The Price of Civilization_ Reawakening American Virtue and Prosperity - Jeffrey D. Sachs [56]
It’s when the society gets much richer and basic needs are met that consumer behavior becomes trickier. In high-income countries such as the United States, we can no longer properly speak of a consumer’s “needs” in the case of the middle class and the rich but only of a consumer’s “wants.” Economists pretend that those wants are real, stable, and based on deeply held preferences, almost a birthright. Brand managers and advertising executives know much better. A successful business not only manufactures products, it also manufactures wants. Businesses now spend an estimated $300 billion on advertising each year to create and manipulate consumers’ demands.1
In real sweat-and-blood decision making, consumers buy things out of intense cravings, whims, addictions, confusions, come-ons, and quests for status. They may try to save, for example, but temptations often get the best of them. The problems of irrationality are actually multiplied by our affluence. The truly poor know what they need to stay alive: food, shelter, clothing, safe water, and health care. Affluent consumers may not have a clear idea ahead of time what will make them happy. Should they consume or save? Should they try to keep up with the Joneses across the street or with a work colleague or their favorite celebrity? Should they buy that new product just flashed across their TV or computer screen?
A considerable amount of American consumption spending is not for the enjoyment of consumption per se, but to show off wealth, status, or sexual allure. In the famous phrase of the economist and social critic Thorstein Veblen, this is “conspicuous consumption,” that is, consumption whose main purpose is to impress others rather than to be enjoyed by oneself.2 The phenomenon is very familiar from the animal world, where evolutionary competition leads males of a species to develop remarkable “ornaments” in order to rise in the pecking order and thereby attract the females. This so-called sexual selection has resulted in the male peacock’s brilliant plumage and the elk’s large antlers.
Conspicuous consumption is therefore akin to an arms race between two rivals. Most or all of the investments end up wasted as useless arms (or antlers or yachts). The economic arms race ends up as the proverbial “rat race,” in which everybody works to the point of exhaustion merely to keep up with others. Herein lies at least one reason why the good Lord commanded that everybody take the Sabbath off. If we had to do so on our own, we’d have to worry whether our neighbor-competitor would also do the same. More likely than not, we’d both end up working through the weekend. It’s a similar reason why many European governments (but not yet that of the United States) prevent this kind of “self-exploitation” by mandating a minimum of four weeks’ paid vacation each year for all workers.
A related but distinct kind of “social consumption” occurs when specific consumption goods are necessary for an individual to be part of a desired social group. An example might be the purchase of a Harley-Davidson to ride with the motorcycle gang; a smartphone to be part of a social network; or a house in the suburbs to have wealthy neighbors and excellent local public schools. The last kind of consumption, however, is not merely about signaling or status; having wealthy neighbors facilitates other crucial outcomes, such as sending one’s children to a good school.
In America, the most important kind of social consumption by far is housing. The choice of a residence may have little to do with the house per se but quite a bit to do with the neighbors and neighborhood that come along with the house. America’s neighborhoods, as we have noted, are very strongly sorted by income,