Tag: Purchases

Mass Advertising

Posted on by jabittan
Have you ever wondered why you see so many advertisements for things you cannot afford? I hadn’t thought about this very much before reading Kevin Simler and Robin Hanson’s book The Elephant in the Brain, but if you look around you will see tons of ads for expensive things that many of us won’t end up buying. I won’t buy a Rolex watch, but I can picture billboards and advertisements for them. I know the slogan that both BMW and Mercedes have at the end of their advertisements, but I likely won’t ever buy a either car. Why are companies like BMW and Rolex advertising to people like me who don’t have the money or intention to buy their products? Wouldn’t it be wiser for the companies to advertise to people who actually wanted and could afford to buy the things they sell?

 

“When BMW advertises during popular TV shows or in mass-circulation magazines,” write Simler and Hanson, “only a small fraction of the audience can actually afford a BMW. But the goal is to reinforce for non-buyers the idea that BMW is a luxury brand. To accomplish all this, BMW needs to advertise in media whose audience includes both rich and poor alike, so that the rich can see that the poor are being trained to appreciate BMW as a status symbol.”

 

Sure, we can appreciate the aesthetic beauty of the car, the horsepower, the sport performance, and the quality of the interior, but a big part of purchasing a BMW is the status symbol. If the true reason for buying a BMW were the list of things we might give as reasons for purchasing the car, then advertisers would not need to make sure that everyone knew the car was an expensive way to show one’s status. Ads could be targeted to the people who really care about car aesthetics and performance, not to people who are just going to shuttle a bunch of kids back and forth to soccer practice.

 

I try hard to be aware of the pressures I feel when making purchases or considering new purchases. I try to understand that I am pulled to make a purchase to show off my status. I also try hard to understand that owning expensive items, having a large salary, and being economically successful do not necessarily define my value as a human being. Understanding what advertisers are doing when they show ads to mass audiences about things that demonstrate our wealth and should be seen (in the mind of the advertiser) as desirable helps me keep my focus on what matters – being a good person, producing value for human beings, and avoiding negative externalities that arise from my desire to show off. This is why I think it is beneficial to understand the mind and what is happening in our heads when we see a BMW advertisement. By recognizing what impulses the ad is targeting and understanding the human drive for status, we can redirect our money and energy to things that truly matter, and away from hollow status markers.

Effortlessly Cool

Posted on by jabittan
“All else being equal, we prefer to think that we’re buying a product because it’s something we want for ourselves, not because we’re trying to manage our image or manipulate the impressions of our friends. We want to be cool, but we’d rather be seen as naturally, effortlessly cool, rather than someone who’s trying too hard.”

 

This quote comes from Robin Hanson and Kevin Simler in their book The Elephant in the Brain. The authors describe some of the processes taking place in our brain when we make purchases that we don’t like to acknowledge. We prefer to hide some of these less than flattering motives when we buy something and we create a surface level reason for our purchase that sounds reasonable to ourselves and others. We create stories in our heads and that we share with others about how we have not done anything for ourselves recently, about how we have been saving for a purchase and want to make sure we get our money’s worth, and about how we really deserve this thing because we have been working so hard.

 

A big reason for why we may purchase something, however, is that we want to impress someone else. We want to make others think something specific about who we are, even if that isn’t exactly true. We want to be impressive, we want to be seen as cool, and we want to impress others, but we can’t always do so directly. It is hard to impress other people with direct shows of how awesome we are, and in many ways (in the United States at least) we have norms which frown upon direct bragging or obvious show-off behaviors. Subtle signaling through purchases, through physique, and through charity help us show-off in socially acceptable ways.

 

What is really interesting about the quote above is how much we try to make our signaling appear effortless. With being socially cool and desirable, a big piece is making it appear natural. Trying too hard counteracts the signaling we are doing with our purchases because it violates the norms against making obvious efforts to show off. We don’t impress people when they know we are trying to impress them as well as we impress people when it just happens to be a by product of our natural behavior. To that end, we spend a lot of time trying to figure out what will impress people and how to do that thing in a way that will appear to others as if it were natural and easy. We want to be cool, but we can’t be seen trying to be cool.

The Signaling Motives Behind Purchasing Decisions

Posted on by jabittan
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.

