The Signaling Motives Behind Purchasing Decisions

Recently I have written about the way we use wealth and money to purchase things that signal something about us. The ideas for my posts have been from The Elephant in the Brain where Kevin Simler and Robin Hanson discuss ways in which we intentionally deceive ourselves and others in order to gain something, demonstrate a quality about ourselves, or provide some type of message to others without needing to be overt about our actions. There are lots of things about our identity, our values, and our survival that work much better under the surface rather than explicitly addressed.

 

Our wealth and money can be signals for our identity, personal character traits, and group status, plus they can be used to purchase other things that further signal these things about who we are. What is interesting is how much we are not aware of these signals, and the extent to which we fail to recognize or acknowledge the drive these signaling mechanisms have in our purchasing decisions.

 

Simler and Hanson write, “as consumers, we’re aware of many of these signals. We know how to judge people by their purchases, and we’re mostly aware of the impressions our own purchases make on others. But we’re significantly less aware of the extent to which our purchasing decisions are driven by these signaling motives.” We go out of our way to make certain impressions on other people, to show that we are part of a certain group, that we truly belong in a particular space, and that we are competent enough to know what we are doing. We put a lot of effort into demonstrating something about ourselves, even if we don’t think we are.

 

Sometimes we are expected to make these signals, and sometimes we make them so that we can fit in with a particular group or identity that we want to adopt. Doctors might purchase fancy cars even if they have high levels of student debt and can’t really afford the car. Runners might buy particular sunglasses to look cool at the group runs, and many religious people might spend a lot on fancy religious jewelry to show off wealth and faith at the same time. The things we buy, or don’t buy, reflect something about ourselves, the groups we belong to, and our values. With some purchases we try to be as visible as possible – like buying a fancy thing at a charity auction, and with some purchases we try our hardest to hide the evidence of our transaction – like say paying off a porn actress to stay silent about an affair. The thing we purchase may be an approved way to flaunt our wealth and social value (like a Tesla), but it could also signal a moral deficiency or a selfish behavior. We don’t always acknowledge it directly, but many of our purchasing decisions have these qualities, and it is probably best to be aware of this signaling behaviors when we are making purchases.

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