This is a six-part series on megatrends, exploring the compelling economic, social, environmental, political and technological issues facing Australia, as part of the CSIRO’s new report, Our Future World 2012.
In part five of this ongoing series on megatrends, Stefan Hajkowicz examined the ways technology has already changed the way we work and shop – and how easy it can be for businesses to be left behind.
In our final article of this series, Stefan Hajkowicz asks a simple question with a difficult answer: How do we fulfill our greatest desires?
So don’t get your hopes up about this last megatrend. It might not be everything you wished for. Seriously though, the “great expectations” megatrend has been the hardest to articulate but has probably captured the most attention. We had originally come up with the title “The way you make me feel” but the CSIRO Futures team felt Charles Dickens was more up-market, and more CSIRO, than Michael Jackson.
Diminishing marginal returns to utility illustrated through beer consumption Stefan Hajkowicz, CSIRO
The Great Expectations megatrend rests on the economic theory of diminishing marginal returns. What’s that? Well it’s best explained by an example.
Imagine you’re heading off to the pub for drinks with friends. You enter the bar in a neutral state of happiness.
Beer 1 to 2 gives you a modest boost of utility. So you’re feeling happier. Beer 2 to 3 improves your happiness again, but to a lesser extent. Each additional beer provides less utility until we reach the maximum. After that each beer provides negative utility.
Economists call happiness “utility”. Just about anything you consume (for instance, shoes, food, and watches) will have diminishing marginal returns to utility. That’s why people switch from consuming physical products towards the consumption of material-free experiences (holidays, movies, a walk in the park). People of the future will have great expectations for experiences.