Increasing Consumer Choice and the Declining Inequality of Happiness

Financial inequality is up but happiness inequality is down. And yes, there is a measure of happiness inequality.

The psychology of envy has changed. We may still be diverted by bread and circuses - but what bread! What circuses! Today's media circus can rival anything the Roman Coliseum had to offer.

One unintended consequence of the fracturing of the mass market may be, as the following article explains, that we all march to the beat of different drummers - and retailers, realtors, car salemen et al.

Since we can create our own intellectual and emotional environment, we are no longer slave to the whims of of the few as in 19th century Boston - 'the home of the bean and cod, where the Lowells talk only to Cabots and the Cabots talk only to God.'

Choice gives us the freedom to decide by whom and what we want to be judged. Which is probably not the opiate of the masses anyone ever had in mind.  JL

Steven Quartz and Anette Asp report in the New York Times:

Apple products are expensive because they’re seen as cool; they’re not cool because they’re expensive (which is still the case for many luxury goods).

THE gaping inequality of America’s first Gilded Age generated strong emotions. It produced social reformers like Jane Addams, anarchist agitators like Emma Goldman, labor leaders like Eugene V. Debs and Progressive politicians like Theodore Roosevelt. By the 1920s, sweeping legislation regulating food and drugs and breaking up corrupt trusts had been passed. The road to the New Deal was paved.

But our current Gilded Age has been greeted with relative complacency. Despite soaring inequality, worsened by the Great Recession, and recent grumbling about the 1 percent, Americans remain fairly happy. All of the wage gains since the downturn ended in 2009 have essentially gone to the top 1 percent, yet the proportion of Americans who say they are “thriving” has actually increased. So-called happiness inequality — the proportion of Americans who are either especially miserable or especially joyful — hit a 40-year low in 2010 by some measures. Men have historically been less happy than women, but that gap has disappeared. Whites have historically been happier than nonwhites, but that gap has narrowed, too.

In fact, American happiness has not only stayed steady, but converged, since wages began stagnating in the mid-1970s. This is puzzling. It does not conform with economic theories that compare happiness to envy, and emphasize the impact of relative income for happiness — how we compare with the Joneses.

In the late 1800s, Thorstein Veblen, the theorist of “conspicuous consumption,” proposed that jewels and mansions were little more than the human equivalent of the peacock’s tail — their main purpose was simply to outdo other peacock tails.

In 1974, the economist Richard A. Easterlin famously wrote that although richer people were happier than poorer people in the same country, people in wealthier countries were not necessarily happier than those in poorer ones (once basic needs are met). More recently, the economist Robert H. Frank has described a status drive that traps Americans in an irrational consumer arms race, in which we vie for status through ever more wasteful purchases.

Continue reading the main story

But if happiness depends on status, and if status depends on relative income, wouldn’t today’s historic income inequality predict a giant happiness gap? Why hasn’t this happened?

There’s no denying that socioeconomic status is still a strong predictor of social status. And class lines have become hardened. But in its cultural expression — and therefore in its effects on our happiness — inequality is increasingly disorganized. Consumerism has expanded the lifestyles, niches and brands that supply the statuses we seek.

As a result, social status, which was once hierarchical and zero-sum, has become more fragmented, pluralistic and subjective. The relationship between relative income and relative status, which used to be straightforward, has gotten much more complex.

For most of human history, inequality of wealth meant inequality of happiness. Status, and its related activities, envy and emulation, drove consumption. By the 1950s, rapidly rising standards of living across the West, combined with social pressures to conform, all conspired to intensify status competition. The architects of “rebel cool,” like Jack Kerouac and Norman Mailer, responded by rebelling against emulation consumption and the status hierarchy of postwar America. They inverted the dominant social hierarchy, rejecting the values of those at the top and appropriating the values of those who had been marginalized at the bottom.

Continue reading the main story

The pursuit of “the cool,” in our view, fundamentally altered the psychological motivations underlying our consumer choices. In conspicuous consumption, our emulation of higher-ups means we compete directly for status because we want what they have. But rebellious consumption changed the game, by making a product’s worth depend on how it embodied values that rejected a dominant group’s status.

