Pakpicha PATHOMPITUKNUKOON

This paper investigates the pathway to the maximum happiness following the middle path in Buddhist Economics. It constructs utility functions and production functions that an individual will be happy when he or she spends time and financial assets for self and public interests. By dynamic optimization to maximize the utility under constraints of constant outputs done for self-interest and public interest over time, the solutions discovers the trade-offs between the time and financial assets spent for self-interest, and also reveals the trade-off between time and the assets donated for public interests as the mean to happiness. Moreover, it shows that an individual cannot live in an extreme way by spending all the time for self-interest while spend all financial assets for other people and vice versa. Therefore, this study mathematically confirms that the middle path in Buddhist Economics is consistent with the optimality in economics, and it is the pathway to the maximum of happiness.

This paper constructs utility function and production function following Buddhist economics. It divides the utility into two parts, the utility from outputs done for self-interest and outputs worked for public interest. The production of private outputs uses two factors, time spent and financial assets kept for private use. The production of public outputs combines two factors, time spent and financial assets donated for public affairs. Then it finds the long-run equilibrium or the steady state to maximize the utility. Moreover, it simulates the effect of changing parameters in the functions on the steady states. It discovers that an individual maximizes the long-run utility when he or she lives almost extremely either to help people or to spend time alone combining with the compensation such that when the individual chooses to spend time extremely for other people, he or she must keep financial assets for self-interest, in contrast, when the individual chooses to keep the time for self-interest, he or she must donate financial assets to public affairs. This study mathematically confirms that the principle of middle path in Buddhist economics truly leads to the maximized utility of an individual.

This study applies CGE model to investigate the effects of rising tourism income and fading agricultural income in Mae Kam Pong village in Chiang Mai, Thailand, on 4 issues: the expansion and recession of major economic sectors, income distribution, social welfare of the village, and welfare of the poorest households. Simulations show that services and construction sectors will expand while tea, commerce and tourism sectors will face the recession. Tourism sector will fade out from the village when tea price drops 20% and tourism price increases around 30%. For the income distribution, the richest quintile will be the top gainer whereas the poorest quintile will be the top loser. The village can maintain its social welfare by raising tourism price 46.5% to compensate the drop of tea price around 10%. It is impossible to maintain the social welfare when tea price drops 20%. The dropping welfare of the poorest households cannot return to its original level after tourism price increases.