be more than 10 billion humans living together on this one fragile planet, and we urgently need a new generation of economists who are ready to find ways to manage our shared planetary home in the interests of all of its inhabitants.

Do behavioral nudges work? If so, what social policy area is most in need of nudging?

Nudge policies — which aim to alter the context in which choices are made — can be extremely effective for surprisingly little cost, as has been discovered by the Nudge Unit in British government. Simple “nudges” have been shown to work surprisingly well, whether in cutting carbon emissions (put a household’s electricity smart meter in the front hall, not in the basement), increasing organ donation (people are invited to opt out of, rather than opt into, the scheme), or reducing missed doctor’s appointments (send a personalized text reminder the day before). And all these results can often be achieved at significantly lower cost than alternative approaches.

Today, I think the area in which we most urgently need to use nudge — along with many other measures — is in shifting our lives and lifestyles away from fossil fuels: towards powering our homes with renewable energy, driving electric cars, or better still, riding bikes on local journeys. So much of our behavior around energy use is culturally ingrained, and I believe it could be altered with smart, cultural nudges. There is some fascinating research and experimenting to be done!

What happens to economics as we move from our planet to space and beyond?

I don’t think we will be moving from this planet out to space and beyond anytime soon. Sure, a handful of space stations may be built and visited by a few thousand people within the next couple of decades, but given that there are 10 billion people here on Earth — inhabiting the most extraordinary living planet that is blessed with breathable air, self-recharging freshwater, fertile soil, warmth from the sun, and a protective ozone layer — we should recognize that we are deeply embedded in the web of life and focus, first, on finding ways to live well here, together. This century, we can create very different futures for ourselves. We could certainly cause the Earth-system to collapse, thus bringing about our own demise. Or we could find ways to thrive within the means of our planet. It depends upon many things: on population size, on the scale of inequality, on the technologies we use, on the governance we create, and, crucially, on the economic mindset that we bring to the task.

You say we’re all economists now. In what ways are we all economists, and we don’t know it? And how can we realize our economic potential for the greater good?

The economy is a complex evolving system, which means that every innovation, every deviation from the way things are usually done is an experiment in evolutionary design. This gives added importance to novel initiatives — from complimentary currencies to open-source software and hardware — that are at the leading edge of new economic design. What’s more, every one of us can have a hand in shaping the economy’s evolution. Not just in how we shop, eat, and travel, but in how we volunteer, invest, and protest. In how we set up new businesses, save for our pensions, license our inventions, and power our homes. That’s what makes us all economists now; we all have a hand in shaping our shared planetary household.

You spend time talking about the “ecological ceiling” and how economics can address climate change. Can economics save us from climate change doom?

The folly of twentieth century economics was that it focused on just two factors of production — labor and capital — and so essentially ignored the living world on which the entire economy, and humanity, depends. That’s why twenty-first century economics needs to begin by acknowledging the economy’s dependence on the sun’s energy and on the living Earth’s materials. Last century’s economics pursued growth as if it were a goal in itself, with all the ecological damage and social inequality that this has entailed. To create an economy that works with, not against, the cyclical processes of life, this century’s economies must be regenerative and distributive by design — and ending the use of fossil fuels is evidently key for achieving that.

The challenge of climate change is indeed foreboding, but I am not filled with a sense of doom. Through teaching and presenting my book, I meet so many 15-30-year-olds who are passionate about transforming the future and thirsty for new ways of thinking. We owe them the very best chance of doing that well, and it starts with an economic education that is fit for our times.

Related Tags