Buying Experiences

Posted on by jabittan
I’m not big into materialism and I notice a lot of problems in trying to purchase ever greater and more expensive things. I’m one of those people who would probably repeat the trite line of “I’d rather buy an experience than a thing” or “I want to use my money to purchase memories and things that will stick with me rather than things that wear out.” What I need to remind myself, however, is that purchasing experiences over material objects does not remove me from the human drive to use our purchases to show off.

 

In The Elephant in the Brain Kevin Simler and Robin Hanson write about making experience purchases. Part of why we make these purchases is to enjoy a new experience, see something new, and get away to make new memories as we claim, but part is about something else. “Buying experiences also allows us to demonstrate qualities that we can’t signal as easily with material goods, such as having a sense of adventure or being open to new experiences,” the authors write.

 

Our experience purchases never happen in a vacuum. We come back from Hawaii with a great tan. We post pictures of the waterfall at the top of our hike on social media. We tell our friends and coworkers about the great meals and the amazing show that we went to. Our experiences don’t stay in the place we visited (sorry Vegas!), and in some ways, that is the point. Part of why we go on vacations, sign up for running events, take fishing trips, or visit the big city is so that we can have new stories to tell when we get back. This is part of the appeal and part of the value of our journeys.

 

This makes sense to me when I think about how we evolved. Even for those of our ancestors who were more predisposed to be home bodies taking care of the local tribal and group needs, a journey away could provide new insights and stories for others. Possibly a warning of traveling away, possibly of news of something new that might be on its way, and possibly just stories about something different. These tales and stories could help build group cohesion as a whole, and could help the story teller rise in terms of social status in the group to pass on their genes.

 

In the world today we should remember this. When we take a trip, we should consider our desire for sharing every detail, and we should consider whether we are sharing for others or for our own gain. We might still brag a bit about where we went, but we should do so with a conscious understanding of what we are doing, rather than denying our (potentially) true motives.

Conspicuous Consuption

Posted on by jabittan
Conspicuous consumption is probably one of the most damaging aspects of American society. It involves using our purchases to serve as a way to show off a particular aspect of who we are want to be. As Kevin Simler and Robin Hanson write in their book The Elephant in the Brain, “the idea that we use purchases to flaunt our wealth is known as conspicuous consumption. It’s an accusation that we buy things not so much for purely personal enjoyment as for showing off or keeping up with the Joneses.”

 

Throughout the book Hanson and Simler look at human behaviors and consider them alongside the stated reasons, beliefs, and excuses that people have for those behaviors. There are many things in life that we do without acknowledging ulterior motives. We have motivations that lie beneath the surface and drive our thoughts, feelings, and opinions. We do not examine and acknowledge these motivations, but they are real, and they are there.

 

Conspicuous consumption is the use of our wealth and ability to make purchases in a way that is ostensibly about one thing, but very likely are about something else that we would like to keep hidden from others. When we buy a fancy new sports car, we will tell others about incredible new technology, about how hard we have worked and how we deserve to treat ourselves, or about the incredible performance of the car. What we likely won’t tell people is that we felt that we deserved more attention and wanted to show off that could afford a new sports car. What we won’t acknowledge, even to ourselves, is how much our behavior is driven by others and by a desire to fit in, be praised, and make sure everyone is aware of our beliefs about our personal value.

 

Each of those things (showing how much we fit in, telling people how valuable we are, and receiving praise) are aspects of social life that we can’t just go around and obtain directly. Instead, we have to signal those things through behaviors and activities that we can spin as more sociable and more acceptable behaviors. Money and wealth gives us a chance to show off and to signal our competence or connectedness to the outside world. It gives us a way to brag without having to outright brag. We can be more humble in the ways that we show off by being indirect.

 

However conspicuous consumption can drive us to ignore climate change and the externalities of our actions. It can create stress as we strive to make purchases that put us in perilous financial situations – the opposite of what the purchase is supposed to signal. And it is ultimately all about gaining more status at the expense of others who cannot keep up. We spend a lot of time and energy attempting to show off our wealth so that we can be rewarded not by the thing we purchase, but with praise and respect of others that we may not really deserve. We should acknowledge these pressures and chose when we are going  to be conspicuous with our wealth, and when we will exit the signaling contest avoid showing off.

The Purchases We Make

Posted on by jabittan
In their book The Elephant in the Brain, Kevin Simler and Robin Hanson write about “conspicuous consumption,” a term coined by economist and sociologist Thorstein Veblen who lived about 100 years ago. Simler and Hanson write, “When consumers are asked why they bought an expensive watch or high-end handbag, they often cite material factors like comfort, aesthetics, and functionality. But Veblen argued that, in fact, the demand for luxury goods is driven largely by a social motive: flaunting one’s wealth.”

