While this isn’t about enjoying a sugary treat from your local bakery, “doughnut economics” uses the simple shape of a doughnut to illustrate a theory where prosperity means staying within a balanced space. The doughnut’s outer ring represents the planet’s ecological limits, while the inner ring ensures basic human needs are met. Between these two rings lies a space where humanity can truly thrive.

What is Doughnut Economics?

Doughnut Economics is a framework proposed by economist Kate Raworth in her 2017 book Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist where she states: “Humanity’s 21st-century challenge is to meet the needs of all within the means of the planet. Doughnut Economics shows how.” 

The central idea is visualised as a doughnut: 

• The inner ring represents the minimum standards of living that no one should fall below – things like access to food, water, healthcare and education. 
• The outer ring signifies the ecological limits of our planet, such as climate stability, biodiversity, and the ozone layer, which we must not exceed if we want to avoid environmental collapse. 
• The sweet spot lies in between, where humanity can meet its needs without overshooting the planet’s boundaries.

What if this theory became the foundation of modern economies? 

It’s already taking root in various places around the world, from Europe to Australia. A city adopting Doughnut Economics might prioritise affordable housing, clean energy, and local food production over expanding its industrial base. Cities like Amsterdam and Brussels are leading the way by setting up initiatives like a  Ministry of Economic Transition or a ‘Donut Team’ that works with businesses to adopt ecological and fair practices. 

We need economies that “make us thrive, whether or not they grow”.

Businesses, on the other hand, might shift towards circular economy practices, ensuring that their operations do not harm the environment and that they contribute positively to society. Some consumer brands, such as IKEA, demonstrate how businesses can adopt these measures now without sacrificing success, last financial year – IKEA reduced its climate footprint by 24.3% while increasing revenue by 30.9%. However, the idea of financial growth as a success indicator would be a metric of the past with true adoption of doughnut economics. As Raworth states, we need economies that “make us thrive, whether or not they grow”. This means changing our picture of what the economy is and how it works.

Further Reading

• Amsterdam Is Embracing a Radical New Economic Theory to Help Save the Environment. Could It Also Replace Capitalism? – The Times

• Why we need to prioritise wellbeing over growth – The Financial Times