Take the Schott Perfecto leather motorcycle jacket. Worn by James Dean, and by Marlon Brando’s character in the 1953 film “The Wild One,” it symbolized a rejection of traditional respectability. In our time, the business suit remains the standard uniform in corridors of power in Wall Street and Washington. But in the San Francisco Bay Area, it might suggest a back-office support professional (accountant, lawyer, etc.) who serves at the whim of a T-shirt-and-hoodie-wearing tech entrepreneur and his similarly clad software developers.

There’s no longer any one way to keep up with the Joneses. If the Joneses drive a BMW 3 Series, you can compete by buying a BMW 4 Series. But if the Joneses drive a minivan, you can drive a sport utility vehicle to rebel against their staid domesticity. (This is what happened in the 1990s, when suburbanites embraced the S.U.V. as a symbol of fun and adventure.) And if the Joneses drive an S.U.V., you can drive a Prius, or forgo a car altogether — as a sign that you embrace a green lifestyle.

By comparing a PC user to an Orwellian drone while likening a Mac user to a sexy athlete in its iconic “1984” ad, Apple made a fundamental claim about the allure of its products. Today, Apple products are expensive because they’re seen as cool; they’re not cool because they’re expensive (which is still the case for many luxury goods).

A new neuroscience of consumer behavior reinforces our argument. In one experiment, we used functional magnetic resonance imaging (fMRI) to understand our brains’ reaction to perceived coolness. We selected students from the Art Center College of Design in Pasadena, Calif., and asked them to rate, from uncool to cool, hundreds of images from the following categories: bottled water, shoes, perfumes, handbags, watches, cars, chairs, personal electronics and sunglasses. We also included images of celebrities (actors and musicians). The cooler objects typically weren’t the more expensive ones: our subjects rated a Kia hatchback above a Buick sedan, for example.

We then asked other students to look at images of these objects and people on a screen above their eyes, while in an fMRI scanner. The most striking finding: Asking people merely to look at products and people they considered “cool” sparked a pattern of brain activation in the medial prefrontal cortex — a part of the brain that is involved in daydreaming, planning and ruminating — similar to what happens when people receive praise. Our brain’s medial prefrontal cortex, in short, tracks our social esteem.

A new generation of ethnographers has discovered an explosion of consumer lifestyles and product diversification in recent decades. From evangelical Christian Harley-Davidson owners, who huddle together around a motorcycle’s radio listening to a service on Sunday mornings, to lifestyles organized around musical tastes, from the solidarity of punk rockers to yoga gatherings, from meditation retreats to book clubs, we use products to create and experience community. These communities often represent a consumer micro-culture, a “brand community,” or tribe, with its own values and norms about status.

Among the millennials (generally defined as those born between 1981 and 1997) the diversity of status-seeking has been especially pronounced. Studies have found that teenagers and young people in their 20s commonly use musical taste as an indicator of their identity and values. No doubt, these tastes are also shaped by ethnicity and class. Nonetheless the variety of possible identities is striking. While the top 1 percent of songs each year account for something like 75 percent of all artist revenues, there are 43 million songs are for sale currently in the iTunes store.

This trade-off comes at a political price, as it makes income inequality less emotionally salient. In a 2013 poll asking Americans to name the most important problems facing the country, only 5 percent cited income inequality or concerns about the poor or middle class (though a recent Gallup poll did find that 67 percent of Americans were dissatisfied with the current income distribution). Politicians from Senator Elizabeth Warren on the left to Representative Paul D. Ryan on the right are talking about inequality, but President Obama has lately been talking more about “opportunity.”

The neuroscience of consumerism doesn’t exonerate our political and economic systems for the chasm of inequality that defines contemporary America. When a group feels unfairly deprived of material wealth, respect, rights or freedoms relative to other groups, that relative deprivation mobilizes political action. The proliferation of consumer choice helps explain why today’s Gilded Age hasn’t sparked as much outrage as the last one. Money may not buy happiness in the long run, but consumer choice has gone a long way in keeping most Americans reasonably content, even if they shouldn’t be.