 

The other pieces of the argument, the good performance of the item, the colors we were dying to have, and the durability of the product might be true sometimes, and that allows us to make those excuses even though they only describe part of our purchase. A big part of Hanson and Simler’s book focuses on the idea that we use these excuses that sometimes are true or that partially describe our decisions to justify actions that signal something other than the stated reason for our action.

 

In the case of buying luxury goods the thing we are signaling is our wealth, which demonstrates our financial resources and can be used as a proxy for our social capital and human value. Our wealth may give others insights into our skills and abilities to do hard things, helping us stand out against a crowd. Our wealth may reveal our deep social connections or our family’s high status, two traits that certainly helped our ancestors pass their genes along in a small political tribe.

 

The problem today, however, is that we don’t admit this is what we are doing with our purchases, and as a result we have trouble addressing major externalities from our consumptive habits. We spend a lot of money on unnecessary luxury goods, and many people go deeply into debt to signal that they are the type of person who would own a certain type of luxury good. Our unyielding desire in the United States for ever further and greater consumption leads us to buy larger houses that we have to heat, faster cars that use more energy, and to own more clothes that will take millions of years to break down thanks to the new synthetic fibers we make them from. Our consumption and our drive to continuously signal our wealth and social value, some would argue, is poisoning and heating our planet to dangerous levels.

 

Simler and Hanson don’t focus on the externalities of our signaling behavior in their book, but they do acknowledge that they are there. In the book, the authors make an argument that most of us would rather ignore. That we do things for selfish motives that we would like to keep under the covers. This is important if you are an economics, sociology, or policy researcher, and for us in our daily lives, we can take a lesson from Hanson and Simler that stems from an awareness of our self-centered behavior. We can think about our signaling behaviors and ask if conspicuous consumption is really worthwhile. We can step back and ask if the ways we signal our wealth help or hurt the planet, and we can start to make decisions with positive externalities and attempt to avoid the negative externalities I mentioned above.

The Purchases We Make

Posted on by jabittan
In their book The Elephant in the Brain, Kevin Simler and Robin Hanson write about “conspicuous consumption,” a term coined by economist and sociologist Thorstein Veblen who lived about 100 years ago. Simler and Hanson write, “When consumers are asked why they bought an expensive watch or high-end handbag, they often cite material factors like comfort, aesthetics, and functionality. But Veblen argued that, in fact, the demand for luxury goods is driven largely by a social motive: flaunting one’s wealth.” The other pieces of the argument, the good performance of the item, the colors we were dying to have, and the durability of the product might be the true reason we made a purchase in some instances, and that allows us to make those excuses even though they only describe part of our behavior. A big part of Hanson and Simler’s book focuses on the idea that we use these types of excuses to justify our actions. Further, they argue that our behaviors often signal something about ourselves implicitly that we don’t want to say explicitly.

 

In the case of luxury goods the thing we are signaling is our wealth. Our wealth demonstrates our financial resources and can be used as a proxy for our social capital and human value. Our wealth may give others insights into our skills and abilities to do hard things, helping us stand out against a crowd. And, our wealth may reveal our deep social connections or our family’s high status, two social traits that certainly helped our ancestors pass their genes on in small political tribes.

 

The problem today, however, is that we don’t admit this is what we are doing with our purchases, and as a result we face major negative externalities from our consumptive habits. We spend a lot of money on unnecessary luxury goods, and many people go deeply into debt to signal that they are the type of person who would own a certain type of luxury good. Our unyielding desire in the United States for ever further and greater consumption leads us to buy larger houses that we have to heat, faster cars that use more energy, and to own more clothes that will take millions of years to break down thanks to the new synthetic fibers we use to make them. Our consumption and our drive to continuously signal our wealth and social value, some would argue, is poisoning and heating our planet to dangerous levels.

 

Simler and Hanson don’t focus on the externalities of our signaling behavior in their book, but they do acknowledge that they are there. The authors simply make an argument that most of us would rather ignore. That we do things for selfish motives and reasons we don’t want to talk about. This is important if you are an economics, sociology, or policy researcher because you need to understand what people are really doing when they rally politically or make economic decisions.  For the rest of us, in our daily lives, we can take a lesson from Hanson and Simler that stems from an awareness of our self-centered behavior. We can think about our signaling behaviors and ask if conspicuous consumption is really worthwhile. We can step back and ask if the ways we signal our wealth help or hurt the planet, and we can start to make decisions with positive externalities and attempt to avoid the negative externalities I mentioned above.

