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| Opportunities & Exposures: Marketing |
Consumptive Enthusiasm
Pam Danziger
02/01/2005
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As the author of the book Why People Buy Things They Don’t Need, I am occasionally confronted by consumer advocates who see me as the evil queen of consumer marketing, someone who is in the business of tricking people into spending far more than they should for all kinds of things they do not need. They ask me: “So why do people buy all these things they don’t need, and how do we make them stop it?”
The consumer advocates and I will never see eye-to-eye because we hold completely different beliefs. I simply do not feel that people buying things for emotional reasons—the chief being they believe the item will, in some meaningful, measurable way enhance the quality of their lives—is a bad thing. While I think it foolish to go into debt for the sake of consumption, I respect consumers’ right to make their own decisions about what they do with their money.
I believe that giving people freedom in the consumer marketplace is one of the things that makes our economy relatively robust. The wheels of our financial system are greased by the daily decisions each of us makes to buy & spend. This is particularly true for the affluent; spending by affluent families puts people to work and contributes to the vitality of our country.
The simple fact is that consumer spending on durables (such as cars), nondurables (such as food and clothing) and services (such as medical care) accounts for 69.9 percent of our $11.6 trillion economy. Because consumer spending comprises such a large proportion of our gross domestic product, more spending means lower unemployment, more jobs, rising incomes and more money for consumers to invest back into the economy.
In Europe, overly cautious consumers seem to be hobbling their countries. Last July, the New York Times, in an article headlined “The Struggle to Get Europeans to Do Their Duty and Spend,” reported: “Prudence arguably breeds stability. But a nation, or nations, full of hesitant spenders neither ignites economies nor spurs the pace of growth when cyclical recovery emerges, like the one that economists forecast for Germany.”
The typical affluent U.S. household, one that falls into the top quintile by income according to the Bureau of Labor Statistics’ 2002 consumer expenditure survey, brings in about 2.5 times more income than the average household. The affluent family also spends just about twice as much as the average. They contribute three times the average to personal insurance and pensions, and give more than twice the average to charity. In total, the affluent, who comprise only one-quarter of U.S. households, contribute nearly half (46.3 percent) of our total annual consumer expenditures, according to the bureau.But the anticonsumption advocates who fear for consumers’ profligate overspending can rest assured. Despite the fact that affluent Americans (and Americans as a whole) have been spending more on things they do not need, they are beginning to shift away from rampant materialism toward a search for heightened personal experiences.
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