Author: Dr. Nicole Olynk Widmar, Associate Head and Professor, Purdue University Department of Agricultural Economics
The concept of consumer behavior is, perhaps, a bit overused. Consumer behavior correctly refers to the behavior of a consumer of a service, product, or even information, media or art. For example, we’re all consumers of food and water. While we may not all be consumers of beef, we’re all consuming some sort of calories regularly. But consumer behavior is only one aspect of human behavior. We can behave as consumers seeking to buy or obtain (or consume!) in the marketplace, but many of us also wear other hats and have a variety of other human behaviors … perhaps as producers, sellers, members of the voting public, or agents of societal or cultural change.
Looking back on the past year and a half, COVID-19 spurred global economic challenges. As most of us were spending increased time at home, a variety of impacts in the marketplace came as a result. These impacts ranged from the run on freezers in the summer of 2020 as people sought to store more food to the inability to find a pool or bike to entertain oneself while at home. Home entertainment and home comforts have been sought-after with different items waxing and waning in popularity seasonally. But interestingly enough, all of this pandemic shopping has been happening alongside a multi-years-in-the-making ‘less is more’ movement towards minimalism.
The Great Decluttering of 2020: The Pandemic Has Inspired a Clean Out of American Homes in The Washington Post by Jura Koncius depicts people redefining their spaces, creating home offices, repurposing items, or potentially choreographing their home to regain a feeling of control over something. The pandemic aspect may be somewhat nuanced, but the purging, cleaning out, getting rid of, and repurposing movement is not new. Marie Kondo’s book (The Life Changing Magic of Tidying Up) and Netflix series (Tidying Up With Marie Kondo) were massively popular before the pandemic. Whether or not an item ‘brings you joy’ is part of societal understanding at this point. If you are not sure what it means to have to touch an item, evaluate whether it sparks joy and thank an item, then I suspect you may be missing some other more recent cultural nuances as well; this is simply common knowledge at this point.
Additionally, The Minimalists have been featured widely and are broadly appealing in their promotion of focusing on what does matter rather than focusing on getting rid of what does not matter. Plus, as an economist who fully appreciates that we are all coming to the marketplace with differing tastes and preferences, I appreciate their honesty surrounding the struggles of decision making — including the idea that you have to know what you want. Recall, “The unfortunate truth #1 about data-driven decision making is that data can’t assist you in making a decision towards an end that you have not yet defined. You have to know where you want to go or what you want to do before you can hope to make decisions that get you there.”
Minimalist Finances and Budgeting by Joshua Fields Millburn covers a variety of topics surrounding income streams and expenses, most of which are personal decisions that would involve tradeoffs weighed against individual values, goals and interests. But there is also a universal concept of tradeoffs that I found well-presented in a way that I think is easily internalized, especially in light of where we are in 2021 societally. Millburn said, “One principal I live by is questioning all my purchases. It takes time to earn money, and my time is my freedom, so by giving up my money I’m giving up small pieces of my freedom. Before I make a purchase (even for a cup of coffee) I say to myself, ‘Is this cup of coffee worth $2 of my freedom?’ This has significantly changed my mindset.”
The (possible) appeal of minimalism in 2021, from one economist’s perspective…
“Changes in consuming, shopping, saving, reusing, keeping and hoarding can all be folded into what is commonly called consumer behavior. Although, upon reflection, it might be more accurate to relabel these actions as ‘changes in household economics decision making’ or ‘changes in home economics’, as not all changes are surrounding consumption — in fact, some are aptly devoted to the lack thereof.”
Considering human behavior … broadly defined, consumption is only one aspect — leisure, conscious lack of or reduction of consumption, or even creation/production are other aspects. The universal concept here lies in tradeoffs: to buy is simply to give up money (also measurable in one’s time spent earning the equivalent sum) in exchange for something else. To not buy is to not obtain that ‘something else’, which we tend to posit makes us less happy when we don’t have that something, whatever it may be. But taken at face value, minimalism is all about focusing on what matters at the exclusion of what doesn’t matter (I took some liberty with that oversimplification), and it is entirely possible to be happier without something or even by giving something you presently have away and no longer possessing it. In other words, does the lack of ‘stuff’ in my possession — with or without having saved resources (money) — make me happier? It seems that the cost or the tradeoff of resources — both time and money — to get more stuff is increasingly not worth it to many people.
The law of diminishing marginal utility in economics states that the additional utility we gain from the next unit of consumption goes down as we consume more and more units. Is minimalism simply the result of not gaining any additional utility or happiness out of additional items when we already have so many? Or is managing one’s consumption, spending or resources an activity from which some of us gain additional happiness? Minimalism is popular and as a mindset may offer insights or frameworks for decision making that make us happier. Diminishing marginal utility is not new, but understanding more about how consumers are making decisions today and what drives them to consume or not is helpful in framing our own production decisions (or savings or consumption decisions … it’s complicated).
ConsumerCorner.2021.Letter.27
