Defensive consumption

A common mistake in economic reasoning is to assume that an increase in national income/productivity will automatically lead to an increase in national welfare — that more GNP equates to a happier populace. There are lots of problems with this assumption, from the inequalities in income distribution to the inadequacies of equating consumption with satisfaction. The supreme sources of satisfaction may be precisely those that come from outside the market, things like work satisfaction and social connectedness, things the market can facilitate — parasiticallly profiting from these desires, and perhaps throwing up tollbooths on the way to one’s being able to satisfy them — but not supply.

Extrapolating from the demonstration effect, Fred Hirsch, in his analysis of positional goods, and their zero-sum nature, sheds some light on this solecism. Because positional goods (like leadership jobs or vacation property) are inherently scarce, treasured almost purely for their very scarcity. Producing more of them would destroy their value, and producing more necessities only makes more people elegible to compete for the scarce luxury goods, making them more scarce, and leading to more dissatisfaction. Increasing productivity, in this scenario, actually has the opposite effect than expected, leading to more misery.

The point is that not all consumption can be treated the same, as the household production of a quantifiable utility equivalent to a commodity’s price. But in fact, much consumption takes place not to yield satisfaction or pleasure or even comfort, but to ward off loss. If we consume to maintain a position in society, we gain no satisfaction from being forced to consume more and at a higher rate because those beneath us have caught up to our previous level. Fulfilling new and greater desires yields the same net pleasure. (Another scenario where a nation consumes more with no gain in satisfaction). Tibor Scitovsky, in The Joyless Economy, proposes distinguishing defensive commodities (which prevent discomfort, are satiable) and creative ones (which provide pleasure). But as he points out, most commodities exhibit qualities of both. The idea of defensive consumption leads me to think of shopping as a potentially pathologically negative act, expressing more fear than desire. Think of conformity consumption: one feels both desperate and self-annihilating.

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