(Ir)Rational Consumerism

Consumerism is no longer all around us. It’s us. From mundane observations of daily impulsive buying, to sociological analysis of high status associated with having “stuff”. As often is the case, such ubiquity exudes a sense of commonness, and ultimately, also tragically, soon elicits acceptability.

“No, that’s absurd!” My classmate John in International Political Economy protested, “We are not mindless infants being coaxed, nay, indoctrinated by capitalism into psychotic buying spree. Granted, we consume a lot of stuff that we don’t need. But isn’t that just called higher standard of living? Sure I don’t have an innate demand for an iPod, a big screen TV, or a SUV – but as long as those stuff make me happy enough to decide to buy them, then it is a rational decision.

Jon, incidentally a economics major (I can’t help but notice), seems to offer here a formidable defense that promises to exonerate all forms of consumerism. I buy ’em because I want ’em- such is the argument, often clothed in economic terms such as “increased utility”.

Let’s pause here and think for a moment. If the fact that you want to do something is enough to constitute the rationality of your decision to do it – then is there any decision at all that can be called “irrational”?

Eh..n..no? – your sense of logic mumbles, apprehensively under the menacing figure of common sense.

YES, your sense of logic is right (as always; and thus should be listened to more often.)

A decision already implicates free will. Because of that, if we accept Jon’s justification of rationality as “because I want it”, then rationality is built right into the concept of a decision itself. Thus, the two concepts of rationality and decision become inseparable, and thereby effectively negating the possibility of any irrational decision. And if there is not any irrational decision, then there is not any rational decision either – but only decision.

Let’s clear up this philosophical thicket a little bit. How about counterexamples (ah, they do wonders!) that prove the existence of “irrational decision”? Well, I just decided to buy my 5th house. “Doesn’t matter,” John says, “because that newest house clearly raises your utility enough for you to buy it (despite the decreasing marginal utility of being the 5th.)”

To push it further – well, I just decided to buy that 5th house, which pushes me into financial ruin. “Doesn’t matter,” John retorts, “if you had anticipated your financial disaster and yet still proceeded, it means that you had rationally weighed the utility of that 5th house against the potential troubles. If you hadn’t anticipated the mess due to incomplete information, it is even more rational at the deciding moment to buy the 5th house.”

To push it further still – well, I just decided to buy that 5th house, whose price is substantially higher than others available (which I am fully aware of.) “Doesn’t matter,” John persists, “you might have gained non-financial satisfaction from the transaction, such as the smugness of careless spending. Given the fact that no two goods are identical, the decision is even more defensible – there might just be something about this house that you like it.”

Thus, I have demonstrated that no matter how outrageous your decision is, you can still defend its rationality by resorting to say: “I did get satisfaction out of that.” And because rationality in this sense (i.e. Jon’s definition) does not give any new information about decision, “rational decision” is a redundant and meaningless term. Therefore, you cannot justify your buying decision as rational simply because you believe that you want that iPad, or because you believe it will make you happier. Such is a fatally flawed, yet plausibly presented, argument that is accepted by who-knows-how-many social science students that do not equip themselves with the precision and subtlety of philosophy.

Whereas a capitalistic society does not strive much to encourage your rationality, it spends substantial resources to facilitate your rationalization. The 2nd counterexample eerily harks back to the immediate cause of the Great Recession, in which banks helped people rationalize their spending with cheap credit and dubious financial advice. The 3rd counterexample hints at advertising, the infamous midwife of consumerism, whose goal is none but indoctrinating consumers with brand/design differentiation. There is no doubt that some design improvement or differentiation is concrete and legitimate – but think how many people are constantly trying to have the newest stuff just because it is cool to do so? That very attitude is the smoking gun of the consumerist indoctrination.

These last words should be reserved to clear away any suspicion that being a economics major somehow makes John less precise or less subtle. I do not mean to say so. However, for many economics dilettantes, terms such as “rational decision” or “increased utility” have been so frequently and axiomatically mentioned that their precise meanings are being abused. So just think twice about what you say, John. (That I did not tell him in class.)

Edit (09/22/10): Replace the Starcraft 2 and girlfriend counterexamples, which are neither relevant nor even funny.

