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December 8, 2010 / Lukasz Cerazy

Have We Become Stupid?

Image: Francesco Marino / FreeDigitalPhotos.net

The richer the economy the more we spend on things that are less important to our survival. In the most advanced economies around the world the average household spends more money on its leisure budget than on food. Apparently the question: “do I really need this?” is not a good enough barrier in our quests to satisfy an ever-growing consumer need. In pre industrial times all that was earned went to feed the family and have a place to live. In those times life was much harder than it is today and families often had to work from morning until evening in the fields just to make a living. On the other side of the industrial revolution economic activity has accelerated at a breathtaking pace and the average purchasing power of an individual has risen dramatically. This has been associated with the development of more specialised functions in society that benefit overall production and increase efficiency. However, some of the jobs that have been created in this economy I seriously do not understand! Why is there such a thing as a dog-stylist or a celebrity on a reality show about Botox parties? These things are totally irrelevant and a complete misallocation of resources!

 

It can sometimes make me so frustrated that I consider running for government with the mission to tax these markets starting with gossip magazines! Why are we not spending all that money on fighting hunger, AIDS, malaria or something else useful? That is because we are irrational human beings – all of us – including this economist. Why does anyone play the lottery when the expected value is so small? Dan Ariely, one of the world’s top behavioral economists, jokingly put it: “playing the lottery is like a tax on stupidity”! Adam Smith touched upon this as early as the 18th century in his work “The Theory of Moral Sentiment” when he described our desire to seek the approval from the impartial spectator. We are all biased towards promoting our own best self-interest be that getting a good job, finding an appropriate spouse or receiving recognition from our peers. This drive has a big influence on how we spend our income. In a perfectly rational world we would consider what is best for us, both individually and collectively, and only spend our money on things that truly benefit society like finding a cure for cancer. However, we are much more selfish than that and living in a perfectly rational world would also be boring.

Maslow's Pyramid

Our consumer choices are dictated by many factors such as: looking good, getting more money, saving time, feeling comfort and many more. In this aspect it can be quite useful to look at Maslow’s pyramid. Abraham Maslow described in this pyramid our hierarchical needs from physiological needs to self-actualisation. This goes some way in explaining the allocation of a household’s demand. Especially how it can vary over time and depends on a given person’s situation. When a lower level is sufficiently saturated we become complacent and crave to satisfy higher desires. However, why do these useless things arise on the supply side in the first place? This is perhaps a harder question to answer but it is probably because marketers understand these needs and lay out very persuasive messages to the public about becoming successful if you watch their show or buy theirs product and nobody want to be left behind. In this perspective supplier powers are much greater than that of the demand side and with a bit of collusion it is not hard to imagine that very few can dictate what the new trend is going to be. Industrial lobbies are, for instance, fully integrated into the political process; however, one does not see many consumer groups putting pressure on producers of dog outfits or dog jewellery.

Photo: DOR MALKA

I do not care about what Katy Parry does or who becomes the next top model, neither am I interested in the Kardashians! But apparently other people are because otherwise they would not have paparazzi chasing them or there would be no such show as Big Brother 12. People that buy gossip magazines and watch these reality shows give incentives to these industries to push on. Should they be banned during times of crisis or scarcity? With the risk of being inconsistent it could be argued that it not a bad idea, however, I believe in free choice and I therefore have to accept others wish to buy useless things. However, I do encourage a more critical approach by consumers towards spurious producers of things we don’t really need. It seems like such a waste, especially in difficult economic times when people are out of work when others take their dogs to get kitted up.



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5 Comments

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  1. gessocat / Jan 24 2011 18:49

    Wonderful article.

