Plot

Searching for a way to address overpopulation and global warming, Norwegian scientist Dr. Jorgen Asbjornsen of Edvardsen Institute develops "downsizing", an irreversible process that shrinks organic material. The institute was itself set up in the 1950s with the profits from producing mustard gas during WW II, so that the fruits of science could be used for the betterment of humanity. Over population was identified as one of the major threats facing humans, and downsizing was an unlikely solution that worked. Jorgen becomes part of the first group of 36 human test subjects and is encouraged that the process reduces people to a height of approximately 5 inches (12.9 cm) (a ratio of 2744 to 1 to the original body size or 0.0364% of their current mass and volume), drastically decreasing their consumption and waste. When the findings are revealed at a conference five years later, there is a global sensation. Dr. Andreas Jacobsen (Soren Pilmark) worked with Jorgen on the procedure. The process is short and painless with a mild discomfort of the removal and replacement of dental and other prosthetic. The subjects are lightly sedated and recover after an hour or two. The habitat for the test subjects was a 7 by 11 meters of gas permeable enclosure. It was designed to protect the test subjects from the hazards of weather, animals and insects. The non-Compostable waste of 36 people for 4 years barely filled one garbage bag. The institute proposes a 200-300-year long transition from a "big" to a "small" society. The test subjects even had the first "small" baby ever born.

Ten years later, Paul (Matt Damon) (an occupational therapist) and Audrey Safranek (Kristen Wiig) are a married couple in Omaha with financial issues. The world economy is losing billions of dollars in consumer spending due to the effects of downsizing. Construction, Automobiles, housing and even defense are suffering. Due to vacant properties (when people downsize, they leave their "big" homes behind), the real estate market had taken a major hit. At a college reunion, they encounter Dave (Jason Sudeikis) and Carol Johnson (Maribeth Monroe) who have "downsized," an irreversible process invented 15 years earlier that involves shrinking humans to a height of five inches. While the inventors advocate that downsizing is environmentally friendly through the reduction of waste, Dave argues that its benefits extend far beyond that and improve one's life through the increase in value of their money.

Exploring the possibilities of downsizing, Paul and Audrey attend a sales pitch for Leisureland given by "small" couple Jeff (Neil Patrick Harris) and Laura (Laura Dern). Laura claims that her entire diamond jewelry set cost only $83 (which is also their food budget for 2 months). They live in a palatial house. A 12,000 sq feet equivalent house costs $63,000, the health package another $4500 and $15,000 for the downsizing procedure. Paul savings of $152,000 in real money translates to $12.5 million in Leisureland. Paul and Audrey agree to undergo the process and move to Leisureland, one of the most popular communities for small individuals (with the best houses, the best doctors, best appliances, all the great concert tours and the best restaurants). Audrey's parents say that they are going to miss her a lot. The procedure has a 1:225,000 chance of resulting in injury, disability or death. Paul is taken to the men's section, and he is told that he will re-united with Audrey in the recovery room within 5 hours. After undergoing downsizing, Paul receives a call from Audrey, saying that she was unable to go through the procedure and, opting out at the last minute, will be leaving him.

One year later, Paul finalizes the divorce with Audrey, and settles into his new apartment. Although Paul had anticipated a life of relative ease, he works as a telemarketer for Lands' End since he let his occupational therapy license lapse because he had not expected to have to work after being shrunk. Paul has started dating someone. While attending a birthday party, Paul has a discussion with Dave and says that he regrets his decision to downsize. Soon after, Paul breaks up with his girlfriend and attends a party hosted by his neighbor Dusan (Christoph Waltz).

The next morning, Paul notices that one of Dusan's house-cleaners is Ngoc Lan Tran (Hong Chau), a Vietnamese political activist who was jailed and downsized against her will. Lan Tran was the sole survivor of a human smuggling attempt (17 downsized people were smuggled) to the United States in a television box (in a container shipment headed for Target) and had her leg amputated upon arrival as it was infected from the unsanitary conditions inside the TV box. She was brought to Lesiureland, which is considered to have the best medical facilities for the small. Attempting to assist Lan Tran with her prosthetic leg, Paul returns to her house in the slums outside of the walls of Leisureland. After assisting Lan Tran's dying friend, Paul attempts to repair Lan Tran's prosthetic leg only to break it and make her unable to work.

In return, Paul works for Lan Tran's cleaning service where he also assists in gathering food from around the city that Lan Tran distributes throughout the slums. Dusan attempts to release Paul from his obligation by taking him to Norway, the site of the first small community with his friend Joris Konrad (Udo Kier). Dusan says something big is happening and they want the group to come there quickly and are offering a lot of money for the same, but Lan Tran argues to come along. Lan Tran had received international attention after her arrival in the United States, including personal correspondence from the inventor of downsizing, Dr. Jorgen Asbjornsen (Rolf Lassgard), who had previously invited her to Norway.

While traveling in a fjord, Paul's boat encounters Dr. Asbjornsen and his wife, Anne-Helene (Ingjerd Egeberg). Dr. Asbjornsen announces that humanity is doomed, as the positive feedback of Arctic methane emissions is impossible to be stopped and will result in the eventual extinction of the human race. Arriving in the first colony, Paul is shown that Dr. Asbjornsen planned for such a contingency with the creation of a large vault inside a mountain to insulate the colony and preserve humanity in the event of an extinction. Their descendants will emerge when the surface environment stabilizes in about eight thousand years. Dusan and Joris are skeptical of the cult-like plan and say the extinction will not happen for hundreds of years. Paul is excited to enter the vault and asks Lan Tran to join him. She rejects his offer, saying that he does not need to enter the vault and can do good in their community by returning. Paul enters the vault but changes his mind and leaves as the door is closing, choosing to return with Lan Tran, Dusan, and Konrad.

Having returned to Leisureland, Paul assists Lan Tran in her duties of providing needed aid and supplies to the people of the slums.