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Why Do We Overconsume?

The problem of overconsumption is summed up by the following quote: “We buy things we don’t need, with money we don’t have, to impress people we don’t like”. The average American will generate 52 tons of garbage in their lifetime. Instead of buying things for their utility, or usefulness, many people find themselves buying things that will increase their status or win them peer influence. Utility in economics is sometimes used as a word for ‘happiness’ - but does overconsumption really make us happy?

The truth is, overconsumption doesn’t make us happier or healthier. However, consumption, because it is tied to GDP, is growing at 3x the rate of population growth. Consumption is also an equity problem - the top 10% consumes more than the bottom 50% of the population. The richest people in society buy private jets and yachts that increase the metrics we use to measure consumption - dollars spent and emissions produced.

So why do we continue to consume more and more? Individual consumption is actually guided by social processes. There are many aspects of modern society that encourage overconsumption. Social media is a huge one. Social media trend cycles drive industries like fast fashion because of the human desire to fit in. Because of social media, our comparison set is no longer just to “Keep up with the Jones’s”, or with your neighbors. It’s to compete with the entire globe. When you log onto Instagram, you are influenced by the consumption habits of billionaires such as the Kardashians.

People also buy things to make themselves feel better. Little purchases, like coffee or avocado toast, can brighten a person’s day. However, consumption has been used to remedy emotional discomfort. We have a word for this - retail therapy. When you feel sad, you go to Target, or Ross, or Marshalls, and shop the aisles for a sense of comfort. In a way, consumption can replace a lack of social support.

Overconsumption has even been tied into our societal conception of love. Of the five love languages, “gifting” is its own category. Buying things for another person is seen as a sign of affection. Every American holiday, from Christmas, to Valentine’s Day, to Halloween, has a brand image. It’s an opportunity to spend money - on decorations, clothing, and gifts.

Part of what’s driving consumption is the increase in the standard of living in America. We are, or at least feel, richer. Because of outsourced production labor, we can consume more at the same price point that we used to. However, for the younger demographic, much that is consumed is bought not through one’s own money, but using one’s parent’s disposable income. Gen Z is the first generation to broadly benefit from gifted and inherited wealth from the previous generation.

Another aspect is psychology. There is a whole field of psychology called the social psychology of consumption. This field recognizes that us humans are constantly assessing our own behavior next to everyone else’s. Almost everyone experiences a fear of being excluded. This is paired with a desire to be connected. These two emotions are very powerful, and can drive us to spend more and more money on things we don’t need.

So how do we address this problem? Many attempts have been made to give consumers more information so that they can make smarter, better choices. However, research shows that people hate losses twice as much as they like gains. Asking people to consume less is very difficult.

If people are going to continue to consume, maybe we could switch to consuming sustainably - or at the very least, more consciously. Studies have confirmed that customers are willing to pay more for verified sustainable products. Part of the solution is to make sustainability cool - make reducing, reusing, and recycling a trend. This has worked for certain product categories - for example, carrying a reusable water bottle such as a Hydroflask.

But what may be even more powerful is to make being unsustainable uncool. Maybe we can use people’s natural loss aversion and fear of being excluded to avoid companies that have unsustainable practices. This has worked in some product categories too. For example, 50 years ago wearing a fur coat was the peak of status - it meant that you were rich. Now, if someone wore a real fur coat, they would be accused of animal cruelty.

Even though we may wish we did, we often don’t make rational decisions as consumers. We are all constrained by habit, status, manipulative marketing, and a lack of information. We need to address the real decision-making process of the average customer. This involves thinking about social norms, peer influence, and status. Providing product-level information may help us to make better choices. But it needs to be VERY easy for customers to purchase thoughtfully. The products offered in stores should have transparent environmental and social information available, and should be screened for sustainability. That way, shopping can be guilt-free and planet-friendly.

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