Seneca on Riches

Posted on by jabittan
Do you actually enjoy the things that you have? Have you become accustomed to the things in your life and do you even notice them? Does your stuff frustrate you and do you worry over your stuff? Are you living in a way where the things that you have are an aid to your life and serve to constantly make you a little more happy, or as soon as you have something do you feel remorse for spending so much to get it, and when you see it are you reminded of the cost to own the thing?

 

In my life, there have been many things that I wanted, but that quickly became part of my status quo and forgotten. Things that required me to spend time maintaining them or that did end up making me as happy as I expected, causing remorse over my impulsive purchase. It is remarkable how quickly a new home can become normal, and how our wonders at having a home can fade into frustration when we have to keep it clean or when another Friday night rolls around and we have nothing to do and no where to go so we dejectedly sit around inside. We spend a lot of time working to make money and often end up buying things that quickly become our new normal and don’t provide us with a continual source and stream of satisfaction.

 

“He who needs riches least, enjoys riches most.” Seneca writes in Letters From a Stoic quoting Epicurus. It is when we become accustomed to the bounty from our wealth and success that we become dependent on our things. Those items which fade to our background and become the status quo start to be our masters, and instead of feeling grateful for having what we have, we just assume that having the thing is what life is supposed to be like.

 

One of the ways that I have been able to get away from these types of moods is by avoiding advertising. Everywhere you go and every time you watch something, somebody seems to be presenting you with an image of an ideal life. That life is always full of friends and laughter, but it is also full of new shiny stuff. We are constantly urged to buy a new car, a new fridge, a new coffee maker, better sheets, a better toothbrush, and each day we are exposed to ads for something new. Overtime, these advertisements push certain expectations for what a happy and successful life is supposed to be into our minds. By being aware of our stuff, our emotions, and the dizzying storm of advertisements we encounter each day we can push back against the feeling that we always need new stuff, and we can start to better enjoy the things we actually have.

 

Getting Beyond Economic Success

Posted on by jabittan
In his book Becoming Who We Need To Be author Colin Wright examines the way we think about and operate as a society around money. He suggests that money has grown in importance and engulfed every aspect and function of our lives in ways that are damaging but often hidden from us. He writes, “As we grow into adults who care about things like self-actualization and happiness defined in ways other than the color-within-the-lines manuals we’ve been provided, we still often limit ourselves to defining happiness in economic terms. If I can make this much money each month, I can leave this soul-sucking job I hate. If I can reduce my expenses, I won’t need to work so much and can free up time to spend on that hobby I’ve been neglecting. If I invest properly now, I may be able to not work at all at some point in the distant future.”

 

Wright argues that money has become our default measurement of success and happiness.  The idea that we can be both happy or successful without large amounts of money does not align with the ways we actually live our lives. We see the story of people getting away from this mode of thinking in movies all the time, but we rarely live our lives with something other than money at the center of all that we do. As a result, our goals, daily routines, and attention are all focused on helping us make more money or use our money.

 

Money itself will not make us happy, but it does provide us with new opportunities. I recently listened (I think to an episode of Tyler Cowen’s podcast but I can’t remember) to an economist suggest that money does not make us more happy above a certain level, but that our level of life satisfaction does continue to increase as we have more money. Our overall happiness may not continue to increase as we have more money, but having more money seems to open up new possibilities in our lives and give us more ability to engage in the world in a satisfying manner.

 

A question we should think about, is whether there is a way to change how we approach life so that we can have a high level of satisfaction without needing ever more money. Does our satisfaction come from distinguishing ourselves from others by purchasing court side tickets to the game? Do we get satisfaction from displaying our status with a large RV? Is our satisfaction contingent upon fancy trips and traveling to exotic places? I don’t know if there is specific research around this idea, but perhaps we can shift what we use on an individual level as our default for success away from money and begin to find more satisfaction in our lives in things that are more meaningful than purchasing expensive and fancy items that show off to our Facebook friends and broadcast our status. Exactly what the alternate version of success will be for us will likely vary from person to person, but it will probably favor relationships and connections with others over material possessions and purchases.