    Perhaps we are more stupid. If we can agree that natural section exists, then slowing it down or removing it with an easy life might have accomplished just what you suggest. If a man in the wilderness chased by a lion was distracted by thoughts of botox or pet clothes, he certainly wouldn’t last long enough to procreate. But seriously, there is a use and purpose for each person lucky enough to be born, it is simply finding it. I think we all go a little crazy when we have these primal yearnings to be something greater than we see in the mirror, and can’t figure out what to do. The result is reality shows, and other such non-sense. But taxing it? Why? If there are enough people to watch it, surely it fills a desire.

    Goethe said it well: “Everything in the world may be endured, except continual prosperity.”

    Mammals require challenge. And as humans if we don’t have significant challenges in life, we create them, no matter how frivolous or destructive.

    – Jay

    • Lukasz Cerazy / Jan 24 2011 22:25

      Hi Jay

      Thank you for your insightful comment – It is clearly the best comment anybody has placed on my blog.

      You you are probably right that the world is not so black and white as I might suggest and taxing any kind of activity is dangerous because how do we decide how and what to tax. Everybody should pursue their happiness but I guess I do not understand why some choose to be lazy or otherwise free-ride of the public system.

      Very nice quote by Goethe.

      Keep up the good work…

      best,
      Lukasz

  2. maggieannthoeni / Mar 29 2011 18:44

    Thank you for your thinking – and for sharing it! You ask questions along the lines of those that interest me. Why do we do what we do?

    I’m pleased to see your Maslow graphic; I think Maslow’s hierarchy gives valuable insight. For me, individuals go through development along his description, and so does all of humanity. It’s the latter I’m hoping to see climb a little higher! Only this morning – because of the excellent quality of your Maslow graphic in part – I ‘m having a re-think on his ‘esteem needs': “prestige and feeling of accomplishment”.

    I’m thinking about our ‘hypnotic acceptance’ that our motivations are largely ‘base’. We like to say we’re ‘all about competition’ – sort of like saying “we can’t help ourselves!” I think we over-look other aspects, also in-born, of human inclination. Cooperation can be explained away as ‘merely trying to survive’, or it can be examined as ‘potential undeveloped’.

    Maslow’s use of ‘prestige’ seems linked to ‘base’ desires, (that ‘fame’ thing), with ‘feeling of accomplishment’ a possible outcome regardless of base or more elevated action-sparking desire. (I guess it depends on his definition of ‘prestige’.)

    Alfred Adler was entirely convinced one of our primary needs is “to feel social competency”. Social competency is an outcome, that, if genuinely felt, might shift what is often meant by prestige. A second vital experience Adler described and promoted is experience of ‘confidence’. Not confidence per this skill or that performance – but a felt confidence, a deeper experience.

    Early life experience “sets the stage” for developing ‘felt competency’ and ‘felt confidence’. A personal world-view begins to take shape. That view in turn ‘filters’ interpretation of broader cultural experience – further confirming the world view filter.

    This becomes trans-generational. Adults lacking comfortable ‘competency and confidence’ train upcoming generations. Children can’t escape ‘learning’ to feel anxious about their ‘competency’.

    For me, Adler’s insights explain much about humans (everywhere) ‘staying relatively stuck’ at Maslow’s lower levels. Brief ‘spikes’ into higher levels happen, then we settle back.

    For me, it’s also very good news that, more than any time in human history, it’s now less necessary for us to ‘stay stuck’. The more we share questions, thoughts, insights – the more we pursue these with as many helpful understandings as we can round up – the more we’re likely to find our way to consistent experience at Maslow’s higher levels.

    Then we’ll relate to children differently. We’ll better create the confidence and competency Adler identifies. Children so-raised will, in turn, shepherd the next generation …

    I’m not sure I have the patience, always, to wait for the ‘unfolding’. But I see no other way!

    Again, thank you for your website!
    Maggie

    • Lukasz Cerazy / Mar 29 2011 19:04

      Dear Maggie

      Thank you for sharing your insightful thoughts here on my blog. I am happy you like it.

      You sparked some interest in me by referring to Adler. I will definately have to do a bit of research on him.

      All the best
      Lukasz

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