The Voluntary Life: 267 Consumerism Vs Saving: Four Theories

31 October 2016

267 Consumerism Vs Saving: Four Theories

Why do people spend so much of their disposable income on consumption and save so little towards their own financial independence? There are many competing theories that try to answer this question. In this episode, I present four theories:
  • Theory 1: People are brainwashed into consumerism by advertising.
  • Theory 2: Spending escalates as people try to keep up with their peer groups.
  • Theory 3: Central bank policies have undermined saving.
  • Theory 4: Spending is the path of least resistance, so you won't save unless you have sufficient motivation.
Which (if any) of these theories have merit? Is there a better explanation? Let me know what you think!

Show Notes:

Listen To Episode 267


  1. Modern neuroscience and psychology tells us that theories 1, 2 and 4 are actually just derivatives of a more fundamental truth or theory, which is that human beings are innately programmed to imitate each other, not only in basic action, but also in desires. Layering "this is the thing" conspiracy or other theories on top of that does not make it any clearer, because you end up just debating the influences and missing the real issue as to why these things have the effects that they do. Moreover, they are not mutually exclusive. So as to 1, advertisers take advantage of people's desires to be cool, famous or whatever (see "Propaganda" by E. Bernays); as to 2, people habitually like to keep up with their peers and copy them -- that is why you are the average of the five people you spend the most time with; and as to 4, since the mimetic mechanism is unconscious and then is subsequently rationalized with the reasoning function of the mind, it is in fact the path of least resistance.

    Theory #3 is very weak and easily falsified, because consumerism has a broad and deeper history that is untethered to current central bank policies. It exists regardless of central bank policies -- you could go back to times when there was no US central bank, for example, and find similar behaviors.

    For a history of consumerism in the West over the past 500 years, I'd recommend "Empire of Things" by Frank Trentmann, which looks at the issue from many different perspectives. Mimetic theory and mirror neurons you can probably Google on your own -- too many references to count there.

  2. Great podcast Jake! Was surprised to hear at the end of the episode that you don't give much weight to theory no.1. Imagine if for example everyday a chocolate bar is placed on a regular consumers desk with a note saying how delicious it is next to it. I believe sooner or later the chocolate bar will be eaten whereas if the chocolate bar was never there there to begin with there is a better chance that the consumer would ever have the idea to eat that particular chocolate bar. Keep up the great work!

    1. Thanks. I should have made it clearer that I do think advertising can be effective, I just don't believe it is done for social control purposes.

  3. Number Five: People save so little because socialism has increased the costs of saving, and reduced the advantages of saving. In the past, when you could get "inflation plus 3%" from a savings account at a bank, far more people built up a nest egg.