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4 comments
  1. ldao90 said:

    this makes me feel so much better after a monthful of frustration from studying micro econ (which indeed is a good course). Basically, economists equate consumming more with being happy and build all their models, graphs, concepts, theories around this assumption. The dangerous thing is, by doing that they in effect are creating a world that they supposedly explain! It’s sort of like a self-fulfilling prophecy.

    I’m wondering if economists can someday redefine their assumption a little bit and turn the entire field upside down 😀 That’d be interesting to study lolz.

  2. anhqle said:

    I surely understand your frustration of seeing how economists embrace their fabricated assumptions in a most matter-of-fact manner possible. Even economists know and acknowledge such shortcoming too – they are by no means dumb people. Yet the inertia of an massively established academic edifice (that is economics) proves too encumbering for any dissents to easily break through.

    That said, there are indeed new branches of economics that challenge the almost sacrosanct assumptions. Your wish of finding an economics that is “interesting to study” is not at all unrealistic. Particularly hot right now is behavioral economics, whose name itself suggests an emphasis on behaviors as a subject of study, instead of a matter of assumption.

    One oft-recommended work on behavioral economics is “Predictably Irrational” (which I’m sure many have read/heard of.) An example in the book goes like this: say we have the pictures of two males, Jun Kim and Loi Choi, who are equally personable. Females’ preference splits 50-50 for each. Now, if we add another picture of Jun Kim II, who looks like Jun Kim, only less attractive – guess what – the majority of females now prefer Jun Kim over Loi Choi. Likewise, if we add a picture of Loi Choi II, Loi Choi suddenly becomes the females’ favorite.

    Keep in mind that the “value” of Jun Kim and Loi Choi remains the same absolutely and relatively in all 3 scenarios, yet the consumers (females) choices are vastly different. The newly-introduced and inferior choices (Jun Kim II or Loi Choi II) are never picked, yet influence the females’ preferences. The same effect is applicable to any goods other than males – but well, the choice of example is meant to be provocative 😀

    I will wisely stop now before offending any economists with my dilettantish understanding of the field. Change is boiling in the economics department, however – that much I do know.

  3. Minh Trịnh said:

    Anh,

    I am indeed amazed to find out how this post of yours relates to (or in fact, completely trashes) my college application essay. As you have already known, my essay builds heavily on the assumption of rationality, and times to times I reason in the very same way your friend did: as long as I am happy, feeling sleepy and drained the next morning pays well for the previous night’s “ngắm trăng cùng người đẹp” (that is not to say I deny it does 😉 ) Fortunately for me, either the admission office did not bother to critically criticize my “rationalized” passion for economics, or the econs department’s influence had grown so much that my being another mindless follower indeed helped.

    As I am writing this, my application essay is probably completing another round of circulation among this year’s college applicants. About this I am not at all displeased, being (until now) a rational economist who does not value personal intellectual property too greatly. That being said, I wish that các em bé attempted to look beyond the apparent gloss, dug deeper and spotted the weakness of the rationality assumption like you did.

    Okay, I am being overly formal: may I copy this post and email to the boys and girls in my SAT class?

    One more thing: I need your advice on choosing a major-minor combination (concentration & secondary field in Harvard vocab). Hôm nào star em hỏi anh luôn nhé 😀

    • anhqle said:

      keke anh mày lên Diamond rồi đó :-> :-> uh uh cuối tuần này midterm xong rồi, hai thằng kia cũng có đĩa, ae lên battle net “bóp các thứ” của bọn Mĩ \:D/

      And sure, a blog entry is written to be read – my pleasure indeed. But as I’ve said elsewhere and as you’ve observed yourself, college application essay is not so much about how rational you are, but how passionate. Even my application essay is along the line of how passionate I am about being rational. Meh.

      So … hopefully your young friends are not too occupied with admission to care about truth. 😀

      P/S: and yeah it freaking does! Unless you two can chuckle and snuggle together into sleep… Now that’s what I call optimal.

      P/S2: why shouldn’t a rational economist value intellectual property right btw? I mean in your specific case, yes, because your essay not being protected does not distort your incentive to produce the essay at all (some would say it’ll even increase hehe). But why not care abt IPR in general?

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